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TeleCheck is a pioneer check processing agency that caters to thousands of merchants and financial institutions in the US and Canada. The consumer reporting agency has been in operation for more than four decades offering the following integral functions:
- Check acceptance
- Check processing
- Risk analytics
The products and services of TeleCheck are known to benefit not only retailers and banks but consumers as well. The Electronic Check Acceptance or ECA is an easy and convenient procedure that merchants subscribe to for hassle-free check processing. The Check 21 Bill which took effect last 2004 have inspired check guarantee companies to offer a guarantee service to their merchants through check truncation services. ECA was structured according to the guidelines of the check law and electronic banking law, thus making it a highly efficient service that merchants can use on a daily basis.
How Does It Work?
Explaining in detail and coherently how exactly TeleCheck works involves numerous aspects that must be taken into consideration and thoroughly explained before other processes are mentioned. In the first place, TeleCheck possesses a network called the TeleCheck Electronic Checka Acceptance, which is also known as the ECA service; this network allows the effective conversion of a paper check into an electronic means of payment at the point of sale.
The process is relatively simple: a customer presents an original signed check to the merchant, which is then passed onto a slider that verifies the bank information, signature, the owner of the account and all the necessary presented information in the check. The network automatically recognizes the check for approval or disapproval, and if approved, the network generates a receipt indicating the amount of funds which will be withdrawn from the account with the required signed authorization from the customer.
Once the customer has signed the receipt, the electronic transaction begins the process of withdrawal from the customer’s account and deposits it to the merchant’s account in a matter of one to two business days, just like debit or credit card transactions. Generally, the merchant will keep the signed receipt and the customer will get to keep his or her check plus the receipt.
A signature for processing check payments in person at a point of sale transaction is generally required given that the merchant has to have the signed authorization from the customer to withdraw the amount of funds and proceed with the transaction. Almost all ECA transactions are reflected in the ATM transactions section within customers’ bank statements. In case of merchants, the transactions are shown in the direct deposit payroll checks. All transactions must by law reflect the date in which the transaction was made, the check in which the check was cleared, the check number, the amount of funds and the place where the check was given.
Now that we have presented the basic overview of how exactly TeleCheck works, it should now be interesting to take note in the more profound technicalities of TeleCheck’s network and how exactly everything works in order to verify all necessary information and process payments successfully at any given time.
One of the most interesting aspects about TeleCheck is the fact that they possess a giant live database of information from customers’ records, financial information, debts, outstanding payments, merchant transactions and credit history. All this information is usually integrated and clustered in highly complex patterns which enable instant access through the firm’s network. Each time a check or payment is attempted to begin processing, these algorithms, databases and clustered patterns analyze this information within the network and respond by approving the transaction or disapproving it.
One of the major goals of TeleCheck is to fully prevent fraud and inconsistent transactions where the check may bounce into the merchant’s account. One of the ways in which TeleCheck does this is to implement several risk models whenever a check is submitted for approval, where the network analyzes several risk models evaluating the information obtained from the check and the main databases, ensuring a flow of identification of information in order to apply successfully each risk model on every particular case.
Usually the process takes less than one minute, and generally the longer it takes, the more likelihood of risk there may be. Most submissions that last more than 1 to 2 minutes in length turn out to be disapproved due to recognition of a potential risk from the buyer or customer. Interestingly enough, the system and network used by TeleCheck does not state whether the check handed in is good or if the bank account has sufficient funds, due to the complexity of accessing this information and numerous privacy laws and regulations, the focus is more directed toward other types of evaluations and fraud prevention techniques.
TeleCheck Benefits to Merchants
The Check Truncation Act or CTA bill is geared towards helping merchants in running their business smoothly. Retailers who have been using TeleCheck ECA services are known to derive the following benefits:
- Increase the level of efficiency of transactions made through physical transportation networks such as check payments.
- Electronic check that is furnished by TeleCheck is then processed by banking institutions at a faster rate, thus streamlining the check collection and return process. Merchants are guaranteed to have the full amount written on checks to be electronically transferred to their business accounts.
- Assists merchants in collection of debt from returned checks. In the event that a check verified through TeleCheck was returned, the agency will attend to the collection of the amount owed from consumers, thus reducing the work of merchants in the collection of funds.
- Reduce the risk of merchants that still accept checks in their storefront.
- Boost the productivity of the employees in commercial establishments as the streamlined process of check approval report is generated electronically and delivered immediately.
Although majority of merchants utilize the check acceptance service rendered by TeleCheck, the decision to approve or deny a written check from a consumer still lies on the merchant. In the event that a written check is run through the database of TeleCheck and returned with either a Code 3 or a Code 4, but the merchant still accepted the check the agency will not render their collection services at all. This guideline that is most commonly agreed by both the merchant and TeleCheck, prompts most merchants to deny checks that returned with a Code 3 or Code 4 evaluation.
Aside from retailers, banks also acquire TeleCheck services when checking for the background and personal information of consumers who plan to open a checking account. This step is undertaken by financial institutions in conjunction with the acquisition of services by ChexSystems, another major check guarantee company.
The ABCs of TeleCheck Products and Services
As earlier mentioned, TeleCheck deals with the rendering of three crucial services namely check acceptance, check processing, and risk analytics. A retailer that accepts check payments will run a written check from customer through TeleCheck’s specially designed system. The system then processes the personal information and analyzes the information based on their national database. Once the check processing is done, the system will then generate a printed report if a specific check transaction is approved or denied.
