UNITED STATES
                      SECURITIES  AND  EXCHANGE  COMMISSION
                             Washington, D.C.  20549
                                -----------------
                                    FORM 10-K
                                        
                                ----------------
  X       Annual Report Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended Sept. 30, 1997      

          Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission File Number 0-15245
                      
                         ELECTRONIC CLEARING HOUSE, INC.
             (Exact name of registrant as specified in its charter)

          Nevada                                  93-0946274
   (State or other jurisdiction of              (IRS Employer
    incorporation or organization)               Identification No.)

            28001 Dorothy Dr., Agoura Hills, California   91301-2697
              (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code:  (818) 706-8999
                    -----------------------------------------
           Securities registered pursuant to Section 12(b) of the Act:

                                          Name of each exchange
         Title of each class               on which registered
                None                              None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  
Yes  X   No    

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the 
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.        


The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on December 
22, 1997 as reported on the NASDAQ National Market, was approximately $0.94. 
Shares of Common Stock held by each officer and director and by each person 
who owns 5% or more of the outstanding Common Stock have been excluded in 
that such persons may be deemed to be affiliates.  This determination of 
affiliate status is not necessarily a conclusive determination for other 
purposes.

As of December 22, 1997, Registrant had outstanding 14,976,541 shares of Common
Stock. 

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Stockholders for the fiscal year ended 
September 30, 1997 are incorporated by reference into Parts II and IV.  
Portions of the Proxy Statement for Registrant's 1997 Annual Meeting of 
Stockholders to be held February 4, 1997 are incorporated by reference in 
Part III.
<PAGE>

                                        
                         ELECTRONIC CLEARING HOUSE, INC.
                          1997 FORM 10-K ANNUAL REPORT


                                TABLE OF CONTENTS


PART I.                                                         Page

Item 1.          Business. . . . . . . . . . . . . . . . . . . . . 3
Item 2.          Properties. . . . . . . . . . . . . . . . . . . .18
Item 3.          Legal Proceedings . . . . . . . . . . . . . . . .18
Item 4.          Submission of Matters 
                 to a Vote of Security Holders . . . . . . . . . .18


PART II

Item 5.          Market for Registrant's Common Equity and 
                 Related Stockholder Security Matters. . . . . . .19
Item 6.          Selected Consolidated Financial Data. . . . . . .20
Item 7.          Management's Discussion and Analysis of 
                 Financial Condition and Results of Operations . .21
Item 8.          Financial Statements and Supplementary Data . . .25
Item 9.          Changes in and Disagreements with Accountants 
                 on Accounting and Financial Disclosures . . . . .25

PART III

Item 10.         Directors and Executive Officers of the 
                 Registrant. . . . . . . . . . . . . . . . . . . .26
Item 11.         Executive Compensation. . . . . . . . . . . . . .29
Item 12.         Security Ownership of Certain Beneficial 
                 Owners and Management . . . . . . . . . . . . . .32
Item 13.         Certain Relationships and Related Transactions. .34

PART IV

Item 14.         Exhibits, Financial Statement Schedules, and
                 Reports on Form 8-K . . . . . . . . . . . . . . .35


<PAGE>


                                     PART I

ITEM 1.     Business

General
                 
Electronic Clearing House, Inc., ("ECHO") is a provider of hardware and
network services to customers on a national scale, specializing in merchant
credit card processing and equipment rental inventory management. ECHO has
expertise in:

                 1)  Point-Of-Sale ("POS") hardware and software design; 
                 2)  Communication networks; and
                 3)  Data center management services. 

The most common application of the Company's expertise is seen in its credit
card processing services which allows merchants to accept credit cards in
commercial transactions.  In providing these services, the Company 1)
electronically authorizes and deposits funds into the merchant's bank account
utilizing the data center and electronic funds transfer capabilities developed
by the Company; 2) moves credit card data from the merchant site to the ECHO
data center over one of several communication networks managed by the Company;
and 3) sells or leases a POS terminal to a merchant that operates using
software provided by the Company. 

The Company has expanded the use of its expertise to the application of
inventory and compensation tracking, and is presently providing this service
solely to U-Haul International. Under this application, the Company 1) sells a
terminal designed and manufactured by the Company that utilizes software
developed by the Company to track dealer inventory, generate reports as
desired by the dealer and calculate both dealer and U-Haul compensation; 2)
manages the transmission of dealer data to the Company's data center over
several communication networks, and 3) evaluates the data and distributes it
to the appropriate location in the United States, thereby allowing rental
reservations to be taken by other dealers in advance of the physical equipment
arriving at the new location.    

The Company currently operates four active subsidiaries, all wholly-owned by
the Company, to coordinate its business activities.

       National Credit Card Reserve Corporation ("NCCR") provides all data
       center and customer service activities relating to transaction
       processing services which include electronic credit card authorizations,
       electronic fund transfers ("EFT"), inventory tracking for U-Haul and
       electronic deposits utilizing the Automated Clearing House ("ACH"), for
       merchants, banks and other customers.

       ECHO Payment Services, Inc. ("EPS") leases, rents and sells POS
       terminals and related equipment.

       Computer Based Controls, Inc. ("CBC") designs, manufactures and sells
       POS terminals and related equipment.

