Consumers will be able to make e-check payments over the telephone under new rules from NACHA — The Electronic Payments Association that became effective on September 14, 2001. The new rules permit merchants, billers and government agencies to offer e-checks by telephone as a payment option.
“An e-check authorized over the telephone is an easy and convenient option for consumers to make payments,” said Elliott C. McEntee, President and CEO of NACHA. “A consumer paying a bill or making a purchase would have an alternative to mailing a check.”
An e-check is an electronic debit to a checking account that is initiated on the Internet, at the point-of-sale, over the telephone, or even by a bill payment sent through the mail. An e-check is processed using the Automated Clearing House (ACH) Network, and typically takes 1-2 business days to be posted to a checking account.
Under the new rules, a consumer can verbally authorize an e-check payment by telephone. The authorization is either tape-recorded or a written confirmation notice is sent to the consumer.
E-checks by telephone are covered by the Federal Reserve’s Regulation E, which defines specific consumer protections from error and fraud. There are no similar protections for paper check payments. NACHA’s rules for e-checks by telephone mirror the Federal Trade Commission’s telemarketing sales rule, and provide an additional consumer protection by specifically prohibiting companies that cold-call consumers from using e-checks for any resulting sales.
Since July 1999, NACHA has been conducting a pilot program to test e-checks by telephone. From its inception through July 2001, the latest month for which statistics are available, the pilot has originated more than 10.5 million e-checks.
The NACHA Operating Rules standardize payment formats for the ACH Network, and define the rights, obligations and warranties of parties involved in ACH payments. Operating rules provide a uniform business and legal framework for the exchange of payments, which enhances participants’ confidence in the safety and reliability of the payments system.
The ACH Network serves 20,000 financial institutions, 3.5 million businesses, and 100 million individuals. The ACH Network is commonly used for Direct Deposit of payroll and government benefits such as Social Security, Direct Payment of consumer bills, business-to-business payments, federal tax payments, and, increasingly, e-checks and e-commerce payments. In 2000 there were 6.9 billion ACH payments made worth more than $20 trillion.
About NACHA — The Electronic Payments Association
NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits transfer (EBT). Visit NACHA on the Internet at .Details