Batch processing overview
When borrowers give their bank account information to a lender and authorize them to make a payment, the lender has to go through the process of communicating with banks so the money gets moved from the customer's account to the lender's. Some lenders enlist the help of payment processing companies, but others choose to handle it themselves through batch processing.
What is batch processing?
Batch processing involves taking information for a large number of transactions (like the borrower's name, account number, and routing number) and formatting them in a single file. These files are specially formatted so that banks can take in the data accurately.
In the United States, banks use Nacha files, which are regulated by an independent group called the National Automated Clearing House Association (Nacha). In Canada, they use CPA-005 files, which are regulated by the Canadian Payments Association (also known as just Payments Canada). Since the Canadian system was based on Nacha, they both work in a similar way, but do have distinct files and batching requirements.
Batch processing with LoanPro
LoanPro supports batch processing in the U.S. and Canada.
In either case, the process in LoanPro is simple.
- Create a processor. Before logging any payments, you'll need to create a Nacha or CPA-005 payment processor in LoanPro. (We're using the same name here, but don't be confused—these are still batch processing tools, not payment processing companies.)
- Assigns borrower accounts to them and make payments. Loans and lines of credits can be assigned to your batch processors manually, or through automations.
- Batch the file and send it to your bank. Secure Payments automatically batches transactions and generates Nacha or CPA-005 files. From there, we can automatically send them to a specified secure location your bank can access, allowing you to streamline your process.
- Receive return files from your bank. Once your bank receives the file, they'll move money between accounts through banking networks. If any payments fail, they'll send you a return file, noting which payments failed and why. LoanPro can automatically take actions based on those returns, like notifying borrowers or cancelling AutoPays.
And only that first step requires human input; the rest can all be automated, fully streamlining your payments process. For more detail on the specific steps, check out our articles on Nacha and CPA-005.
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