BOC will allow retailers and payment service centers to receive checks at the point of presentment and take the items to the back room for scanning and conversion to ACH items.

Whereas with POP a signed authorization was required with BOC this is not the case.  In this case notice equals authorization in conjunction with the presenters election to continue the transaction.

Here are the highlights of BOC requirements:

Authorization Requirements

1. Provide notice, and; receive the source document.
2. Notification Language must be substantially similar to Reg E notice language.
3. Must be posted in a prominent and conspicuous location.
4. A copy of the notice language must be provided to the receiver.

Opt Out

Receivers can opt out

Originators encouraged to offer alternative payment options to Receiver

Applies only to one specific check -- unlike ARC, where opt out applies to all checks drawn on a particular account.

Source Documents - What can be converted?

Checks that:

1. Are provided by Receiver at point of purchase or manned bill payment location.
2. Contain a pre-printed serial number.
3. Do not contain an Auxiliary On-Us Field in the MICR line.
4. Are in an amount of $25,000 or less.
5. Are completed and signed by the Receiver.

What Cannot be converted?

1. Checks not encoded in magnetic ink.
2. Checks that contain an Auxiliary On-Us Field in the MICR line.
3. Checks greater than $25,000.
4. 3rd party checks.
5. Demand drafts and 3rd party drafts that don’t contain the Receiver’s signature.
6. Checks provided by a credit card issuer for purposes of accessing a credit account.
7. Checks drawn on home equity lines of credit.
8. Checks drawn on an investment company as defined in the Investment Company Act of 1940.
9. Obligations of a financial institution.
10. Checks drawn on the U.S. Treasury, a Federal Reserve Bank, or Federal Home Loan Bank.
11. Checks drawn on a state or local government that are not payable through or at a participating DFI.
12. Checks payable in a medium other than U.S. currency.

Requirements for MICR Capture

1. Originator required to use MICR reading device during initial processing.
2. Must capture routing number, account number, and check serial number from Receiver’s source document.
3. Key entry allowed during subsequent processing in order to correct errors.

Again these are the basics, and anyone that plans to use this SEC Code will want to be thoroughly familiar with the rules that will be published prior to commencement.

Paul

Prior to the receipt of each source document that is used on the basis for the origination of a BOC entry, the Originator must provide Receiver with notice reflecting:

“When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction.  For inquiries please call <retailer phone number>.”

The notice must contain the following additional language until January 1, 2010:

“When we use information from your check to make an electronic fun transfer, funds may be withdrawn from your account as soon as the same day (you make) (we receive) your payment, and you will not receive your check back from your financial institution.”

Paul

I would like to know more about the BOC process in terms of how would the electronic conversion happen? are there any specific standards/file formats for this purpose? Can you please answer my query or let me know from where I can find answers.

Thanks,

Kishore

There are no images being transmitted through the network, so there is no technical standard like Check 21 standards.

The image is captured and only the data sent through the network with the SEC Code of BOC.

IF this does not sufficiently answer your question, please let me know.

Paul

The checks are scanned and uploaded to the platform along with the data.  The images are stored on the platform and the platform transmits the data in a NACHA file to the Fed.

The process is as simple as loading checks on the imager, verifying the items through the web interface to Alliance (GUI) and releasing the items for transmission to the Fed.

Paul

NACHA Press Release

Paul