This article details the general process of patient ACH and CC payments and what that process looks like in Waystar. The article will describe authorization responses, when to expect payments to post, and will provide an overall understanding of the merchant services process.
This article covers the following topics:
- The Transaction Process: Authorization & Settlement
- Processing Rates
- Miscellaneous Fees
- Voice Authorization Fees
- Transaction Failure Messages
- ACH Check Conversion
- ACH Timeline
- Processing an ACH Check Conversion Transaction
- Voiding an ACH Transaction
- Exception Processing
- Settlement and Deposit of Funds
- ACH Return Codes
- Charging Credit Cards
- Charging ACH Accounts
- How long does it take for an approved ACH check transaction to deposit into my bank account?
The Transaction Process: Authorization & Settlement
An authorization is a permission by the Issuing Bank to accept a credit card for payment. Authorization is obtained by swiping the card through the card swipe or by manually entering the card number and expiration date into the Collections Terminal. The transaction is then sent electronically to Elavon. When a transaction is authorized, the Patient Payments Collections Terminal receives an approval code, stores the code, and automatically opens the Receipt window to enable printing of the customer receipt. For face-to-face transactions, it is recommended that you retain a signed copy of the Customer Receipt for at least 18 months.
There are two ways to process an authorization:
- Face-to-Face Transaction: In a face-to-face transaction, the cardholder is present with their credit card in the merchant’s establishment at the time of the sale. The merchant swipes the card through the card swipe device, which reads the magnetic stripe on the back of the card. That stripe contains the card number and other identifying information. Sometimes the magnetic stripe on a card becomes damaged and the terminal cannot read the information, or the merchant does not have a card swipe machine. In that case, the merchant can make a physical imprint of the card to prove it was present at the time of the sale. The card number and expiration date are manually keyed into the terminal for authorization along with the cardholder’s ZIP code. This is referred to as a “key-entered” transaction.
- Mail or Telephone Order (MOTO): In a Mail Order or Telephone Order transaction, the cardholder places an order by mail or phone. The cardholder is not present at the merchant’s establishment at the time of the sale (also referred to as a “Card Not Present” transaction). The merchant keys in the card number. The merchant verifies the cardholder’s address by using the Address Verification Service (AVS). This is accomplished by entering the cardholder’s ZIP code.
Authorization Responses When an authorization request is submitted, the issuer can send back one of seven responses to a merchant:
- Approved: The payment has been approved for processing, but the funds have not yet been deposited into the user’s account.
- Declined: The payment has been declined.
- Funded: The payment has been approved and funds have been deposited. Note: Transactions will be updated to funded status one day after the associated bank account has received the funds.
- Returned: The payment has been returned through the user’s account.
- Call Authorization Center: While the transaction has been approved, users must contact the number listed to obtain an authorization code to manually enter and process the payment.
- Failed: The payment failed due to connection or user error. The transaction must be resubmitted.
- Voided: Payment was voided (canceled) the same business day as the original payment by a user on the account.
After transactions are authorized, they must be “settled” in order for the merchant to be paid for them. Settling a transaction through the Patient Payments Collections Terminal is referred to as Electronic Draft Capture (EDC).
The details of each transaction are sent to the Issuing Banks of the credit cards that have been accepted. This is called processing. At the end of the day, the merchant sends the transactions in the terminal in a batch to the Elavon Host.
This is called closing or settling the batch. These transactions are accumulated and stored on the Elavon Host system and automatically submitted for payment 7 days a week at approximately 2:00 AM ET for all transactions approved in the previous 24 hours.
Elavon’s Merchant Accounting System sends approved and settled transactions through the Interchange system and then sends a message to the Automated Clearing House to pay the merchant for the transactions.
The Automated Clearing House (ACH) is a funds transfer system governed by the rules of the National Automated Clearing Houses Association which provides for the inter-bank clearing of electronic entries for participating financial institutions. The Federal Reserve Bank is the primary ACH operator processing entries between financial institutions, and it facilitates the electronic transfer of funds for the transactions to the merchant’s bank.
The funds are deposited into the merchant’s checking account, or Demand Deposit Account (DDA). The merchant now has the money for the transactions. Visa, MasterCard, and Discover transactions are deposited together into the merchant’s DDA Account on the second business day following the transaction. American Express transactions are deposited directly by American Express and will post one day later.
