Overview of eCheck Transaction Processing

The merchant receives authorization from a customer to charge his or her bank account based on the authorization requirements for the specific eCheck transaction type. The customer provides all of the required bank account information for the eCheck transaction type. Once the transaction is submitted, purchase and payment information is securely transmitted to the Payment Gateway server. The transaction is accepted or rejected based on initial data validation and security criteria defined by

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. A few reasons for rejection at this stage of processing include invalid routing number, inactive account number, insufficient information to process the credit, or the credit exceeds the amount of the original charge transaction.

If the transaction is accepted,

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formats the transaction information and sends it as an ACH transaction to its bank, the Originating Depository Financial Institution (ODFI), with the rest of the transactions received that day.

The ODFI receives transaction information and passes it to the ACH Network for settlement. The ACH Network uses the bank account information provided with the transaction to determine the bank that holds the customer’s account, the Receiving Depository Financial Institution (RDFI).

The ACH Network instructs the RDFI to charge or credit the customer’s account (the customer is the Receiver). The RDFI passes funds from the customer’s account to the ACH Network. The RDFI also notifies the ACH Network of any administrative returns (in the event that funds could not be collected from the customer’s bank account) or unauthorized returns (in the event that the customer disputes the purchase, similar to a credit card “chargeback”). Reasons why an eCheck transaction might be returned include, but are not limited to: not sufficient funds (NSF), invalid account number, account closed, or account frozen. Reasons why an eCheck transaction might be returned as unauthorized include, but are not limited to: customer advises not authorized, stop payment, or authorization revoked. In the event of a returned transaction,

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will post the return to the merchant.

The ACH Network relays the funds to the ODFI (the bank associated with

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).

The ODFI passes any returns to

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.

After the funds holding period,

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initiates a separate ACH transaction to deposit eCheck proceeds to the merchant's bank account.