Electronic Clearing House to Power Point-of-Sale Check Service Program.

Business Editors

AGOURA HILLS, Calif.--(BUSINESS WIRE)--July 16, 2001

Beta program scheduled for July launch using ECHO's ACH technology

and National Check Network (NCN) check writer database

Electronic Clearing House Inc. (Nasdaq:ECHO), a leading provider of electronic payment services, today announced that the company has been certified as a third-party, acquiring processor for a new point-of-sale (POS) check service that is being piloted by Visa U.S.A.

The Visa POS Check Service process allows financial institutions participating in the pilot to offer merchants the ability to convert checks from any financial institution into electronic funds transfer items at the point of sale. If the check writer's financial institution has chosen to participate in the Visa POS Check Service pilot, the account balance is immediately authorized for the merchant by the participating bank. Under the terms of the agreement, checks from financial institutions that have chosen ECHO as their third-party processor will be routed to ECHO's ACH processing system and the NCN database, which will provide the critical infrastructure to enable electronic conversion, verification and guarantee of such checks. Starting in July 2001, several major financial institutions that have chosen ECHO as their third-party processor will initiate their participation in the pilot program for Visa's POS Check Service.

The POS Check Service represents a major new initiative by Visa to enable merchants to receive direct online authorization for checks written against consumer demand deposit accounts, similar to the authorizations provided for credit and debit card transactions. A merchant will be able to convert a paper check automatically to an electronic transaction and will have the option of either verifying availability of funds or guaranteeing payment on the check. Once authorization is obtained, the customer is required to sign a separate sales receipt authorizing the conversion of the check transaction to an electronic transaction. The merchant then voids the paper check and returns it to the customer along with his or her signed sales receipt.

Benefits to the merchant include the ability to accept checks with confidence and reduce the costs and hassles of processing paper checks. Industry research shows that personal checks are used in approximately half of all personal consumption expenditures, yet less than one percent were converted to electronic transactions. In 2000, consumers wrote approximately 19 billion personal checks at the point of sale, costing merchants an estimated $23 billion in check handling, fraud costs and losses.

"We are very excited to be working with Visa U.S.A. on this very important, far-reaching initiative," said Joel M. Barry, chairman and CEO of Electronic Clearing House Inc. "Despite the growth of electronic payments, many Americans continue to prefer the convenience and control of a personal check. This service will expedite the check out process, provide consumers with greater flexibility, and could reduce check processing costs for banks and merchants. For ECHO, this agreement allows us to participate in what we anticipate will be a rapidly growing revenue stream by providing check verification and guarantee services for consumer checks that are not written against participating banks. In addition, we plan to aggressively market the POS Check Service to selected businesses where large-ticket check transactions are frequent, so as to allow them to mitigate bad check risk at a very reasonable cost."

VisaNet, Visa's processing system, currently processes transactions for about 5 million U.S. merchants and 90 percent of the demand deposit accounts in the country. In the case of checks written on an account at a financial institution participating in the POS Check Service pilot, the check will be authorized directly by that bank. However, for financial institutions that have chosen ECHO as their third party processor and where the check is written on an account at a non-participating bank, the check will be verified against 48 million known checking accounts stored in ECHO's NCN database.

Verification significantly reduces the risk of fraud or loss to the merchant. Under the guarantee option, the check is purchased from the merchant at a discount, completely eliminating the risk of loss. The NCN database is updated on a daily basis by some 280 participating collection agencies. For this reason, NCN is one of the most accurate, comprehensive and timely sources of check writing information available to merchants.

About ECHO:

Electronic Clearing House Inc. provides a complete solution to the payment processing needs of merchants, banks and collection agencies. ECHO's services include debit and credit card processing, check guarantee, check verification, check conversion, check re-presentment, check collection, and inventory tracking. Customers include more than 60,000 retail merchants and U-Haul dealers across the nation.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, but are not limited to, such factors as successful completion of the Visa POS check service pilot program, acceptance of the service by Visa member banks, fluctuations in demand for the company's products and services, the introduction of new products and services, the company's ability to maintain customer and strategic business relationships, technological advancements, impact of competitive products and services and pricing, growth in targeted markets and other information detailed from time to time in the company's filings with the United States Securities and Exchange Commission.