High-risk merchants, when setting up a processing payment account, deal with a significantly high level of risks which require a managed and specialized form of payment processing services. They will require a processing payment solution which fully equips their special high-risk business model and objectives. High-risk merchants seeking approval of merchant processing services to process credit cards and other payment options often find these difficulties due to their business which falls in “high risk” category.
These merchants and traders dealing with customer demographic find it quite difficult to maintain the 1% threshold required by the ACH network rules. As credits cards and ACH was the technology commonly and widely used for processing electronics payment and checks.
The Check 21 processing, however, provides a good alternative to these offshore companies and merchants for ACH processing. Although, if we see from a functional standpoint these both processing options operate in quite a similar way but these share some differences. The Check 21 processing uses a bank to bank image transfers and does not process through ACH networks providing a greater flexibility in revoked transactions. And, the most important and bigger difference comes in the governing rules and regulations. ACH transactions are governed by NACHA regulations that require revoked transactions to be kept at levels under 1% whereas Check 21 is governed by check laws and the Uniform Commercial Code.
Some differences between the ACH and Check 21 processing
The foremost advantage of Check 21 is that it enables you to process e-checks with fewer concerns about revoked transactions as if your revoked transaction rates over 1% you are not able to maintain an ACH account. Check21 processing accepts a significant number of revoked transactions as there is no specific percentage of thresholds but remember this doesn’t mean you can have an unlimited number of revoked transactions.
Check 21 processing costs more than ACH processing as Check21 are often associated with high-risk businesses that cost more than standard risk businesses. The Check21 accounts incur discount rates in addition to per transactions fee. In the processing of returns, this involves more manual labour for banks and processors. However, this has nothing to do with your processing and operations as this is mainly monitored by the banks and processors.
Lastly, having an appropriate merchant processing and transaction mode is very vital for high-risk businesses and providing a number of payment methods to your customer is always very beneficial for your business. The gradual introduction of these merchant processing services like Check 21 processing and E-check processing has provided an ease to customers as well as merchants to make transactions and keep records.