eCheck Settlement

Because eCheck payments are made from a customer's bank account, the settlement process is different from the credit card transaction settlement process. For eCheck transactions, settlement occurs when the payment gateway initiates an ACH transaction to collect funds from the customer's bank account. Funding occurs when funds collected are deposited to the merchant's bank account. The timing of eCheck deposits might vary by merchant. Settlement for eCheck transactions occurs each business day, excluding bank holidays. eCheck transactions submitted to Cybersource before your daily transaction cut-off time are sent to the bank the following business day. The settlement time for each batch of transactions marks the beginning of the Cybersource funds holding period. Transfer of eCheck proceeds to your bank account occurs on the business day after the transactions are considered collected by the system.

IMPORTANT

The availability of funds is not verified in real time, so you should wait until the holding period is over before shipping or providing access to merchandise purchased using eCheck.

The timeframe for settlement, returns, and funding can vary. These factors can influence timing: the day of the week the transaction is submitted, the number of holding days established for your eCheck account, whether the transaction is returned for any reason, or whether processing occurs over a weekend. eCheck transactions begin their funding when a transaction is captured and settled.

This sequence describes a typical eCheck processing cycle with a 5-day holding period:

The merchant receives an eCheck transaction. At the transaction cut-off time, the transaction is picked up by the payment gateway.

The payment gateway submits the previous day's batch to the ACH network. This is the first day of the funds holding period. The number of holding days varies per merchant. For example, 5 days.

The ACH network collects funds for the transaction from the customer's bank and sends them to Cybersource. This is the second day of the funds holding period. The purpose of the holding period is to allow for returns for transactions included in the batch. Returns can come back on this day.

Third, fourth, and fifth day of the funds holding period. Returns can come back on this day.

The payment gateway sends available eCheck proceeds to the merchant's bank account. Returns can come back on this day.

The eCheck proceeds are available in the merchant's bank account. Returns can come back on this day.

Processing only occurs on banking days, so the timeframe can be extended depending on what day of the week processing and holding days occur. For example, if day 1 in the example above is a Friday, day 2 does not occur until Monday, 2 days later, prolonging the timeframe by 2 days.

eCheck Returns

eCheck transactions consists of several validation phases. When first submitted to Cybersource, eCheck transactions are validated for the presence of required data, such as the bank account number and ABA routing number. After the transaction is submitted to the ACH network, it undergoes additional validations, for example, whether the customer's bank account exists and whether there are enough funds in the bank account. A transaction might be returned for various reasons. An eCheck transaction can pass the initial phases of validation and be returned or rejected later in the cycle.

These are the three types of eCheck returns:

Insufficient funds (NSF) return: This type of return occurs when the customer’s bank account does not have sufficient funds for the eCheck transaction.
Unauthorized return (chargeback): These transactions are unauthorized returns:
The customer claims they did not authorize the eCheck transaction or had revoked their authorization.
The transaction was for a different dollar amount than was originally authorized.
The transaction was settled prior to the date of the customer's authorization.; Additional reasons for chargebacks are listed in eCheck Chargebacks.
Administrative returns or returned items: This type of return includes all other reasons for a return, such as these:
Account is closed.
Account number is invalid.
Non-transaction account.
Account is frozen.

IMPORTANT

Cybersource does not automatically resubmit charges returned from a customer’s bank due to NSF. You can resubmit transactions returned as NSF or uncollected funds up to two additional times for a total of three submissions. Continued attempts can result in a fine and possible sanctions from Nacha.

All unsuccessful eCheck transactions returned through the ACH network includes a return code to indicate the reason for the return. You are responsible for taking any appropriate action when eCheck transactions are returned. The amount of each return is posted to your eCheck settlement account and statement.

eCheck Chargebacks

For transactions made from personal checking and savings accounts, Nacha grants 60 calendar days during which a customer may return a charge item erroneously posted to the customer’s bank account. The 60-day window begins the day the bank first made its statement with the transaction listed available to the customer.

IMPORTANT

If your eCheck return rates exceed Nacha thresholds, Nacha might require additional information. You will be notified by Cybersource and must immediately respond and become compliant. After becoming compliant you must maintain compliance for the next 180 days. If you cannot reach and maintain compliance, your account might be terminated.

Nacha Thresholds for eCheck Returns
Return Type	Nacha % Threshold	FNBO Volume Threshold	Days to Comply	Maintenance Period
Unauthorized	0.50%	5 items	30 days	180 days
Administrative	3.0%	15 items	60 days	180 days
Total	15.0%	25 items	60 days	180 days

Take precautions to minimize the risk of losses when using the eCheck service. To reduce the potential for chargebacks, you must ensure that you are receiving the proper payment authorization prior to processing an eCheck transaction. You may also want to consider waiting to ship goods until after eCheck transaction proceeds are deposited in your merchant bank account (following the required Cybersource holding period).

eCheck Credits and Refunds

You may issue credits and refunds for eCheck transactions. The following requirements apply:

The original eCheck transaction must have been processed through the Payment Gateway.

eCheck refunds must be submitted with the transaction ID of the original eCheck transaction.

The amount of the refund must be less than or equal to the amount of the original transaction.

The sum of multiple refunds submitted against the original transaction must be less than or equal to the amount of the original transaction.

Your eCheck settlement sub-account must contain available funds (funds that are no longer in the holding period) to cover the refund. If your account does not contain sufficient funds, the refund is rejected.