As part of your Agreement with Allegiance Merchant Service, Inc. (hereinafter referred to as “Allegiance Merchant Service,” “us,” “our,” or “we”), this Electronic Check Service (ECS) Merchant Operating Guide (MOG) is intended to be a concise, easy-to-understand instruction guide for processing ECS and Automated Clearing House (ACH) Transactions. You can also refer to it for assistance with returns, Chargebacks, and reports. If you have any questions concerning these services or the content of the ECS MOG, please contact us. The meanings of capitalized terms used in this ECS MOG are defined in the attached Glossary or have meanings ascribed to them in the Agreement.
The Allegiance Merchant Service Electronic Check Service provides many benefits to your business as well as to your Customers, including:
If questions arise or you have difficulty with any aspect of ECS, please contact customer support. When contacting customer support, please provide your Merchant Identification Number (MID) and as much information as possible. Contact information is as follows:
Allegiance Merchant Service
1401 Central Avenue
Charlotte, NC 28205
Tele: (704) 315-5775
Fax: (704) 837-7084
Email: info@algms.com
ECS is the service offered by Allegiance Merchant Service whereby Paper Checks and ACH debits are processed electronically. Except as otherwise provided herein, the terms “ECS” and “Electronic Check Services” include both electronic check conversion and ACH-Echeck Transaction processing.
ECS supports several Paper Check Conversion and ACH Transaction processing options. Specific ACH Rules apply depending on which Channel (POP, BOC, ARC, WEB, TEL, PPD, or CCD) is used to process the Transaction. Paper Checks ineligible for ACH processing are subject to alternative processing as Check Replacement Documents.
ECS Transactions are typically processed online, meaning that the Item created from Paper Checks or Customer information inputs is processed through Allegiance Merchant Service’s network for real-time validation and Authorization. For the ECS Conversion with Guarantee Service Level and for the ECS Conversion with Verification Service Level, Paper Checks must be converted into Items and must be submitted for real-time validation and Authorization.
Batch delivery is available for Merchants that have selected the Conversion Only Service Level. Businesses that choose Batch delivery typically manage and handle real-time Transaction approval internally, or choose to forego validation based on the risk level associated with the Transactions. Transactions given approval through Merchant’s authorization processes are accumulated and later submitted to Allegiance Merchant Service via a Batch delivery file.
For POP and BOC, Paper Checks may be Authorized by our Authorizing Agent and be processed via ACH or processed as Check Replacement Documents routed through traditional Paper Check settlement systems.
For ARC, TEL, PPD, and CCD, Items may be Authorized by our Authorizing Agent and processed via ACH to be posted electronically to the Customer’s account. Items may occasionally be routed through one of our other service providers or processed as a Check Replacement Document.
This chapter provides an overview of the general policies and procedures that each Merchant should follow when utilizing ECS for POP, BOC, and ARC Transactions. It is important to develop consistent policies and procedures throughout your business to ensure compliance with all applicable regulations and Laws. Before you begin accepting Paper Checks for ECS, you and your employees should become familiar with the information in this chapter.
a. The following types of Paper Checks are eligible for ECS using any approved Check Reader/Imager:
b. The following additional Paper Checks are eligible for ECS only by using a Dual-Sided Check Reader/Imager solution (availability depends on Merchant’s POS platform capabilities). These Paper Checks are ECS eligible, but if Merchant elects the ECS Conversion with Guarantee Service Level, these Paper Checks are not eligible for the Guarantee:
*The image must contain all of the appropriate data elements from the front and back of the money order for processing.
It is Merchant’s responsibility to determine the types of Paper Checks that can be submitted for ECS processing based on the type of Check Reader/Imager solution used and Merchant’s POS platform capabilities.
The following types of Paper Checks are not eligible for ECS:
Note: An ineligible Paper Check that is nevertheless processed through ECS may be subject to Chargeback.
For POP, BOC, and ARC Transactions, ECS includes the Conversion of eligible Paper Checks into electronic payments. For Merchants, this means that Paper Checks can be settled as simply as card Transactions.