       XpressCheX, Inc. provides check guarantee services to California-based
       merchants.

The Company's current growth and profitability is being generated primarily
from its credit card processing, U-Haul inventory tracking activities, and
equipment leasing services (see CREDIT CARD PROCESSING, U-HAUL and LEASING).
In management's opinion, the Company's equipment design and manufacturing
activities have been innovative and have provided added versatility in meeting
customers' needs. The Company's check guarantee services are restricted to
only California merchants (see XPRESSCHEX).

History of Company

The Company was incorporated in Nevada in 1981 under the name Bio Recovery
Technology, Inc.  In January 1986, the Company changed its name to Electronic
Clearing House, Inc. and acquired Electronic Financial Systems, Inc., which
was then engaged in credit card processing. The Company initially provided
only credit card authorizations to retail merchants. In 1982, ECHO developed
the capability to electronically transmit credit card transaction data from a
merchant location to ECHO's data center, thereby eliminating the need for the
merchant to deliver paper drafts to a local bank for processing.  This
electronic transmission capability made it possible for processors and banks
to process credit card transactions for merchants located outside of their
immediate geographic areas.  In 1986, ECHO developed the capability, utilizing
the Federal Reserve System's Automated Clearing House (ACH) to deposit funds
into any U.S. bank of the merchant's choice.  These two developments make it
possible for remote banks and processors to provide the same processing
services previously available only through the merchant's local bank.   

Although positioned well in 1986 to take advantage of its new ACH service on a
national scale, the Company was hampered until 1994 by several unstable bank
relationships that prevented the Company from fully marketing its capabilities
over the ensuing years. Management changes at the bank, bank merges,
unilateral policy changes and poor merchant service by bank personnel have led
the Company to seek different or additional bank relationships.  In 1995, one
of the Company's sponsoring banks experienced major real estate losses, which
required that it seek a capital infusion and motivated the Company to secure
additional banks as primary sponsor banks.  Since the Company cannot eliminate
or control such bank related activities, management believes that the Company
should have two or more participating financial institutions to avoid having
its processing volume restricted by financing limitations and business
policies of participating banks.  Management also believes that prudent
business practices dictate that several bank relationships be obtained to
avoid limitations upon its business operations (see LEGAL and BANK
RELATIONSHIPS).     

Since 1985, the Company has written and maintained software to assure that
common extant POS terminals sold in the marketplace could process over the
ECHO network. In developing the ability to generate the terminal software, the
Company in 1985 purchased CBC, a company that had expertise in computer
control systems. CBC subsequently developed a high performance terminal and a
secure printer that have been used primarily in the money order dispensing
market by American Express and are presently being evaluated for use by the
United States Postal Service ("USPS") under a pilot program awarded to the
Company in November, 1995 (see CBC and USPS). Two patent applications involved
with the Company's printer methodology have been granted (see PATENTS). 

In 1995, a system utilizing CBC's terminal, ECHO's data center, and customer
support services was developed and deployed to 2,000 U-Haul dealers for the
real-time management of rental equipment for U-Haul International. The number
of active dealers under the system grew to more than 6,000 in fiscal 1997 (see
U-HAUL).  

The marketing of the Company's services has been accomplished in four primary
ways: 1) direct sales utilizing an independent sales organization; 2) an Agent
Bank program that allows small banks to offer full merchant processing
services under the sponsorship of ECHO and its primary banks; 3) a referral
program; and 4) Internet Home Page promotion. For fiscal 1997, approximately
69% of new merchant relationships came through the efforts of the independent
sales organization and the balance was divided between the referral and
Internet programs. The Agent Bank program was put on hold temporarily in
fiscal 1997 while one of ECHO's primary banks recapitalized. It is expected
that the Agent Bank program will become a contributor to the source of new
merchant relationships in fiscal 1998 (see MARKETING and INTERNET).   

In early 1996, the Company purchased a business with specialties in
communications, Windows NT programming and the Internet, the world-wide
communications network. Through this acquisition, the Company has been able to
expand its scope of acceptable transaction input devices beyond the
traditional POS terminal to include transactions submitted over a common
telephone and transactions submitted over the Internet (see ECHOTEL and
INTERNET). Through the expertise of the programming and management personnel
resulting from this acquisition, the Company also expanded the tools it makes
available to specific industries to utilize its services. These tools include
ECHOBOX, ECHOCASH, ECHOTRANS, and ECHOBATCH (see SPECIFIC INDUSTRY TOOLS).

The Company continues to put a high priority on research and development ("R &
D") of both equipment and transaction processing solutions to problems faced
by general merchants and/or specific industries in the marketplace (see
RESEARCH). As profitability of the processing activities grows, the Company
intends to dedicate between 3% and 5% of its revenues to such endeavors.   

General Summary

In management's opinion, the Company is technically oriented and has expertise
in POS equipment programming, design and manufacture, communication networks,
and data center transaction processing and management. The Company recognizes
that development and maintenance of these in-house capabilities through the
years and continuing research activities based upon this expertise have
increased the costs of operation, as compared to the Company's competition who
have chosen to out-source these services, and has contributed to continued
years of losses as a Company. However, upon reaching profitable operations,
significant increases in revenues result without significant increases in
expenses. Strategically, having reached the point of profitability in
operations, it is believed that this in-house expertise makes the Company more
capable and viable in the long term and allows the Company to promote, develop
and provide full solutions from both a transaction and equipment viewpoint at
lower costs to the marketplace in a shorter period of time than is normally
the case. The Company intends to focus on providing innovative processing
solutions that combine banking and credit card information, efficient and fast
network communications, a full scope of data center services, real-time
customer support services via 800 access and, as needed, advanced POS products
for select financial markets and/or national clients. 