Here are examples of how an ACH payment would go through the posting transaction process
Here is an example of how a CC payment would go through the posting transaction process
Credit and Check Card processing rates result from many factors; the various combinations of these factors are called Interchange Categories (Visa & MasterCard combined have over 225 Interchange Categories). Credit card processors use several methods to present their rates to customers. Some simply show the lowest “qualified” rate and do not mention that most transactions won’t qualify. Others try to simplify the pricing by bundling or combining all the Interchange Categories into four or five tiers. Although this may reduce the number of rates and fees presented to the merchant, it also tends to increase the cost to merchants, who typically end up paying the highest rate for all categories in each respective tier.
Three primary features of the Patient Payments Collections Terminal allow provider merchants to qualify for the lowest rate possible:
- The transaction with the lowest cost is one where the card is swiped, and our customers need only an inexpensive card swipe rather than an expensive full-featured terminal to qualify for this rate.
- If a card cannot be swiped (back office, telephone, web payments), the Collections Terminal should require that the ZIP code be entered, which qualifies for a lower rate when a card cannot be swiped.
- Finally, your Patient Payments Collections Terminal will automatically close out and settle all transactions at the end of each day. This avoids higher charges for delayed settlement. Our pricing model also provides you with full funding; you receive credit for the total transaction amount and your fees are billed monthly by our processing partner Elavon.
In addition to charges for each credit/check card transaction, miscellaneous fees may be charged to the merchant for specific incidents that may occur during the normal course of accepting and processing card transactions. These fees and their amounts are typical for the transaction processing industry. In our experience, the unique characteristics of the healthcare industry and the Patient Payments Collections Terminal mean our providers will rarely if ever incur these charges, but we are required to provide notification of these fees to all merchants. If charged, these fees will appear on the Elavon Monthly Statement.
- Chargeback Fee: A chargeback is a transaction disputed by a Cardholder or Issuer. The most common reasons for a Cardholder dispute include dissatisfaction with the quality of merchandise or services received; failure to receive merchandise or services; a questionable transaction; a processing error by the Merchant’s staff; unauthorized use of a Card; or the Cardholder’s inability to recognize the charge as listed on their credit card statement. When a chargeback occurs, the Merchant’s account is debited the amount of the disputed charge along with the Chargeback Fee. There is a dispute process whereby the Merchant can have the chargeback reversed and the transaction amount and fee credited back to the Merchant. Elavon staff will work with the Merchant to assist in this process.
- Retrieval Fee: A Retrieval Request is made by the card issuer on behalf of a Cardholder for a copy of the transaction receipt. This most often occurs when a Cardholder loses his or her copy of the receipt, does not remember the transaction, or questions the transaction for any reason. The merchant will receive a request from Elavon to provide a copy of the signed receipt. This request will arrive by fax and by mail. The merchant is required to submit the receipt copy to Elavon within a certain number of days. An Elavon representative will typically follow up by phone call to the merchant if the receipt copy is not returned promptly. The Retrieval Fee is charged to the merchant only in those cases where the merchant fails to respond to the Retrieval Request by the deadline.
- DDA/DBA Change: Whenever a merchant needs to change the bank account for the deposit of credit card sales proceeds or change the account for the billing of merchant fees, or change the DBA Name of the merchant, Elavon charges a $20 fee to make these changes in their system and Waystar passes this fee to the Merchant.
- NSF/Returned Item Fee: Most transactions between Elavon and the Merchant are credited into the Merchant’s account for credit card sales. However, debits are made to the account (usually once a month) for any processing and/or miscellaneous fees. If there is not enough money in the account to cover this debit, the debit will be returned to Elavon unpaid as an NSF. Elavon will then contact the Merchant to make sure funds are promptly deposited to cover the debit, and the debit will be resubmitted along with a $20 NSF fee.
Voice Authorization Fees
A Voice Authorization occurs when a Merchant calls the Voice Authorization Center at Elavon, provides Cardholder and purchase information over the telephone, and receives an Authorization Code for the transaction. This typically occurs when a Merchant cannot process a transaction through the normal channels because of a system outage or inability to connect electronically to the authorization center. A Voice Authorization may also be necessary if the Merchant feels the transaction may be suspicious or is unsure how to handle a unique problem or issue when attempting to process a transaction.
