To ensure the business is sustained in the long run and to identify and stop fraudulent merchants and consumers very early on, Electracash has recently enhanced most business areas, including implementing a new accounting system, establishing thorough credit review requirements before accepting merchant and affiliate applicants, and instituting comprehensive risk management procedures.  A brief summary of Electracash's consumer and merchant fraud management practices is provided below.

Every ACH sales transaction processed by Electracash undergoes various verification processes to weed out fraud and help ensure the merchant is being paid appropriately for the goods and services rendered. These practices include:

• Routing and transit/ABA number verification
• Account number structure validation
• Account number verification that covers approximately 40% of all checking accounts in the U.S.
• Proprietary positive and negative files
• In some cases, “pre-notification”, a non-monetary ACH convention where Electracash sends the transaction to the RDFI to identify the account validity.  This feature can be turned off for certain applications.  

Merchants are required to maintain a “Holdback” with Electracash at all times. These funds are maintained by Electracash in a separate account known as the Deferred Contingent Holdback Account, which may be commingled with funds of other merchants, and does not bear interest. Generally, the Holdback amount is set to be equivalent to approximately one month of average ACH sales dollar volume for that specific merchant.

Merchants may choose between three methods of establishing an appropriate level of deferred contingency:

• A percentage of each sale transaction withheld until the target amount is reached
• A bank Letter of Credit provided to Electracash in the target amount
• A cash deposit provided to Electracash in the target amount

The establishment of exposure limits is a technical requirement specified in NACHA regulations. Electracash has monitoring systems that warn of extreme spikes in usage. In the event such a spike occurs for any single merchant, Electracash's policy is to contact the merchant to ascertain whether the spike is an unexpected, questionable event.

The exposure limit requirement is specified in Electracash's ACH Processing Agreement, based on (1) a combination of the highest volume conducted over a four-day period (to account for volume peaks), (2) a reasonable percentage of estimated uncollected items at any one time, and (3) the dollar amount of deferred contingencies -- on a per merchant basis. Electracash seeks merchant agreement on the amount set, and reviews as necessary to accommodate growth in the merchant's ACH sales. Exposure limits are enforced in real-time.

Electracash adheres to strict electronic payments/Internet security standards. We have  security policies and procedures in place to ensure that customer account data is not compromised, including:

• 128-bit SSL encryption on all connections that transmit sensitive data
• Password-managed sites
• Multiple tiers of firewall protection
• Completely redundant Internet connections, database servers and web servers
• Secure sites for transaction capture capability on both electracash.com and electracash.net
• Meets all US and Canadian federal regulations
• Meets all NACHA banking and data security requirements