Credit Card Processing

The Company is a registered Independent Service Organization and Merchant
Service Provider with Visa and MasterCard, respectively. To engage in Visa and
MasterCard processing, a cooperative relationship is required with a bank
which provides necessary sponsorship of Visa and MasterCard transactions. The
Company currently has four primary processing bank relationships (see BANK
RELATIONSHIPS). 

In 1997, the Company's credit card dollar volume increased 28%. For the year
ended September 30, 1997, NCCR accounted for 86% of the Company's revenues. 
NCCR presently provides services to over 14,300 users, including approximately
8,300 merchants and 6,000 U-Haul dealers across the nation. These services
include 24-hour daily credit card processing capability, "800" number access
to customer service personnel and, as needed, various field support services.

Functioning like an electronic utility, NCCR earns a steady stream of
transaction and processing fees while the multiple computers in its processing
center communicate continuously with merchant terminals, and the databases of
Visa, MasterCard, American Express, Diner's Club, Carte Blanche and Discover.
The merchants' POS terminals dial the Company's host computers and receive
credit card authorizations which have been electronically verified for credit
validation and other security considerations.  

Electronic files are then transmitted daily by NCCR to the major credit card
organizations which subsequently transfer funds from the card issuing banks
into one of NCCR's processing banks.  At NCCR's direction, funds are then
electronically moved from NCCR's processing banks and deposited into the bank
of the merchant's choice.  On a typical day, NCCR will make deposits to 450
banks across the nation on behalf of its merchant base.  

In addition to electronic authorizations and deposits into the merchant's bank
of choice, the Company's software programs utilize the POS terminal's
electronic memory to capture transactions, retain data and enable merchants to
review, reconcile and edit (i.e., "correct") transactions from their business
location.  NCCR has been successful in providing various services which
include a terminal loaner program to minimize downtime, frequent sales reports
and information containing reconciliations of a merchant's business activity
and sophisticated security services utilizing the merchant's terminal, the
Company's host computers and field activity.  NCCR utilizes several advanced
telecommunications capabilities involving manageable network design, robust
communications protocols, circuit troubleshooting, and packet switching, in
order to provide consistent and reliable services to its merchants.

NCCR's compensation for credit card processing is derived from two primary
sources, the merchant's discount rate and the merchant's transaction fee. The
discount rate is expressed as a percentage and is the fee charged to the
merchant for the Company's services. Once set, this percentage is deducted
from the amount of each transaction submitted by the merchant and the net
amount is deposited into the merchant's bank account. Discount rates range
between 1.49% and 2.99% and, overall, the Company's average discount rate is
1.90%. 

The transaction fee is charged for each transaction processed and the
Company's average transaction revenue is $0.17 per transaction. The Company
maintains a range up to $0.20 per transaction. 

Over the past several years, industry consolidation has been occurring as
evidenced by the merger of the number one and number three processors in 1995.
Impressive growth in recent years in the credit card processing market has
occurred by firms through portfolio acquisitions. Such a strategy raises
special challenges that involve supporting and integrating numerous processing
methodologies, initiating quality customer support and field support services
and, probably most difficult, maintaining merchant relationships. Merchant
portfolios can be purchased but the merchants who are processing thereunder
are under no obligation to continue to utilize the services of the new owner.
This lack of contractual obligation leads to a persistency problem. The long-
term profitability of such a strategy will center on the ability of the new
owner to bring innovative services to its merchants and its ability to
consistently provide timely quality service. 

The growing profitability of NCCR operations opens the possibility of the
Company considering portfolio acquisitions in the future. The broad technical
expertise of the Company, as described earlier, diminishes some of the
inherent problems faced in pursuing such a growth strategy.  The Company's
data center reliability and the costs associated with communication activities
of NCCR are presently favorable but no assurance or guarantee can be made that
such conditions will continue.  Material changes in these areas could reduce
or eliminate the profitability expected to be seen from NCCR operations.

Under the Imperial Bank processing contract, the bank assumes (and is
compensated for bearing) losses due to unauthorized or fraudulent use of
credit cards.  The First Charter Bank, First Regional Bank and The Berkshire
Bank contracts compensate the Company to assume such potential liabilities for
the unauthorized use of credit card information.  Although the Company has
systems and software for the electronic surveillance and monitoring of
fraudulent credit card use, the Company still could incur substantial losses
as the result of the unauthorized or fraudulent use of credit cards by
unscrupulous merchants, which could, depending on the size of the losses, have
a materially adverse effect on the Company, or cause it to cease operations.
The Company does not maintain any insurance to protect it against any such
losses. Historically, the Company allocates ten basis points (.001) of daily
processing activity as a reserve against any losses that it may sustain due to
such activity.  The Company has approximately $1,025,000 and $289,000 in
reserve against chargeback receivables for the fiscal year ended 1997 and
1996, respectively. The Company sustained expenses of $836,000, and $242,000
against said chargeback losses for the fiscal years ended 1997 and 1996,
respectively.  The Company believes this mechanism of allocating daily from
processing revenues to a reserve to address these obligations when they arise
will be adequate to address the inherent risks associated with merchant
processing.   