It is rare in the healthcare field that voice authorization is required. If a healthcare provider Merchant is having trouble gaining approval for a transaction, the provider typically asks the Cardholder to provide another card or method of payment. However, if the Merchant does need to receive a voice authorization, the fee varies depending upon the specific characteristics of the transaction and authorization.
- Voice Authorization with Touchtone: An authorization is requested using a touchtone phone without speaking directly to an Elavon representative
- Voice Authorization with AVS: The same as touchtone authorization, but with the additional verification of the customer’s ZIP code.
- Voice Authorization: Operator Assisted: Request for a transaction authorization that requires the Merchant to speak to an Elavon representative.
- Voice Authorization-Operator Assisted with AVS: Request for an authorization that includes verification of the customer’s ZIP-code and requires the Merchant to speak to an Elavon representative. • Voice Authorization-Bank Referral: A situation wherein the merchant is having trouble processing a transaction, calls the Authorization Center for a Voice Authorization, and the situation dictates that the Elavon representative connect the call to the Cardholder’s Issuing Bank for approval.
Transaction Failure Messages
- Declined: Transaction has been declined. Ask for another form of payment.
- Declined PICK UP CARD: is a response sent by the issuing bank that indicates the card is no longer honored by the bank. You can have the customer call his or her bank that issued the card.
- Call Auth Center: This message means that the Issuing Bank requires more information before it will approve the transaction. You can call Elavon’s Authorization Center at 800-834-0409 or have the customer call his or her bank that issued the card. After this message is received, you have 1 hour to call Elavon's Authorization Center to obtain an authorization code. After obtaining the code, hover over the transaction and click "force." Then, enter the code when prompted. This will force the transaction to process.
ACH Check Conversion
Our check processing feature converts check payments into electronic transactions for deposit directly into your bank account using an Automated Clearing House (ACH). It supports front-office (point-of-service) and back-office transactions, pay-by-phone, mail-in, and web payment applications.
The feature also enables you to verify if the checking or savings account being used for any specific transactions is an open, active account with a positive balance. Forte Payment Systems is our processing partner for ACH check conversion. Their powerful processing platform – PaymentsGateway – is among the best in the industry for processing ACH transactions.
Use ACH Check Conversion to:
- Accept patient checks for face-to-face payment by scanning the check and converting it to an electronic transaction, at which time the check is voided by the provider and returned to the patient.
- Accept patient checks through the mail and process them by scanning the check and converting it to an electronic transaction, which allows remote deposit into your bank account.
- Accept one-time payments via phone or through your website from a checking or savings account.
- Set up recurring payments by debiting a patient’s checking or savings account on a scheduled basis.
A unique feature of Waystar’s ACH Check Conversion feature is the availability of Forte’s ATM Verify product.
ATM Verify checks the patient’s bank account against a database of more than 200 million bank accounts from most major financial institutions, updated each business day. If the patient’s account is listed in the database as being overdrawn, closed, frozen, suspended, or non-existent, the transaction will be declined. In addition, if the bank account is located at BB&T, Union Bank, or First Citizen of the Carolinas, the verification will be approved only if the account is open and has a positive balance in the account.
The Rules & Regulations governing ACH Check Conversion cannot be completely addressed in this user guide. Additional information is available through publications and websites found on Forte’s corporate website (http://forte.net/).
Each type of ACH check conversion transaction has unique requirements and time frames for return, revocation, or Stop Payment of a transaction. In most cases, the consumer has 60 days to dispute the transaction.
ACH Check Conversion Basics
Basic ACH Check Conversion requirements apply regardless of how and where the transaction is initiated.