In processing POP, BOC, and ARC Transactions, each Merchant should:
In processing POP, BOC, and ARC Transactions, no Merchant should:
Credit of funds for Items submitted for processing may be delayed if such Items or the underlying Transactions are believed to be the result of fraud, are for illegal purposes, do not contain sufficient information to allow the resulting Items to be processed by or through an ECS Association, or do not comply with the ECS Rules.
When a Customer chooses to pay for goods or services by Paper Check, it is suggested that the Merchant briefly explain the ECS process. Customers should be made aware that:
Notice
In order to accept Paper Checks in a POP environment, Merchant must post the notice sign provided by us, unless we have approved a custom notice sign. Merchants must post this notice sign in a prominent and conspicuous location at the point of purchase and must provide the Customer with a takeaway copy of such notice at the time of each Transaction. We recommend that Merchant incorporate the takeaway copy of the notice on the Transaction Receipt. Additionally, the notice sign must not be obscured by other information or other signs that may be located at the point of purchase.
MICR Capture
During the initial processing of Paper Checks for creation of an Item, Merchant must use a Check Reader/Imager to capture the full MICR line, including the full ABA Routing Number, full account number, and full check serial number from the Paper Check. Manual key entry is not permitted during initial processing but is permitted for the subsequent correction of errors.
Merchant Telephone Number
We will provide a sign to Merchant that includes a working telephone number for Customer questions or inquiries regarding Items processed via ECS. Merchant must post the sign provided by us, unless we have approved a custom sign.
Merchants should follow these steps when processing POP Transactions:
1. Ensure the Paper Check is eligible for ECS.
2. Ensure the Paper Check is properly filled out.
3. Ensure that the Item submission date and Paper Check date are the same.
4. Process the Paper Check through your POS Device to create an Item.
5. Obtain Customer information and enter it when prompted by the POS Device, or write this information on the Paper Check prior to imaging (required for Conversion with Guarantee Service Level only).
6. Obtain the Customer’s signature on the Transaction Receipt.
7. Compare the signed Transaction Receipt to the Customer identification to ensure they match.
8. Ensure all Paper Checks are either marked void or “franked.”
9. Return the marked void or “franked” Paper Check to the Customer, along with the Customer copy of the Transaction Receipt and a takeaway copy of the notice required above.
After the Transaction has been completed, Merchant should:
When a Customer chooses to pay for goods or services by Paper Check, it is suggested that the Merchant briefly explain the ECS process. Customers should be made aware that:
Notice
In order to accept Paper Checks in a BOC environment, Merchant must post the notice sign provided by us, unless we have approved a custom notice sign. Merchants must post this notice sign in a prominent and conspicuous location at the point of purchase and must provide the Customer with a takeaway copy of such notice at the time of each Transaction. We recommend that Merchant incorporate the takeaway copy of the notice on the Transaction Receipt. Additionally, the notice sign must not be obscured by other information or other signs that may be located at the point of purchase.
Opt Out Requirement
Merchants may allow Customers the opportunity to opt out of electronic check Conversion. If a Customer opts out of electronic check Conversion, the Merchant is not obligated to accept the Paper Check as payment and we recommend that Merchant request an alternative form of payment.
MICR Capture
During the initial processing of Paper Checks for creation of an Item, Merchant must use a Check Reader/Imager to capture the full MICR line, including the full ABA Routing Number, full account number, and full check serial number from the Paper Check. Manual key entry is not permitted during initial processing but is permitted for the subsequent correction of errors.
Merchant Telephone Number
We will provide a sign to Merchant that includes a working telephone number for Customer questions or inquiries regarding Items processed via ECS. Merchant must post the sign provided by us, unless we have approved a custom sign.
Merchant should follow these steps when processing BOC Transactions:
1. Ensure the Paper Check is eligible for ECS.
2. Ensure that the Paper Check is completely filled out and signed by the Customer.
3. Verify the Customer’s identity.
4. Process the Paper Check through the POS Device.
5. Obtain Customer information and enter it when prompted by the POS Device, or write this information on the Paper Check prior to imaging (required for Conversion with Guarantee Service Level only).
