This section addresses topics unique to accepting checks as a payment method. You need a code switch in the point of sale (POS)application to handle minor changes between the integration of a check customer with Fusebox.
The implementation of the Elavon Gateway applications into your POS application must address the following business environment criteria that is specific to accepting checks, where electronic check conversion, verification, or guarantee may apply:
An authorized check writer of an account may or may not be present.
A merchant processing agreement with a certified check service provider must be in place.
All industries that accept checks as payment must be addressed.
The following transaction types and transaction qualifier are required when using the Check Coversion, Check Verification (with or without ACH), or Check Guarantee (with or without ACH) services.
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Important to know
A void to Elavon Acquiring Check host can only be processed within 10 minutes of the original transaction.
Check transactions are non-industry specific therefore no industry fields are to be included in the API request.
Check Acceptance Considerations
Individual states within the United States govern the acceptance guidelines for checks tendered within their jurisdiction. The ability to prosecute may be limited if the state guidelines are not followed. Collection costs could be higher for customers who do not adhere to the state guidelines (i.e., customer contracts for services from a third party, such as a check service provider).
Key implementation considerations that apply to accepting checks include:
Check service provider and services
Services offered by transaction processors and check service providers
Magnetic ink character recognition and card readers
Services Offered by Transaction Processors and Check Service Providers
Your POS system is responsible for securing the MICR information from the presented check. The services offered by transaction processors and check service providers include:
Electronic check conversion (with or without ACH)
Check verification (with or without ACH)
Check guarantee (with or without ACH)
Electronic check conversion can be combined with verification or guarantee services as well, but this guide is focused on the primary check service in all cases.
The section below describes how each check service works.
Each merchant can only be setup with one of the check services.
When approved, a financial transaction results in funds moving from the check writer’s account to the merchant’s account. An authorization that is obtained and submitted on a merchant’s Demand Deposit Account (DDA)is a record for funding at the end of the day, along with the credit card transactions. A physical check does not need to be deposited at the merchant’s bank. The funds are moved through an Automated Clearing House (ACH). Some check conversion products can be combined with check verification or check guarantee, to reduce the risk of performing a check conversion where physical goods are exchanged.
A non-financial transaction which requires a normal deposit of the physical check to fund the merchant account. Check verification validates that the bank account associated with the check does not have a bad check status and therefore, is not a high risk. Processors may verify that the check writer’s account is not on a negative file. The negative file contains the accounts that have insufficient funds (NSF) checks written against them. This also has the option to perform ACH in near real time.
A non-financial transaction that requires normal deposit of the physical check to fund the merchant account. Check Guarantee Services may include:
Some check guarantee services verify that the check amount exists in the checking account at the time of purchase. This essentially guarantees that the merchant will receive funding for the purchase.
Other check guarantee services rate customers with a beacon score or credit worthiness. Based on the score, these services may guarantee a person’s check, but may not actually check the balance in the account.
May include NSF recovery and full payment to the merchant for any check that is not recovered, as long as the required identification and process was followed during the acceptance and guarantee.
The check services currently offered to merchants have different requirements for the data that must be gathered during the authorization process. Elavon has documented the most common check authorization requirements in this guide. For check authorization requirements specific to particular transaction processors, refer to the appropriate processor section of the TPP Interface module guide.
This also has the option to perform ACH in near real time.
Automated Clearing House (ACH) Check Transactions
ACH check transactions are the check not present equivalent of ECS transactions, using only the bank routing number and account number from the bottom of the check for processing. ACH uses the same processes and infrastructure as ECS to perform check not present transactions accepted via the Internet, telephone, back-office (single or recurring) and pre-approved payments on accounts.
To support ACH Transactions, API Fields 0920 and 0921 are required.
ACH Format Code – API Field 0920 (3 Numeric) – Only one option exists
- 001 – Indicates Format Code B ACH Check Transactions
ACH Product Codes – API Field 0921 (3 Alpha/Numeric) - Four options exist
WEB - Internet-initiated based on input of account information by customer at a payment application website.
TEL - Origination of debit entry following an oral authorization obtained via the telephone or IVR.
PPD - Origination of debit entry following a standing (recurring) or single entry with written authorization signed or similarly authenticated by the customer.
CCD - Origination of debit entry by an organization to transfer funds to another organization with written agreement.
Magnetic Ink Character Recognition and Card Readers
Your POS system is responsible for securing the MICR information from the check presented through a MICR card reader. Unlike credit cards, there are no standard formats for the MICR line located on the bottom of a check. The check reader manufacturers support the most common formats.
The formatting and presentation of collected MICR data to the Elavon Gateway applications varies by check service provider and transaction processor.
Specific identification is required for each type of check presented. All POS systems should be able to identify the type of check and prompt for the appropriate type of identification.
Check types include:
The most common types of identification are listed below. These types can vary depending on the check service provider and the end user’s merchant preferred business practices:
Date of birth
Alternate IDs such as social security numbers, courtesy cards or military IDs
Driver’s license number and state code (swiped or manually entered, depending on the issuing state)
The check service provider may require more than one type of identification.
Business Practices and Impact
Business practices must be in compliance with the state code table and check authorizations rules described below.
State Code Table
Your POS system is required to support and maintain a cross reference table that is based on information provided by the check service provider. This table must contain the alpha or numeric number (see: ISO standard number for each state), and state codes required by the check service provider and transaction processor to identify the state where the check or driver’s license was issued.
Optional POS Functions
The two optional POS functions available in Fusebox are check franking and a manager override.
The merchant is also responsible for documenting or franking (validating) the physical check with pertinent information. Check franking is the endorsement of the check. Some POS systems have the ability to automate the check endorsement at the register as part of the check approval process.
Another feature you may want your POS application to support is the ability to accept a check that is declined by the check service provider based on a manager’s override.