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Identifying Checks Ineligible for Conversion
Certain categories of checks continue to be excluded from eligibility for conversion including: Home Equity Lines of Credit; checks drawn on investment companies; U.S. Department of Treasury checks; Federal Reserve Bank, Federal Home Loan Bank; and checks drawn on state or local governments.
The most recent change to the NACHA Operating Rules establishes clear guidelines for identifying business checks ineligible for conversion to electronic transactions, including:
- Checks that contain an auxiliary on–us field (PDF) in the magnetic ink character recognition (MICR) line are ineligible for conversion. Such checks can be readily identified because they are nine inches long, compared to the standard six inches for consumer checks.
- Checks valued at more than $25,000 are ineligible for conversion. In practice, virtually all such checks are business checks, and the dollar limit will ensure that checks sent to wholesale lockboxes are not converted.
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