6. Ensure all Paper Checks are either marked void or “franked.”
7. Return a takeaway copy of the notice required above to the Customer.
8. Ensure that the Item submission date and Paper Check date are the same when accepting Paper Checks at the Point of Sale.
9. Ensure that the Item submission date is no more than one (1) business day later than the Paper Check date when accepting Paper Checks at locations other than the Point of Sale (e.g., via a manned bill payment location).
We encourage Merchant to establish policies and procedures to destroy Paper Checks as soon as is reasonable after submission of Paper Check images to us in accordance with this ECS MOG to protect against the risk of fraud or erroneous entry of the Paper Check into the traditional Paper Check processing system.
In order to accept Paper Checks in an ARC environment, the Merchant must first provide Customers with notice that their Paper Check(s) will be converted into electronic payments. Notice is required prior to the receipt of each Paper Check that is converted. Notification can be made in any of the following ways:
Notice
The recommended notification language is as follows:
“Each remittance of payment by check is considered authorization to convert that particular check into an electronic fund transfer. If your check is unable to be converted, it may be processed as a Check Replacement Document drawn against your account.”
These notices must be clear and readily understandable. Notices in small print and buried in the middle of unrelated information are not sufficient. Notices must not be otherwise obscured by other information or other signs that may be located at a drop box or manned bill payment location.
For Paper Checks accepted at in-person environments for the payment of a bill, Merchants must provide a copy of the authorization notice to the Customer at the time of the Transaction.
Opt Out Requirement
Merchants may allow Customers to opt out of electonic check conversion. Merchants must honor any such opt- out requests for all Paper Checks subsequently drawn from the same account, and must remain in effect until the Customer notifies the Merchant otherwise. It is suggested that Merchants establish procedures for handling Paper Checks that are not to be converted or request an alternative form of payment.
MICR Capture
During the initial processing of Paper Checks for creation of an Item, Merchant must use a Check Reader/Imager to capture the full MICR line, including the full ABA Routing Number, full account number, and full check serial number from the Paper Check. Manual key entry is not permitted during initial processing but is permitted for the subsequent correction of errors.
Merchants should follow these steps when processing ARC Transactions:
1. Ensure the Paper Check is eligible for ECS.
2. Ensure the Paper Check is completely filed out and signed by the Customer.
3. Obtain Customer information and enter it when prompted by the POS Device, or write this information on the Paper Check prior to imaging (required for Conversion with Guarantee Service Level only).
4. Ensure that the Item submission date is no more than one (1) calendar day later than the date Merchant collects Paper Checks accepted by mail, courier, at a drop box location, or at a manned bill payment location.
5. Process the Paper Check through your Check Reader/Imager. We encourage Merchant to establish policies and procedures to destroy Paper Checks as soon as is reasonable to protect against the risk of fraud or erroneous entry of the Paper Check into the traditional Paper Check processing system.
It is suggested that you establish procedures for those instances in which a Paper Check receives a Decline response for an ECS Transaction. In the event of a Decline response, notify the Customer of the Decline, and refer the Customer to the notice and contact information located on the Transaction Receipt. This notice contains information about the Customer’s legal rights. You should consult with an attorney regarding your legal responsibilities in connection with Decline responses. As a Merchant, you can ask for another form of payment or process the Paper Check in its paper form after an ECS Decline, but such Paper Check may not be processed under ECS. We recommend that Merchant not accept any Paper Check that receives a Decline response.
ECS Transactions may be voided electronically in certain circumstances. Voids can occur for several reasons, including:
To initiate a Void, you must:
If either of these conditions is not met, you cannot execute a Void/Reversal of the Transaction. Instead, you must follow your return process for cash or Paper Check Transactions.
Merchants must honor the confidentiality of Customer information. No information obtained from either a Customer or us as a result of processing ECS Transactions may be disclosed to any third party. The following limited exceptions may apply:
To fit your specific needs, the following general Service Level options are available:
(1) Conversion with Guarantee
(2) Conversion with Verification
(3) Conversion Only
In addition, Conversion with Verification and Conversion Only each are offered with collection service options, as described in the chapter titled “Additional Services.”
