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Electronic Representment of NSF Transactions

jjensen | 10 April, 2006 16:24

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Electronic representment of NSF (Non Sufficient Funds) is a method whereby checks from bank accounts with insufficient funds are repeatedly deposited through the Federal Reserve Automated Clearing House until funds are available.

This is good for retailers because it protects retailers by allowing them to collect upon bad checks from customers that have already received merchandise.

While the process of paper check representment is complicated, simply put, the bad check is held and the customer's account is tracked until the necessary funds to cover the check are deposited. Once deposited, the amount that the check was drawn for is removed.
Some payment processors do not represent NSF checks or electronic checks for their merchants at all and merchants must go through the files to separate cleared transactions from NSF transaction and then create a batch file to resubmit them through the Fed. Others payment processors only perform this representment of NSFs once.

The best option is to have these transactions represented two times after the transaction initially bounces with all of the work done electronically through the payment processors automatic check representment system.


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