Bank Relationships

To engage in Visa and MasterCard processing, a cooperative relationship is
required with a bank which provides necessary sponsorship of Visa and
MasterCard transactions.  The inability of the Company to maintain such a
cooperative relationship with a prior bank in 1989 had a materially adverse
effect upon operations and was the subject of a lawsuit settled in favor of
the Company in 1995. Management changes at the bank, bank merges, unilateral
policy changes and poor merchant service by bank personnel have led the
Company to seek different or additional bank relationships.  Since 1989, the
Company has established and subsequently terminated the sponsoring
relationship with three banks, the most recent in 1994.  In addition, in 1995,
one of the Company's sponsoring banks experienced major real estate losses,
which required that it seek a capital infusion and motivated the Company to
secure additional banks as primary sponsor banks. Since the Company cannot
eliminate or control such bank related activities, management believes that
the Company should have two or more participating financial institutions to
avoid having its processing volume restricted by financing limitations and
business policies of participating banks.  Management also believes that
prudent business practices dictate that several bank relationships be obtained
to avoid limitations upon its business operations. The Company finds that
small banks (assets less than $500,000,000) tend to find its program most
attractive and, despite the uncertainties involved in working with small
banks, the Company does not believe it could secure similar arrangements with
larger banks at this time. Failure to obtain contractual processing
relationships with additional banks could limit and impede future credit card
processing activity and could have a materially adverse effect upon the
Company's operations.

The Company presently has processing agreements and relationships with
Imperial Bank, Los Angeles, California, First Charter Bank, Beverly Hills,
California, First Regional Bank, Los Angeles, California and The Berkshire
Bank, New York, New York. However, there can be no assurance that the Company
will always be able to maintain its present banking relationships or establish
other such relationships, or, if such other relationships are available, that
they can be obtained on terms satisfactory to the Company.  

U-Haul International
 
The U-Haul program began in 1995 after almost a year of development of special
software by the Company. The software operates on CBC's EB920 terminal and
keeps track of available inventory at the dealer's site. The system also
prepares the rental contract between the dealer and the customer and reports
the activity electronically to the home office, thereby eliminating the need
for a U-Haul dealer to manually prepare weekly summary reports of rental
activity. The system tracks all financial data and forwards both rental and
financial data daily to ECHO's data center. ECHO distributes the rental data
on an hourly basis around the nation to the points of destination. This allows
a receiving dealer to accept reservations for rental of the specific equipment
prior to the equipment's actual arrival.   

The Company has capitalized part of its costs associated with the development
of the system and amortizes such costs over three years. Revenues are derived
from equipment sales to U-Haul and income resulting from daily transaction
processing services provided to dealers and U-Haul Corporate. U-Haul
transaction activity and equipment purchases constitute a significant portion
of the Company's growing profitability. During fiscal year 1997, the Company
entered into a three-year contract with U-Haul International which covers
processing services, software development, data distribution, equipment
purchases/warranty, customer support, and consulting.  The new contract,
estimated to generate revenues between $4 and $8 million dollars over the
three-year term, has renewal provisions for extending the term.

ECHOTEL Program
 
Historically, the Company has utilized a POS terminal located at the
merchant's place of business, the industry standard method of data entry. The
purchase of an electronic terminal is sometimes not economically feasible to a
merchant with low monthly credit card volume or to a business that performs
services at their customer's site (e.g., appliance repair, etc.).  To address
the needs of these retail business segments and provide access to electronic
authorization and deposit services without the obligation to purchase
equipment, the Company developed and deployed  "ECHOTEL" (previously called
"Telemerchant"), a program permitting a merchant to submit POS transactions
via any touch-tone telephone. This service utilizes Interactive Voice Response
("IVR") to prompt such merchants through the POS process, providing them with
immediate credit card authorizations.

The Company also intends to exploit its IVR technology to address and automate
specific merchant needs such as ordering supplies and accessing bank account
information on demand. The Company has chosen to market its ECHOTEL and IVR
services through several third parties.  In addition to the possibility that
such parties might not be as effective as the Company desires, the possibility
also exists that the present format of the program may not meet market
expectations or introduce additional chargeback risk to the Company.  Although
not expected, if such becomes the case, the Company intends to make the
necessary modifications in both the product design and marketing strategy to
most closely match market expectations and/or minimize chargeback risk, but
success can not be assured.   
Internet ("Net")

One of the most talked about marketing mediums in publications today is the
Internet, the worldwide network of computers that allows businesses to
advertise their products on an international scale. Customers "browse" or
"Surf the Net", read the advertisement and, if they wish, purchase those
products from their businesses or homes, by use of their computers.

Security of credit card numbers transmitted over the Net has been a recurring
question.  Serious concern exists in the banking industry about unscrupulous
access to a customer's credit card number when it is presented over the Net.
The Company agrees with many of these concerns but finds that the primary
issue that must be solved in order to confidently accept transactions over the
Net is assurance that the merchant subsequently ships the product to the
customer. 