In the Conversion with Guarantee Service Level, Paper Checks are converted into electronic payments and then guaranteed by a Guarantor. During processing, an Approval or Decline decision is issued based on the Customer’s account status or Authorizing Agent’s risk management databases. The Guarantor retains the collection risk for all eligible, qualified Paper Checks that are processed following Merchant’s receipt of an Approval decision. Merchant should pursue all Guarantee claims directly against the Guarantor as neither Allegiance Merchant Service nor Member is responsible for any amounts owed to Merchant by a Customer or the Guarantor. Only consumer, business, corporate, and convenience Paper Checks are eligible for Guarantee. Additional ECS- eligible Paper Checks (as listed in chapter 2.A.1.b) are not eligible for Guarantee, but may still be processed under this Service Level. In addition, in order to qualify for the Guarantee, the consumer, business, corporate, or convenience Paper Check must include the following information:
If any of the following occurs, the Paper Check will be a “Disqualified Check” and the Transaction will be ineligible for the Guarantee:
For the Conversion with Verification Service Level, Paper Checks are converted into electronic payments and an Authorization message is routed to an Authorizing Agent for verification that the Transaction is likely to be paid. The probability of payment is based on specific account information at the time of the request and/or third party risk management database(s). During processing, an Approval or Decline decision is issued based on verification of funds in the Customer’s account or third party risk management database(s). Merchant retains the risk for all Transactions processed, including those that are returned notwithstanding Merchant’s receipt of an Approval decision. The Conversion with Verification Service Level is only available if Transactions are processed online.
To verify a Transaction, an Authorizing Agent uses third party risk management database(s) concerning the account and the Customer.
In the Conversion Only Service Level, Paper Checks are converted into electronic payments, then an Authorization message is routed to an Authorizing Agent to authenticate that the Paper Check contains a valid ABA Routing Number and account number and is eligible for ECS. During processing, an Approval or Decline decision is issued based on these criteria. The Merchant retains the risk for all Transactions processed, including those that are returned notwithstanding Merchant’s receipt of an Approval decision. The Conversion Only Service Level is available with both online and Batch processing.
A purchase payment occurs when a Merchant accepts payment by a Paper Check issued for the purchase of goods or services. Each purchase payment is subject to Approval as an ECS Transaction, regardless of Service Level selected by Merchant.
Approval Responses
Approved purchase payment Transaction Receipts may vary in appearance; however, each such Transaction Receipt must contain the information required in the ECS Primer.
Where a fee for insufficient or uncollected funds may be debited, the specific fee amount must be disclosed on the Transaction Receipt.
Decline Responses
Transactions that do not receive Approval can result in either a short Decline receipt or a long Decline receipt. For additional information regarding how Approval and Decline decisions are made, refer to specific Service Level descriptions. The following is a general description of Decline responses. Please refer to the ECS Primer for more details (if applicable).
Short Decline Receipt
If a Transaction is Declined due to a system error or an error in MICR data capture, a short Decline receipt will print. In this case, a short Decline receipt is printed with an error response. Errors can be caused by errors in data capture, due to faulty Merchant equipment and for a variety of other reasons. Merchant may resubmit to us for processing an Item that received a Decline response due to an error. Merchant may not resubmit an Item that has otherwise received a Decline response. If the POS Device displays any message other than Decline and a short Decline receipt prints, please attempt to reprocess the Paper Check.
Long Decline Receipt
If an Authorizing Agent Declines a Transaction, a long Decline receipt will print and will include the Authorizing Agent’s contact information to allow the Customer to inquire as to why the Transaction received a Decline response. Unlike short Decline receipts, long Decline receipts contain a Decline Code as well as the third-party Authorizing Agent’s contact information.