- Originator: Generally the provider merchant
- ODFI: Originating Depository Financial Institution (Forte’s bank)
- Receiver: Person or business who authorized an originator to initiate a charge or refund (usually the patient)
- RDFI: Receiving Depository Financial Institution (the patient’s or payer’s bank)
Types of Checks/ Transactions Eligible
- Consumer or business checks drawn on U.S. banks in U.S. dollars not exceeding $25,000
- ACH debits (money from patients or other payers) and ACH credits (payments to patients or others)
- One-time payments or recurring payments
- Transactions in which a physical check is presented for payment
- Transactions in which a debit or credit is authorized to a checking or savings account, by phone or web
Types of Checks/ Transactions Not Eligible
- Third-party checks • Amounts greater than $25,000 for any single transaction
- Money Orders, Travelers Checks, Credit Card access checks, Home Equity line checks
- Checks with an Auxiliary On-Us Field (more details later in this section)
- Transactions not specifically authorized by the Receiver (the Patient or Payer)
Day 1: Submission Date: Originator (merchant) submits the transaction to Forte via real-time, batch, or items that are scheduled to go out. This is the submit date. To be effective the following day, all transactions must be received by 7:30 PM ET.
- A transaction can be voided only on the same day the original request is authorized, up until 7:30 PM ET. Transactions are settled every business day at 7:30 PM ET. Any transactions that occur after that time can be voided up until 7:30 PM ET the following day. To void a transaction, go to the Patient Payments Transactions screen, locate the transaction, and click the Void button at the bottom of the transaction row. A popup will ask for confirmation that you wish to void the transaction. Click Yes or No as applicable.
Day 2: Effective Date: Early in the morning the transaction is presented to the RDFI (customer’s bank). The 48-hour period in which the banks have to inform the originator that the item did not pay begins. If the account is closed or is invalid, many banks can send a rejected item notification to the Federal Reserve on this day.
Day 3: Deadline for Returns: By the end of the day, all returned items must be sent by the RDFI to the Federal Reserve. Items that were rejected on Day 2 are received from the Federal Reserve through the ODFI (Forte’s originating bank). Forte compiles this data and reports it back to the originator.
Day 4: Last Day of Returns: The last of the returned items are received and the originator’s reporting is updated to reflect that. Forte sends a credit to the originator for items that have cleared.
Day 5: Funds Available: Originator’s bank receives the credit from Forte and applies it to the originator’s account. This typically occurs before the bank opens and funds are available immediately.
Settlement and Deposit of Funds
ACH rules allow the RDFI (patient’s bank) a specific number of days to approve and fund the transaction or to return the transaction. As a result, it generally takes four to five business days for the proceeds from an ACH transaction to be deposited into your bank account. Depending upon the patient’s bank and the time of day the transactions were processed, not all ACH transactions originated on a particular day will necessarily be deposited into your bank account on the same day.
In rare cases, it is possible that a deposit is made to your account and then the patient’s bank returns the transaction, at which point the amount of the original deposit is withdrawn from your bank account
Processing an ACH Check Conversion Transaction
Before you begin to process an ACH transaction, be sure you have established your User Preferences, set Account Preferences, and customized the Customer Transaction Receipt.
Depending on User Preference and the specifics of each transaction, the ACH transaction is processed as
- Check Scan: a physical check is presented to the provider and scanned with the approved Mini MICR Check Scanner.
- Manual Entry: a physical check is presented to the provider and a scan is attempted but fails more than once, at which point the check information is key-entered.
- Check by Phone: the transaction is key-entered into the terminal and no physical check is present
Voids and Refunds (credits) for ACH check transactions are very different from Voids and Refunds for credit card transactions. ACH check transactions can be settled multiple times during the business day, and once settled, it takes several days for the funds to be deposited into your bank account. It is difficult to determine if a transaction can be voided through the terminal or if it can be voided manually by contacting the ACH directly. In some cases, it cannot be voided at all.
Voiding an ACH Transaction
A void is the cancellation of a transaction already authorized and approved. A void is performed if the transaction was processed incorrectly or the customer changes his or her mind after the original transaction is completed.
An ACH transaction can be voided only during the same day the original transaction is authorized, up until 6:00 PM ET. Transactions are settled every business day at 7:30 PM ET. Any transactions that occur after 6:00 PM ET can be voided up until 6:00 PM ET the following day.
When a specific transaction cannot be voided, the customer must allow the original transaction to clear and be deposited into the provider’s bank account, at which time the provider can issue a refund (credit) for the amount of the original transaction.
ACH Return Codes
The following is a list of all ACH return code numbers and their definitions: