In anticipation of the upcoming rule change by NACHA - the electronic payments association - Wells Fargo will integrate its automated clearinghouse (ACH) and account reconciliation plan (ARP) systems to better identify and post converted business checks accurately to clients' accounts.
When it takes effect on September 15, the industry-wide rule-change will decrease the likelihood that business checks can inadvertently enter the ACH clearing process. Wells Fargo's new system has been designed to post, reconcile, and report business checks like paper checks even if they are converted.
Intended to reduce the impacts on businesses of checks converted to electronic debits, the new NACHA rule sets up a clearer definition across the industry of what comprises a business check, so that business payments made by paper check post correctly and stand a lower chance of being returned as ineligible if converted. Wells Fargo's new integrated system will go a step further, giving customers using ACH Fraud Filter a choice - either to stop the debit if an ineligible business check was converted, or to let it post. Positive Pay customers will have the option to make a pay or return decision if the item is an exception. Converted business checks will be identified as check debits on the statement with a special indicator so customers can identify converted items, as well as online via Wells Fargo's Commercial Electronic Office (CEO).
"Wells Fargo builds payment systems with our customers in mind, looking to the real needs of real businesses," said Kris Chester, senior vice president in Wholesale Internet & Treasury Solutions for Wells Fargo. "We understand that treasurers making business payments want to ensure that their payees get paid and expect all payments to post and reconcile properly, regardless of whether the payments arrive in paper or electronic form."
Many retailers prefer the convenience of converting consumer checks to ACH debits, but business checks are currently ineligible. When some business checks occasionally do enter the ACH debit process, however, it results in costly delays from checks posting improperly or being returned. Treasurers using account reconciliation services or controlled disbursement to manage cash flow find such payments post incorrectly and are not reconciled automatically.
The revised NACHA rule will specify that paper checks under $25,000 may be converted and processed as ACH debits when they lack the "auxiliary on-us" field identifying them as a business check. Customers who choose to include the "auxiliary on-us" field on their checks will reduce the chances that a check will be converted in error.