The Conversion of a Paper Check into an Item does not guarantee payment, even if the Transaction receives an Approval response. Transactions can still be returned for various reasons. The most common returns are due to:
The following paragraphs describe how returns are processed under the various Service Level options:
Unless an ECS Transaction involved a Disqualified Check, a Merchant is protected against returns for insufficient or uncollected funds, closed accounts, or invalid accounts. The Guarantor bears the risk of these returned Transactions. However, Items resulting from a Disqualified Check are not covered under Conversion with Guarantee and may be returned to the Merchant.
A Merchant is responsible for all ECS Transactions that are returned unpaid or are otherwise charged back to Allegiance Merchant Service. The Merchant is notified of a return via a mailed notification. The mailed notification provides an image of the Paper Check, which includes the Customer’s contact information to assist the Merchant in the collection efforts. As an additional service, the notification will allow the Merchant to forward this return or subsequent returns to collection by simply following the procedures on the notification.
If the Merchant subscribes to collections, we automatically submit Transactions returned for insufficient or uncollected funds to a third-party collection agency. Merchant must enter into a separate contract with the collection agency designated to perform this service in order to collect the amount(s) owed to Merchant in connection with a returned ECS Transaction. A mailed notification informs the Merchant that the return Transaction has been placed in collections. Each month the Merchant receives an acknowledgement report to show the status of Paper Checks received and a statement, sent directly to the Merchant, along with the dollars collected during the prior month.
The ACH Rules restrict the number of times that any entry returned for insufficient or uncollected funds may be reinitiated to no more than two times following the return of the original entry. Returned POP, BOC and ARC Transactions are automatically resubmitted up to the maximum number of times allowed by law and the ACH Rules in an attempt to clear funds. Paper Checks processed as Check Replacement Documents that are returned for insufficient or uncollected funds may be re-submitted up to one (1) time.
Note: An Item created from an ineligible Paper Check and submitted for ECS is subject to a Void/Reversal or Chargeback.
Returns of Transactions originally processed via ACH may be returned for a variety of reasons, including administrative errors in the original entry, insufficient or uncollected funds, and Customer disputes. Administrative and financial returns of Transactions originated from a Receiving Bank may be processed electronically via ACH. In these cases, the Merchant is notified of returned Transactions via U.S. mail.
Returned Check Replacement Documents are processed through the traditional Paper Check processing system. Merchant is notified of returned Transactions via U.S. mail.
Review the following list to help eliminate returns and Chargeback:
For qualifying Merchants, we offer the following solutions to capture and transmit the images of Paper Checks to us:
If Merchant elects to receive POS with Image services, Merchant shall scan the Paper Check at the POS to initiate an image transfer to us. Merchant must utilize a certified Check Reader/Imager device. Merchants accepting Paper Checks for POP and ARC Transactions must use the POS with Image service.
If Merchant elects to receive COI services, Merchant shall retain all Paper Checks that received an Approval response and, at the end of the day, at the end of a shift, or within one (1) calendar day from the approved Transaction date, Merchant shall scan the Paper Checks to initiate an image transfer to us. Merchant must utilize a Check Reader/Imager with stacking capabilities interfaced to Image Software or Third Party Image Software, and an integrated POS which is certified by us or our agent to be compliant with ECS specifications. Merchant must comply with any COI related guides separately provided to Merchant, which are made a part of this ECS MOG.
If Merchant elects to receive CI services, Merchant shall retain and consolidate at a Merchant centralized location all Paper Checks that received an Approval response and, at the end of the day, at the end of a shift, or within one (1) calendar day from the approved Transaction date, Merchant shall scan the Paper Checks at the centralized location to initiate an image transfer to us. Merchant must utilize a high speed imager interfaced to Image Software or Third Party Image Software, and an integrated POS which is certified by us or our agent to be compliant with ECS specifications.
If Merchant elects to receive OI services, Merchant and Allegiance Merchant Service will arrange for delivery of physical Paper Checks from Merchant locations to third party image capture locations designated by us. We or our agent will scan the Paper Checks and send the images to the ECS image archival host, which will manage the image data for the primary purposes of returns management and exception out-clearing. Checks are securely stored and destroyed on behalf of Merchant.