In 1996, Visa, MasterCard and major software development corporations
established a methodology standard for moving transactions over the Net,
called Secure Electronic Transactions ("SET"). SET involves the integration of
several technologies and parties, including the purchaser, the seller, the
bank, the processor and the network service provider. Each segment of the
solution is under development and several fully integrated systems are now
available.  The company intends to be a full participant in the SET community,
but will introduce SET only when the benefits appear to outweigh the costs. In
preparation for SET deployment, the Company has already modified the interface
to its internal transaction processing system to accept transactions via
Transmission Control Protocol/Internet Protocol (TCP/IP).

The SET development notwithstanding, secure mechanisms already exist on the
Net that assure confidentiality of data. 

     Secure Internet Web Services: In the first quarter of fiscal 1997, the
     Company deployed a secure Internet World Wide Web ("WWW") server in
     anticipation of utilizing common commercial WWW browsers and the Internet
     as an additional POS transaction delivery mechanism. The Company has
     therefore been accepting credit card transactions over the Internet since
     January 1997, using a combination of 40 and 128-bit message encryption
     and digital signature standards, as well as proprietary back-end
     technology that offers additional protection to the cardholder and
     merchant. Management believes this combination of technologies offers
     superior confidentiality protection as well as substantial cost
     advantages compared to alternative, WWW-based transaction technologies.
     The Company's service based on these technologies is called ECHONLINE,
     and it is aimed at enabling Internet Service Providers ("ISPs") to submit
     transactions to the Company on behalf of themselves and of their own
     customers.  During fiscal 1997, the Company reached agreements with two
     software developers to develop commercial interfaces to ECHONLINE - one
     for Unix, and one for Windows NT.  The UNIX software is available for
     free, and ISPs that have acquired this software have been able to process
     transactions with ECHO within a week of acquisition.  The Windows NT
     software is available for a modest fee, and ISPs and larger merchants
     that have acquired this software have been able to process transactions
     with ECHO within a day of acquisition.

     Internet Applications System: In order to streamline the process for a
     prospective merchant to apply for a merchant account, the Company
     deployed a WWW application form in the second quarter of fiscal 1997 to
     provide this functionality. Intranet technology is used to help Company
     personnel quickly review these applications and move them through the
     approval process. In addition, the Company has a referral program for
     ISPs and other associates that encourage them to refer merchants to the
     Company.  To assist our associates in tracking these referrals, the
     Company's Internet Application System tags application records using the
     associates own tracking identifier.  Automating the process using this
     back-end technology has encouraged our associates to continue to refer
     potential merchants to ECHO and helped keep Company personnel highly
     productive as the volume of new merchant applications increases.

     Risk Management System:  Tools commonly used over the Internet may be
     invoked to construct an Intranet system that is available for use by the
     Company's employees. In the fourth quarter of fiscal 1997, the Company
     developed a comprehensive merchant risk management system utilizing
     Intranet and positioned the system to operate using neural network
     technology.  This system is now in active use by the Company's merchant
     security personnel, and after extensive in-house beta-testing, the
     Company is contemplating offering this technology for sale as a product
     or service to other financial institutions.  The Company does not have a
     firm schedule for when such a product offering will occur, nor any
     assurances that such an offering will meet with market acceptance.

The Company has highly trained and knowledgeable people who are designing and
managing its Net activities.  Although not expected, if for any reason certain
key people were no longer available to the Company, the Company would have to
look to outside sources for similar capabilities since it does not have
additional technical personnel of similar level.  No assurance can be made
that such expertise would be found and, if found, available to assist the
Company. Additionally, the Net products being developed and introduced are
intended to augment the Company's present processing activities and are
intended to be offered for low entry and low on-going processing costs when
compared to other similar services.  This strategy is intended to draw retail
business relationships presently processing with other providers to the
Company, but there is no assurance such a strategy will be effective or will
be a sustainable pricing strategy in the long-term.  The Company intends to
review this strategy regularly, as a result, and make changes in pricing, if
necessary, based upon actual experience.

Specific Industry Tools 

One of the Company's core beliefs is that the Company must accommodate as many
different "point-of-interaction" entry methods as possible in order to build
the credit card processing services business, while concentrating on those
methods and techniques that will provide the most leverage for the Company. To
these ends, the Company has developed the following tools which it makes
available at no cost to merchants:

     Enabling Vertical Market Third Party Applications: Many industries (e.g.
     restaurants, hotels) rely on third-party-developed applications running
     on PC-compatibles and other equipment to support their point-of-
     interaction needs.  To support these clients, the Company formalized POS
     interface specifications to its host computers, developed a conformance
     certification service/process, and widely encouraged third-party
     developers to use this free certification service and associated
     materials to build the Company's point-of-interaction interfaces into the
     third-party products.

     ECHOBOX: ECHOBOX is a method of bulk transaction submission to an ECHO
     bulletin board system that automatically moves data into an electronic
     check withdrawal procedure, a credit card authorization process or credit
     card deposit for a merchant. 