In the case of an approved check transaction, the officer in charge will require consumers to sign a receipt with a four-digit approval code. One copy of this approval sheet is provided to the consumer, while another copy will be stored and documented by the merchant as well.
For denied transactions, a simple and discreet report will be handed by the cashier. Consumers will be asked to call TeleCheck directly to know more information as to why their checks were denied for the transaction. The evaluation provided by TeleCheck to merchants is based from the company’s own risk-based decisioning model and system. TeleCheck states that they utilize various factors in determining whether a check is either good or bad. Several characteristics and patterns are analyzed as well in order for them to verify if a check is valid or invalid.
Throughout the forty years that
TeleCheck has been rendering services to retailers and merchants, it has slowly built a strong statistical profile of what a valid and solid check should look like. Checks that fail their statistical requirements and did not meet some guidelines will be automatically turned down for approval.
It should be noted however that TeleCheck offers predictive risk decisioning results as the company does not perform funds check into a consumer’s personal checking account.
Here are the top reasons why consumer written checks receives a denied evaluation report from TeleCheck:
- High-risk check transaction – negative information was identified resulting in a check written to be high-risk for merchants to accept.
- Lack of information on the TeleCheck database – Code 3 means that TeleCheck does not have sufficient information on a checking account holder, thus making it rather impossible for the company to predict if a check written is valid or fraudulent
- Previous Fraud Report – if a consumer’s account was reported to be a victim of fraud recently, TeleCheck has this on record. Even if the case was reported to the bank and resolved accordingly, TeleCheck may still subject your account to be high-risk months or even years after a fraud incident.
- Past History with TeleCheck – this is also known as Code 4. A consumer who has a history or record with TeleCheck will most likely encounter a denied transaction through merchants even if the debt had already been paid and covered.
- Human Error – the employee manning the cashier may have typed in the wrong driver’s license number or personal information onto the Telecheck system.
If your check was denied at a merchant, you will automatically be provided with contact information so you can immediately fix the issue. This will enable you to clear your name and establish a good checking transaction as well. It should also be remembered that a customer’s credit report is not in any way utilized by TeleCheck as a metric of its risk-decisioning model. Individuals with bad credit can write checks to merchants provided that they have sufficient funds in their personal checking account.
Ways of Getting Out of a TeleCheck Dispute
Even though TeleCheck offers a dynamic, secure and highly efficient check payment systems and networks, there are is a high probability of getting into a dispute for a wide number of reasons. The most common dispute for merchants is to not receive payments when the check has already been processed and approved at the point of sale. Likewise, the most common dispute for customers is to be charged more than what was signed at the moment of paying with the check. Both merchants and customers can open a TeleCheck dispute to straighten out their problems, usually the customer is the most affected when it comes to dealing with disputes and general problems within the TeleCheck networks and systems.
For merchants, the best way to get out of a dispute is to call the TeleCheck customer service department and request to cancel a dispute. The merchant has the responsibility to fax or mail the receipt to TeleCheck where the transaction was approved plus the supporting evidence where it is reflected that the funds were not deposited after the transaction was approved by the system. TeleCheck will process the dispute within 3 to 5 business days and will most likely follow up with a response and clearance after this period.
The same process applies to customers; it is required for customers to fax all receipts, a copy of the check, a copy of the items bought at the merchant and any other supporting evidence that may be required in order to process the actual dispute. It is highly recommended to always act and explain thoroughly all information and the case in a very professional manner and with a touch of friendliness, getting upset and acting erratically with customer service representatives at TeleCheck will leave nothing more than an unsatisfied case and an unresolved problem.
Whenever a transaction is processed through TeleCheck, the network or system established to the merchant will always show a code that has a significance and meaning to the overall fate of the transaction in the short and long run. The following list of codes is what usually represents in the majority of TeleCheck systems across merchants:
- Approval Code: this code can be any combination of four numbers indicating a successful approval by TeleCheck. The four digits can be represented as 1234 or simply as a combination thereof such as 9435; this code is then given to the cashier which is then usually written on the check to signify a successful approval.
- Call Center: this code can be represented either in text or as a code followed by the text “Call Center”. The significance of this code is that the transaction cannot be completed until the cashier calls a TeleCheck call center representative in order to receive a follow up with the transaction, the representative will then verify extra information within the database and proceed to make an approval based on the information analyzed.
- Code 3: this code represents a rejection or disapproval from the TeleCheck network, it usually signifies a that the system did not find nor recognized any negative information on the check owner but the check and the information about the owner does not satisfy the standards set in order to let the transaction be approved.
- Code 4: this other code represents a rejection or decline from TeleCheck on a more serious level where the database recognizes several key piece of information that prevent the warranty and security in order to let the check be processed. Usually this code signifies a major alert for fraud potential from the check owner.
- Error Entry: usually appears when there is an error belonging to the input by the cashier at the moment of transaction. May appear also when there is a technical error within the system as well.
- Magnetic Ink Character Recognition (MICR): this code basically just represents the numbers located at the bottom of the check which are usually the routing and account number is bold black letters.
TeleCheck Contact Numbers
Here are important TeleCheck contact numbers that consumers need to remember in case they would like to know more information about a declined transaction or if they would like to clear their personal information with the company. This is done by consumers so they can still use their personal checks in subsequent transactions through other merchants and retailers.
- TeleCheck Fraud and Identity Theft department – 1-800-710-9898
- TeleCheck Free Annual File Disclosure Form – 1-800-366-2425
- TeleCheck Setup Department for Merchants – 1-800-760-1700