This chapter provides an overview of the general policies and procedures that each Merchant should follow when utilizing ECS for ACH debit Transactions using the WEB, TEL, PPD, and CCD standard entry class codes. At this time, only debit entries are supported. It is important to develop consistent policies and procedures throughout your business to ensure compliance with all applicable regulations and Laws. Before you begin using ECS for ACH debit Transactions using the WEB, TEL, PPD, and CCD standard entry class codes, you and your employees should become familiar with the information in this chapter.
Allegiance Merchant Service offers both Batch processing and online processing of ACH Transactions. Batch processing may be familiar to Merchants who have typically sent ACH files to a financial institution for processing on a daily basis. Online processing offers additional benefits such as the Conversion with Verification Service Level and full alignment with credit card settlement and funding timelines.
Note: ACH-Echeck is limited to Transactions where there is a preexisting relationship between the parties, such as bill payment, and is not available for retail purchases of goods or services or e-commerce. Typical uses of ACH-Echeck include government, education, utilities, telecommunications, healthcare, insurance, and property management payments, professional/general billed services and charitable donations.
Internet-Initiated Entries (“WEB”) are used for the origination of consumer debit entries to a Customer’s account pursuant to an authorization that is obtained from the Customer via the internet. We support a number of services that process WEB Transactions. Depending on Merchant’s service, we may interface directly with the Customer in connection with the Transaction or Merchant may interface with the Customer. In services where we interface directly with the Customer, we will obtain and retain WEB authorizations and process resulting Transactions in accordance with the ACH Rules.
In services where Merchant interfaces directly with the Customer, Merchant must obtain and retain WEB authorizations and process resulting Transactions in accordance with Allegiance Merchant Service Specifications and the ACH Rules, including, but not limited to the following:
Authentication of a Customer’s identity and evidence of a Customer’s assent to a debit authorization is strongest when the authorization occurs simultaneously or nearly simultaneously with the identity authentication. Merchant bears the burden of demonstrating that authentication of the Customer was sufficiently linked to the Customer’s authorization.
Telephone-Initiated Entries (“TEL”) are used for the origination of debit entries to a Customer’s account pursuant to an oral authorization that is obtained from the Customer via the telephone or by an automated voice response system, orally spoken. A TEL entry may be initiated only where there is an existing relationship between Merchant and the Customer or, if there is not an existing relationship, where the Customer initiated the telephone call to Merchant. Merchant must obtain and retain TEL authorizations and process resulting Transactions in accordance with Allegiance Merchant Service’s specifications and the ACH Rules, including, but not limited to:
Prearranged Payment and Deposit Entries (“PPD”) are used for the origination of ACH debit entries to a Customer’s account pursuant to a standing (recurring) or single entry written authorization that is signed or similarly authenticated (in a manner that complies with the E-SIGN Act) by the Customer. The signed or similarly authenticated authorization by the Customer must:
Corporate Credit or Debit Entries (“CCD”) are used for the origination of ACH debit entries by an organization to effect a transfer of funds to or from the account of that organization or another organization. This application can serve as a stand-alone funds transfer, or it can support a limited amount of payment related data with the funds transfer. As with consumer entries, an organization (the Customer) must authorize all ACH debits to its account. Merchant must include the name of the receiving organization with each CCD entry or the Item will be rejected and returned unpaid. The organization that authorizes the initiation of CCD entries must also enter into an agreement with Merchant under which the organization has agreed to be bound to the ACH Rules.
At this time, Allegiance Merchant Service supports a Merchant-initiated payment: debit model. The Merchant initiates a CCD debit to the Customer’s account. Merchant will debit the Customer’s account for the amount of the payment due by the Customer to the Merchant on an agreed upon date, financial terms and number of entries. This method may be used as a stand-alone payment instruction for a transfer of funds, with no remittance detail included in the entry. In the CCD debit model, the Merchant “pulls” funds from the Customer’s account.