     ECHOBATCH: To accommodate generic high-volume business opportunities, in
     fiscal year 1996, the Company constructed and successfully beta-tested
     "ECHOBATCH", a fulfillment house-based complement to its popular ECHOBOX
     processing service.  ECHOBATCH runs on standard PC's, resides at the
     fulfillment house, and permits the fulfillment houses to submit multiple
     merchants' data in a highly controlled, secure manner to the Company's
     ECHOBOX service interface.

     ECHOTRANS: To accommodate the growing popularity of PC's as POS devices,
     in 1996, the Company developed "ECHOTRANS", a PC compatible-based program
     for both general merchants and specific high volume magnetic card-swipe
     situations.  This program, in conjunction with a mag-swipe card reader,
     modem, and printer can be used on both standard and portable (lap-top)
     PC's as a POS device.  This program uniquely satisfies certain common
     high-volume sales environments as a result of its ability to be
     customized for ease of use in specific POS situations and to
     asynchronously handle the tasks of card-swipe, processing, and receipt
     printing.

The Company believes that certain industries hold greater processing potential
than others and has designed products and a marketing plan pointed toward
those industries. The effectiveness of the products and of the marketing
programs can not be assured but management is encouraged by the growing
interest and use of these special tools by various merchants.

Computer Based Controls ("CBC")

Equipment Design and Manufacture

Through the years, the Company has developed software which enables the
Company's host computer to interface with terminals of several manufacturers,
the largest of which, Verifone International, is estimated to have a 77% share
of the POS terminal market.  This capability enables the Company to provide
credit card and check guarantee services not only to merchants who buy or
lease the Company's terminals, but also to merchants who use terminals sold
and leased by other hardware competitors of the Company.  

In the early 1980's, the Company's customers used leased terminals from AT&T. 
In the mid-1980's, the Company purchased "Microfone" terminals from General
Telephone and Electric ("GTE") and offered them to merchants by sale or lease
from various financial service companies.  As merchants' processing
requirements outgrew the capabilities of these terminals, the Company
developed and installed proprietary modifications in them to meet customer
needs.  When technical requirements continued to grow, the Company acquired
Computer Based Controls, Inc. ("CBC"), a designer and manufacturer of
commercial electronic systems, to meet its merchants' needs.

Prior to its acquisition in 1985 by the Company, CBC's experience was in the
design, development, and manufacture of computerized products for the
aerospace industry, and automated control systems for welding machines and
other industrial processes.  CBC determined that the Company's product
objectives could best be achieved by applying aerospace technology to
telecommunication equipment. CBC has concentrated its efforts to develop cost
effective equipment which meets the broadest range of existing industry
standards. 

Individual products developed by CBC to meet the Company's needs include:


Description                Model        Comments

Electronic Banker 910      EB910        Replaced the Microfone II POS terminal
                                        and provided greater flexibility at a
                                        competitive price.

Electronic Banker 920      EB92         Replaced the EB910 POS terminal. 
                                        Provided significantly more memory
                                        capacity, ESD immunity, and a faster
                                        modem.  Later upgrades included direct
                                        support for attachment of a PS/2
                                        keyboard.

Electronic Banker 921      EB921        A modified EB920 POS terminal intended
                                        for the US Postal Service Electronic
                                        Money Order Dispenser (EMOD) project. 
                                        Included additional ESD provisions and
                                        a redesigned operating system.

Electronic Banker 100      EB100        A small, low cost POS terminal that
                                        could compete effectively in
                                        environments not requiring the
                                        additional features of the EB920.

Electronic Banker 10       EB10         Utilized a touch screen for graphical
                                        POS applications.

Roll Printer 100           RP100        A patented, high security, 40 column
                                        printer originally designed to meet the
                                        needs of the automated money order
                                        dispenser (AMOD) project.  Also used in
                                        cash advance and gift certificate
                                        applications. 

Roll Printer 100+          RP100+       A patented, high security, 40 column
                                        printer derived from the improvements
                                        made in developing the RP121 printer. 
                                        This printer supports forms up to 8.5"
                                        in length and can reverse to place text
                                        at the extreme edge of a form. 
                                        Designed to meet the needs of automated
                                        money order dispensers, cash advance
                                        and gift certificate applications. 

Roll Printer 120           RP120        A modified RP100+ which includes the
                                        patented "Symbology" bar code reading
                                        technology.  This system will obtain
                                        the printed documents' serial number at
                                        a competitive price.

Roll Printer 121           RP121        A modified RP120 for the US Postal
                                        Service Electronic Money Order
                                        Dispenser (EMOD) project. Included
                                        significant improvements in print
                                        quality and incorporated "Symbology".

PS2 Keyboard Protocol      PS2 
Converter                  Converter    A very small and inexpensive converter
                                        used to interface standard PS/2
                                        keyboards to an RS232 interface.  This
                                        device handles all normal BIOS-level
                                        operations and provides an inexpensive
                                        method of adding a keyboard to existing
                                        applications.


Other products have undergone extensive design by CBC and are in different
stages of  development.  These items include:


Description                 Model          Comments

Electronic Banker 100       EB100          A small, low cost POS terminal
                                           designed to compete effectively in
                                           environments not needing the
                                           additional features of the EB920. 
                                           This terminal is under consideration
                                           for final tooling within the year.

Electronic Banker 10        EB10           A small, high end POS terminal
                                           utilizing a graphical user
                                           interface.  This system is not
                                           scheduled for release and, if
                                           revitalized, would require
                                           significant design revisions not
                                           currently planned. 

