What is POP?

What is Point-of-Purchase (POP) and How Does it Work?

Point-of-Purchase (POP) is the standard entry class code that gives consumers and businesses the ability to convert paper checks into electronic payments at the point-of-purchase (e.g., the store’s register.) The voided check is handed back to the consumer after it has been scanned, and the consumer signs an authorization form.  The consumer may opt out of check conversion, at which time the merchant may choose to offer an alternative payment option. 

The check acts as the source document. The MICR information from the paper check is captured by a MICR reader, and the information is used to process a one-time ACH debit to the consumer’s bank account.

How Does POP Work?

1. Consumer presents a merchant with a check.
2. Merchant runs the check through a MICR reader, capturing all pertinent information.
3. Merchant key enters the amount of the transaction and other pertinent consumer data.
4. Authorization is printed, similar to the authorizations printed in other Point-of-sale transactions.
5. Consumer signs the authorization and keeps a copy as a record of the purchase.  The authorization and the receipt may be combined into one document.
6. Merchant returns the check to the consumer marked or stamped “VOID, Not Negotiable”.
7. Merchant initiates a one-time ACH debit transaction with its financial institution (ODFI).

Source: Federal Reserve Board Financial Services Policy Committee website

Click here for more information on Accounts Receivable Conversion (ARC) and Back Office Conversion (BOC). See the FRB's comparison of BOC, ARC, and POP. NACHA has published a Guide to Implementing a Back Office Conversion Entry Program, which is available from the NACHA website.

Preparing for and Using BOC

The FRB also has prepared information for merchants on handling BOC.

• Benefits for Merchants (PDF, 27 KB, 02/07)
• BOC Education and Ways to Streamline Transition (PDF, 31 KB, 02/07)

See also

• Check 21 changes - a fundamental change is occurring in the world of checks, for both businesses and banks
• remote capture with remote deposit - ChekDirect solves the problem simply
• remote capture without remote deposit- TEKScan provides one-sided scanning for simple microfilm or photocopying replacement
• back office conversion - TEKScanRC helps you collect the information needed to package information for ACH clearing
• ACH - ACHLink connects your check scanner with the ACH network
• check scanner choices - single feed or batch scanning, one- or two-sided scanning. Digital Check. Canon. Magtek.
• check imaging solutions - the ChekScan suite of products offers a variety of check imaging software, from stand-alone to networked to enterprise
• software/feature checklist - which ChekScan software product best meets your needs? our checklist can help you decide
• ChekScan testimonial - Digital Check thinks highly of our products; see why

Contact us for more information.