WEB, TEL, PPD and CCD Transaction authorizations may be for one-time (single) funds transfers from the Customer’s account, in which case a separate authorization is required for each transfer, or may be for recurring funds transfers from the Customer’s account, in which case a single authorization permits Merchant to debit the Customer’s account at regular intervals without additional intervention or input from the Customer. For recurring WEB, TEL, PPD and CCD entries, Merchant’s authorization from Customer, in addition to complying with the applicable requirements above, must comply with all of the following:
WEB, TEL, PPD, and CCD Transactions are eligible for Conversion with Verification and for Conversion Only (processing only) Service Levels.
For the Conversion with Verification Service Level, an Authorization message is routed to an Authorizing Agent for verification that the Transaction is likely to be paid. The probability of payment is based on specific account information at the time of the request. During processing, an Approval or Decline decision is issued based on third party risk management database(s). Merchant retains the risk for all Transactions processed, including those that are returned notwithstanding receipt of an Approval decision. The Conversion with Verification Service Level is only available if Transactions are processed online.
To verify a Transaction, an Authorizing Agent uses third party risk management database(s) concerning the account and the Customer.
In the Conversion Only Service Level, an Authorization message is routed to the Authorizing Agent to validate that the ABA Routing Number and account number provided by the Customer are eligible for ECS. During processing, an Approval or Decline decision is issued based on these criteria. The Merchant retains the risk for all Transactions processed, including those that are returned notwithstanding receipt of an Approval decision. The Conversion Only Service Level is available with both online and Batch processing.
An ECS Transaction submitted for Authorization does not guarantee payment. Transactions can still be returned for various reasons. The most common returns are due to:
Reinitiation of WEB, TEL, PPD, and CCD Entries
The ACH Rules restrict the number of times that any entry returned for insufficient or uncollected funds may be reinitiated to no more than two times following the return of the original entry. Returned WEB, TEL, PPD, and CCD Transactions are automatically resubmitted up to the maximum number of times allowed by law in an attempt to clear funds. The Merchant is notified of a return via a mailed notification.
Review the following list to help eliminate returns and Chargebacks.
To enroll in any of the following additional services, please contact your Allegiance Merchant Service representative. Additional approvals and/or agreements may be required for the following services:
For all ECS Transaction types (excluding WEB, TEL, PPD, and CCD) and Service Levels (excluding ECS Conversion with Guarantee), Merchant can request that we automatically submit NSF Transaction returns to a third-party collection agency. Merchant must enter into a separate agreement with the collection agency designated to perform this service in order to collect the amount(s) owed to Merchant in connection with an ECS Transaction. The collections service option includes the following benefits:
For POP, BOC, ARC, CCD, WEB, TEL and PPD Transactions, and for all Service Levels excluding ECS Conversion with Guarantee, upon the successful resubmission of a returned ECS Transaction, an NSF Transaction service fee may be collected automatically and deposited to the ECS depository account designated by Merchant. The amount of the fee will vary depending on each state’s limit on the maximum amount that may be charged for acceptance of out-of-state checks or CCD, WEB, TEL and PPD Transactions.
Prior to our collecting any NSF Transaction service fee on Merchant’s behalf, Merchant must, at minimum, instruct us as to the amount of the fee to be collected and provide appropriate conspicuous notices at the POS or in the other form of Customer Transaction authorization, sufficient to establish that the Customer has authorized the collection of an NSF Transaction service fee in accordance with Allegiance Merchant Service’s requirements, applicable Laws and ACH Rules. Merchant is fully responsible for ensuring that all NSF Transaction service fees and all related disclosures to and permissions obtained from Customers comply with applicable Laws and ACH Rules.
Merchants may obtain authorizations from Customers for the collection of NSF Transaction service fees. Merchant must ensure that a Customer separately authorizes the collection via ACH entry of an NSF Transaction service fee using an authorization method specified in this MOG (e.g., for POP, BOC and ARC Transactions, Merchant must obtain a signed or similarly authenticated, written authorization from the Customer to collect an NSF Transaction service fee (in accordance with the requirements for WEB, TEL and PPD Transactions)).
