CUNA Regulatory Comment Call

July 13, 1999

POS Merchant-as-Keeper Pilot Guide

The National Automated Clearing House Association (NACHA) requests comments on guidelines for testing a new check truncation service. This service would allow a merchant to truncate a consumer check at the point of sale (POS) by converting the payment to an ACH debit entry and retaining the check. Comments are due to NACHA by July 23, 1999. Please submit your comments to CUNA by July 21, 1999, by fax to CUNA at 202/371-8240 or e-mail to CUNA's Assistant General Counsel Michelle Profit at You may also contact us if you would like a copy of the guidelines.


A POS Merchant-as-Keeper transaction begins when the consumer pays for a purchase at the point of sale and gives a check to the merchant, who obtains written authorization from this consumer to truncate the check and converts the payment to an ACH debit entry. The merchant must stamp the check "VOID" and transmit payment information to the originating depository financial institution (ODFI), which transmits it to the ACH Network as a PPD debit entry. When the consumer receives a statement, it will show the check number, the merchant name and the descriptor POSCHECK.

The POS Merchant-as-Keeper guidelines contain rules to protect all pilot participants. Accordingly, all checks must be no more than $2,500 and must be drawn on the presenting individual's account. The consumer must provide written authorization that contains the bank routing number, account number, check number, transaction amount, merchant's name, and a hotline number for inquiries. The merchant must retain and store the check (the original for 90 days and copies for seven years) in a secure environment and in such a manner that the check or a facsimile can be retrieved quickly upon request. On the request of the receiving depository financial institution (RDFI), merchants must supply the original or a copy of the check within ten banking days. The ODFI must be a member of a regional ACH association and a member of NACHA's Electronic Check Council. Participating merchants or their processors must also be a member of the Electronic Check Council. NACHA reserves the right to terminate the entire pilot at anytime or to terminate any organization's participation if it violates the guidelines.

This service differs from the Point of Purchase Rules that go into effect on September 17, 1999, because those rules require the merchant to return the check to the consumer, instead of retaining it. This version is being tested because it allows merchants to continue to accept checks from consumers, but gain the speed and efficiency of electronic payments