Through these various products, CBC created various system solutions to meet
customer needs.  The most significant systems include:


Description                 Models         Comments

AMOD                        EB910 + RP100
                            EB920 + RP100  The AMOD system was purchased by
                                           American Express from 1991 to 1995
                                           to provide a means to electronically
                                           issue and print fully-negotiable
                                           money orders.  The system holds
                                           blank forms in a security enclosure
                                           and prints them as directed by the
                                           agent. CBC has shipped more than
                                           18,000 AMOD systems from 1990 to
                                           1995.
Cash Advance                EB910
                            EB920          The Cash Advance terminal is used
                                           primarily in the gaming industry. 
                                           The system relies on remote credit
                                           authorization.  CBC has shipped more
                                           than 2000 Cash Advance systems from
                                           1992 to 1996.

Cash Advance                RP100          The Cash Advance printer is used
                                           primarily in the gaming industry. 
                                           This system securely prints checks
                                           used within the gaming
                                           establishment.  CBC has shipped more
                                           than 2000 Cash Advance systems from
                                           1992 to 1995.

U-Haul                      EB920 + SK100
                            EB920 + PS/2   The U-Haul system provided a means 
                                           to track compensation and inventory
                                           of rental equipment nationwide on a
                                           daily basis.  In addition, the
                                           system allows credit payment for
                                           rentals through remote credit
                                           authorization.  CBC has shipped more
                                           than 6,000 U-Haul systems from 1994
                                           to 1997.  An additional 3,100
                                           systems will be installed in 1998.

EMOD                        EB921 + RP121  The EMOD system provided a means to 
                                           electronically issue and print fully
                                           negotiable  money orders.  Security
                                           is enhanced by the ability of the
                                           system to electronically sense the
                                           money order serial number directly
                                           from the form itself. The system
                                           holds blank forms in an enhanced
                                           security enclosure. Money orders may
                                           be issued directly from  the EB921
                                           keypad or remotely via the
                                           Integrated Retail Terminal.  175
                                           systems were shipped in 1997.

United States Postal Service ("USPS") Pilot Program

In November 1995, CBC was awarded a contract to design and build 575
Electronic Money Order Dispensers ("EMOD") for the USPS.  The First Article
Test of the EMOD system was approved in February 1997.  In May 1997, 175
"Stand-Alone" EMOD units were deployed in the Dallas, Texas area.

The Company has been informed by the USPS that it will review the pilot
program in January, 1998 and decisions regarding further deployment after the
pilot program will be made at that time. In management's opinion, the EMOD
system will be found to be responsible for significant savings in time and
money for the USPS due to the lower cost of money order issuance and
management relating thereto, and the system's ability to electronically
transfer daily accounting information to regional headquarters, lowering
administrative and accounting costs accordingly.  

Other USPS issues remain concerning securing a printing company that can
economically produce the desired EMOD form stock with the necessary security
components.  The Company has not been informed by the USPS of any further
decisions regarding further deployment after the pilot program has completed. 
There are some indications made by USPS personnel that some number of units
will be deployed to contract sites to provide the ability to electronically
submit daily accounting information.
 
Patents
The Company presently has two patents with respect to certain of its
proprietary technology; however, there can be no assurance that if challenged,
these patents can be judicially sustained.  In the absence of such protection,
competitors would be able to duplicate the Company's products.  Furthermore,
even if the Company has patents, there can be no assurances that the Company's
competitors will not independently develop or patent technologies that are
substantially equivalent or superior to the Company's technologies.  The
Company has expended considerable time and resources to develop information
systems to serve its merchant base.  There is no intellectual property
protection on the computer equipment and database that comprise these systems. 
Additionally, although the Company believes that its products and technologies
do not infringe upon the proprietary rights of any third parties, there can be
no assurance that third parties will not assert infringement claims against
the Company.  Similarly, infringement claims could be asserted against
products and technologies which the Company licenses, or has the rights to
use, from third parties.  Any such claims, if proved, could materially and
adversely affect the Company's business and results of operations.  The
Company is only aware of one party who believes the USPS money order
distribution system provided by the Company violates its patents but no action
has been taken by such party to date.  It is the opinion of management that no
infringement has occurred and has secured legal opinions substantiating such
position but, although any such claims may ultimately prove to be without
merit, the necessary management attention to, and legal costs associated with,
litigation or other resolution of such claims could materially and adversely
affect the Company's business and results of operations.

The Company has recently obtained a patent on its method of electronically
obtaining the serial number of a document.  This method relies on the use of
its patented Symbology bar code.  The patent describes a unique method of
illuminating a form from one side while resolving the bar code image from the
opposite side.  No additional optical components are required beyond the basic
illumination source and the CCD image array.

NCCR Research

A number of NCCR projects require interaction between POS terminals and
mainframe host computers.  A good conceptual understanding of the problems
unique to both worlds is essential in order for the Company to provide
effective solutions to the targeted market segment.  The Company has expended
significant effort developing in-house software development expertise for
state-of-the-art POS and mainframe applications to meet these needs.  NCCR
research and development programs include the following:


Developed in 1997 and in Use                 Under Development
Customer Service Call Tracking               Debit Card Processing
and Reporting                                

Security Monitoring and Follow-Up            On-line Inquiry Services to    
System                                       merchants                     
                                                
                                             Sales Tracking Systems

                                             Direct Settlement Software

NCCR's development activities can be redirected quickly, based upon any one of
several factors, i.e., market changes, financial capabilities, etc.  Neither
the effectiveness nor even the completion of the items shown are assured due
to such uncertainties that exist.