The ability to collect NSF Transaction service fees through ECS, and the amount of the fee, varies from state to state (see Appendix C). Merchant, and not Allegiance Merchant Service, is responsible for ensuring that the amount and method of collection any such fees complies with state laws, and Merchant should consult with an attorney regarding its rights and responsibilities before selecting the NSF Transaction service fee collections option.
Hold Check is only available for Merchants who are new car dealers in the automobile industry and who subscribe to the ECS Conversion with Guarantee Service Level. Under Hold Check, Paper Checks are presented for payment in accordance with banking procedures applicable to processing Paper Checks; the Paper Checks are not processed electronically. Under Hold Check, the Guarantor bears the risk of loss if a Paper Check is returned to Merchant unpaid provided the following criteria are met with respect to each Hold Check:
COD is only available for Merchants in the auto parts, lumber/ building, mattress, and heating and air conditioning industries who subscribe to the ECS Conversion with Guarantee Service Level. Under COD, a Merchant may accept a mail or telephone order for products and services to be paid for by Paper Check(s). The Guarantor bears the risk of loss if a COD Paper Check is returned provided the following criteria are met with respect to each COD Paper Check:
For Merchants using an integrated Electronic Cash Register (ECR) POS solution, ATA may be used to Authorize POP and BOC Transactions when electronic online Authorization is unavailable. If Merchant receives a “Call Auth Center” response message indicating that a Paper Check cannot be processed electronically under ECS, Merchant will utilize the ATA service to enter data required for Authorization of the Transaction using the keying sequence provided by us. The ATA service will provide a 4-digit response code for each Authorization request, receiving Approval or Decline, and will track this Authorization internally. Merchant’s personnel must write the Approval code on each Paper Check and complete the sale by entering the Approval code into the register. The register will respond with a “Hold Paper” response and complete the “franking” of the Paper Check. Transactions receiving a Decline must be handled by Merchant in accordance with Merchant’s internal Paper Check acceptance criteria and the ECS Rules.
Merchant will comply with the Paper Check processing requirements set out in the TOS, this ECS MOG, and as set out below:
ATA is used to authorize Paper Checks for Hold Check and COD Transactions. Merchant will utilize the ATA service to enter data required for Authorization of Paper Checks, using the keying sequence provided by us. The ATA service will provide a 4-digit response code for each Paper Check processed, indicating Approval or Decline, and will track this Authorization internally. Merchant’s personnel must write the Approval code on each Paper Check.
a. For use with Hold Check:
b. For use with COD:
Stop Payment is only available for Merchants who subscribe to Hold Check and to the ECS Conversion with Guarantee Service Level. The Guarantee shall apply to Paper Checks on which payment has been stopped by a Customer due to a dispute over goods or services between the Merchant and the Customer, provided the following conditions have been met and the Paper Checks meet all terms and conditions listed in the TOS and this ECS MOG:
The total of the Transactions processed since your last settlement is called a Batch. We will credit you for the combined net total of payment Transactions (e.g., credit, debit) in your Batch. The Batch total is posted to your DDA and disclosed on your DDA statement. Batch settlement should occur on a daily basis.
To settle the daily Batch, perform the following steps:
1. Total the day’s Transaction Receipts;
2. Verify that the Transaction Receipts equal the POS Device totals. You can print a report from your POS Device, as applicable, to assist you in balancing. For information on how to print a report, refer to the instructions that came with your POS Device or contact customer support. If the totals do not balance:
3. Close the Batch according to the instructions for the POS Device.
An integrated Electronic Cash Register (ECR) POS solution performs the reconciliation of Paper Check Transactions between the Batch and the ECR. Merchants will submit approved ECS POS transitions to Allegiance Merchant Service daily. Merchants utilizing an integrated ECR POS solution should refer to instructions provided by the hardware/software provider for Batch transmission at the close of business for the day, which should guide you through the following general processes:
Additionally:
ECS reporting tools enable you to access your account and manage your ECS information using your web browser.
The following reporting tools are available to Merchants:
Note: For questions regarding online reporting or to sign up for this service, please contact your sales representative or customer support.
