What is a Remotely Created Check or a RRC?

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Many payment methods are available today, and among them are remotely created checks, or RCCs. They’re a convenient way to take payments from customers, and for more than two decades, they were a dominant way for customers to pay bills or merchants. That, however, may change in the near future.

A Bit of History

RCCs aren’t created by the account holder’s bank, and they don’t include the signature. Instead, they include the account holder’s printed name, and the merchant takes the customer’s bank and routing number through the web (or over the phone), then prints a check with that information and processes it just like they normally would.

RCCs came from Check 21 legislation. Created in 2004, the checks were not subject to ACH rules. The goal was to create a way for customers to easily use checks to make purchases over the phone or online. The legislation also made remote deposit a possibility.

The Problems with RCCs

The biggest problem for most who deal with RCCs is that there is a pretty high risk of fraud involved. It’s easy to debit a customer’s account without consent, and the method is used today by online scammers on a regular basis.

The other frustration for many is that it’s hard to detect and control any fraud in this arena, which means there’s a higher rate of return on these checks. One study found that rate of return as high as 70%, which is as frustrating for payment  processors as it is for merchants.

Lawmakers are currently taking a closer look at RCCs to decide whether they will continue to authorize their use. It is possible that at some point in the near future, RCCs will no longer be legal tender for businesses.

Are They All Bad?

RCCs can be a really good solution for high-risk merchants, especially if they want to be able to take electronic check payments. Because many cannot qualify for ACH processing, RCCs give them more possibilities than ever. As with other payment methods today, though, they are not without their potential problems.

Should I Accept ACH/EFT Payments?

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If you’re like many merchants today, you may be searching for one more way to allow your customers to pay for your goods or services. Offering your customers an extra option or two can sometimes mean the difference between completing a sale and losing out to another merchant. ACH/EFT payments are one choice to consider adding to your current payment processing menu.

What Are They?

First, it may help a bit if you learn more about this type of payment. ACH stands for Automated Clearing House. It’s a system of moving money between banks, and it is federally regulated. It began as a system to replace paper checks, and sometimes, it’s called an e-check. Employers use it to directly deposit payments to an employee account.

This type of payment can be used, though, to move money from a customer to a business in almost any industry. EFT is an acronym that is used almost interchangeably with ACH, and for good reason. EFT stands for Electronic Funds Transfer, and  it’s a broad idea that includes any type of electronic payment, including ACH.

The Benefits of ACH Payments

Besides offering your customers one additional payment choice, there are a number of reasons to consider accepting ACH payments. It’s typically fairly quick, but you can also set up recurring billing cycles with ACH payments. More than that, though, it’s also quite a bit cheaper to process this type of payment versus a credit card payment. While the exact amount depends on your card processor, it usually ranges from about .5% to 1% of the overall transaction. Sometimes, it can be as low as $0.25 per transaction.

Not all potential customers have a valid credit card account, but most of them will have a bank account. If that’s the case, they may choose your company over another if you offer ACH payment processing.

Learn more about our ACH/EFT payments service and how we can help you. Contact Y2Payments today.