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Frequently Asked Questions
What is accounts receivable check conversion (or ARC)? Accounts receivable check conversion is the electronic conversion of physical items for electronic payment. After items are imaged, they are converted into ACH debits. What is ACH payment processing (or ACH processing)? ACH payment processing involves the truncation of a paper document into an ACH debit entry. Through the Automated Clearing House (ACH) Network, ACH transactions are transmitted electronically between financial institutions. What is ATM capture? ATM capture enables customers to make deposits at image-enabled ATMs. The ATMs capture check images and transfer them, along with associated transaction data, to a central site for processing. What is branch capture? Branch capture is the process of capturing images of paper transactions at branch locations. Then, connecting to a central location through the Internet or a wide area network, branch personnel can transmit the images for proof-of-deposit or real-time item processing. What is check conversion (or electronic check conversion)? Check conversion is the conversion of a paper check into an electronic debit (ACH or ATM/POS). What is check imaging? Check imaging is the process of digitally capturing check images. The images can then be electronically exchanged as well as used in the creation of substitute checks. What is check processing? Check processing is the method employed to collect, convert, process and clear checks between financial institutions. What is check truncation? Check truncation is the process by which the original paper check is removed from the forward collection or return process. In place of the original check, check images and/or data or a substitute check is sent forward for collection. What is correspondent banking? Correspondent banking provides services such as credit, deposit, clearing and payment services for financial institutions. What is distributed capture (or distributive capture)? Distributed capture is the ability to capture items and deposits at the point of presentment, including branches, ATMs, and merchant locations. With distributed capture, paper is removed from the process thereby lowering processing costs, accelerating check clearing and increasing funds availability. What is electronic processing? Electronic processing refers to several types of electronic transactions that transform a payment, for example, by taking a paper check and converting it electronically to a digitized form. What is an image cash letter? An image cash letter, also known as an X9.37 file, is a group of checks packaged and sent by one financial institution to another financial institution, clearinghouse or Federal Reserve office. A cash letter is accompanied by a list containing the dollar amount of each check, the total dollar amount of the checks contained in the cash letter and the number of checks in the cash letter. What is image exchange? Image exchange is the exchange of some or all of a digitized image, or images, of a check. Check images can be exchanged electronically between financial institutions or through an electronic check clearing network. Another form of image exchange is imaged exception item processing which includes Check 21 enhancements such as imaged return item cash letters or the ability to create return item substitute checks. What is image payment processing (or imaged payment processing)? Image payment processing is the process of handling payments via electronically transmitted digital images. images What is image remittance processing? Image remittance processing solutions offer an image-based, automated payments processing solution that can accommodate nearly any size financial institution or business. The image remittance processing system captures and digitizes paper payment documents into an imaging system, enabling institutions to streamline remittance operations, reduce costs and generate new fee income. What is an image replacement document? An image replacement document is also called a substitute check or referred to as an “IRD” which is a term used by the Accredited Standards Committee in the technical specification for substitute checks (X9.90). It is the reproduction of a physical check or the image of a digitized check. This substitute machine-readable image copy is the practical or legal equivalent of the original check. According to the Federal Reserve, a paper reproduction of the original check is considered to be a substitute check. It contains the front and back images of the original check and bears a MICR line containing all the information appearing on the MICR line of the original check (except for information considered not necessary by applicable industry standards). What is IRD balancing? With IRD balancing, image replacement documents or substitute checks can be tallied and treated as regular paper checks to determine the amount of money in an account, equal to the net of credits and debits at that point in time for that account. A reproduction of a physical check or the image of a digital check What is the purpose of IRDs in banking? Since passage of the Check Clearing for the 21st Century Act of 2003 (Check 21), the Federal Reserve Board has encouraged check truncation (the replacement of a paper check with a digital image) earlier in the processing cycle by removing the need to transport the original check from the bank of first deposit to the check processor, and from the check processor to the paying institution. Check 21 allows a new negotiable document – a substitute check or Image Replace Document (IRD) – and gives it the same legal status as the original paper check. Financial institutions have the option of either storing or destroying the original document once it has been captured electronically. What is item processing? Item processing is the handling of check transactions from collection and conversion through processing, presentment and clearing. What is merchant capture? Merchant capture provides businesses a means to capture check images, make electronic deposits and improve treasury operations. What is payment processing? Payment processing includes all types of payment channels – ACH, check, credit, debit, smart card, phone etc. – and how the payments flow through a processor such as an item processor and/or ACH channel or merchant/credit card processor. What is remote branch capture? Remote branch capture is the process of capturing images of paper transactions at branch locations. Then, connecting to a central location through the Internet or a wide area network, branch personnel can transmit the images for proof-of-deposit or real-time item processing. What is remote capture? Remote capture involves the capturing of check images at the first part of a check’s journey to presentment. It shortens the lifecycle of incoming payments, facilitating the potential for improved float and lower transportation costs. Remote capture includes ATM capture, branch capture and merchant capture. What is remote deposit capture (RDC)? Remote deposit capture allows a business to scan checks and electronically send the information to a financial services provider for posting and clearing. Also called “corporate capture” and “merchant capture.” What is teller capture? Teller capture involves image capture of deposited items at the teller station. Using check scanners installed at their workstations, tellers scan checks once each transaction is completed. The scanning software reads the MICR data, dollar amount and signature and then verifies the image quality prior to transmission. What is X9.37? X9.37 is the electronic image version of a cash letter. An X9.37 file, or Image Cash Letter (ICL), is transmitted to a Federal Reserve Bank or other financial institution and contains cash letter totals and individual items drawn on eligible endpoints. The electronic transmission contains the MICR information from the checks and total information for reconciling in standard format. | |||
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