CBC Research

Most CBC projects deal with product development issues requiring an
understanding of low-level hardware and software, national and international
standards, and agency approval requirements.  CBC has expended significant
effort updating the RP100/EB920 core design to create the RP121/EB921 for the
EMOD project. For CBC, it is essential to maximize the potential for new
concept development to flow back into the commercial product line.  CBC
focused research and development include the following:



Under Development                            Planned Development
Multi-tasking operating system software      Debit Processing

Software development kit for outside         U.S. Manufacturing 
(non-Company) programmers

Enhancements to EB100                        Smart Card Technology

Enhancements to RP100 to enable horizontal   Cashiers Check Management 
form presentation


CBC's development activities can be redirected quickly, based upon any one of
several factors, i.e., market changes, financial capabilities, etc.  Neither
the effectiveness nor even the completion of the items shown are assured due
to such uncertainties that exist.

Leasing

The Company sells and leases terminals and printers to retail merchants
through its subsidiary, ECHO Payment Services, Inc. ("EPS"). EPS cultivates
relationships with independent sales organizations, agent banks, and trade
associations and has formed strategic alliances with other marketing groups to
increase equipment sales and leases. EPS normally leases equipment at an
annual return of 24%, bundles leases in various sized packages and sells them
at a discounted rate to banks and individual investors.  Servicing and
collection of leases sold is performed by the Company.  

XpressCheX

In 1987, the Company initiated its check guarantee services to merchants
located in California so a merchant could accept a customer's check with
impunity. To support merchants in other states, the Company supports
alternative check guarantee services to operate concurrently with the
Company's credit card software in the merchant's terminal.

There are two basic types of electronic check processing services available in
the market today, check verification and check guarantee.

   Check Verification: The merchant pays a fixed fee for each transaction.  For
   this fee, the provider searches its proprietary data base of bad-check
   writers attempting to match a specific piece of information (driver's
   license number, MICR number, etc.) provided by the merchant.  A match
   identifies the check writer as an individual (or business) known to the
   provider to have current, delinquent check-related debts.  Upon notification
   of this match (via a coded response from the provider) the merchant decides
   whether to accept, at his own risk, or decline the check.  The provider
   offers no guarantee that the check will be honored by the check writer's
   bank and makes no promise of reimbursement if the check is dishonored by the
   bank.

   Check Guarantee: The merchant pays a fee based on the amount of the check
   for each transaction.  For this fee, the provider searches its data base for
   the piece of identifying information provided by the merchant.  If the
   identifying information is matched, the provider issues a coded response
   instructing the merchant to refuse to accept the check.  If the identifying
   information is not matched, a coded response advises the merchant that the
   provider has guaranteed payment on that item.  If that check is subsequently
   dishonored by the check writer's bank, the merchant is reimbursed by the
   provider.

Currently, XpressCheX, Inc. offers only the check guarantee type of service to
merchants located within the state of California.  Due to resources being
directed to other divisions of the Company and due to the lack of a national
data base from which to offer national check guarantee, the Company has not
actively promoted its check guarantee services. As a result, XpressCheX's
performance has progressively declined over the years.  

Analysis is currently underway to determine if the XpressCheX should be
retained as a product line and, if retained, what its total product line
should include and how it can be effectively marketed outside of the state of
California.

Real Estate

The Company presently owns undeveloped land in seven western states.  The
Company has entered into an agreement with a party to seek to sell all of its
real estate holdings. The Company has held all of its land properties for over
ten years and does not have current appraisals nor title insurance on its real
estate holdings. Some of the properties are held pursuant to quit claim deeds. 
The real estate holdings are carried on the Company's books at estimated fair
market value less estimated costs to sell.

Marketing

In 1992, the Company entered into an agreement with an independent sales
organization ("ISO") with primary offices in Cleveland, Ohio. The ISO has
offices in fourteen (14) states and, from time to time, between 250 and 300
salespersons in the field representing the processing services of the Company.
During 1997, the ISO relationship generated approximately 69% of new merchant
relationships for the Company as compared to 70% for fiscal 1996. In the
coming year, the number of new merchant relationships from the ISO is expected
to rise but the overall percentage of new merchant relationships generated by
the ISO sales is expected to decrease as a result of increased merchant
relationships being secured utilizing the Internet, the ECHOTEL program and
other direct sales programs being actively promoted by the Company. 
 
Management believes the Company is unique in providing high quality POS
hardware, specialized software, a variety of processing services and full
customer support through one vertically integrated source. In most instances,
such services are performed by different parties and, as a consequence,
merchants become very frustrated trying to solve a problem, not knowing which
party to call.  

NCCR's marketing strategy is twofold:

1)  to build its credit card transaction volume by focusing on the small to
medium-sized merchant segment, defined as merchants processing $25,000 or less
per month in credit card activity, who tend to be overlooked by other
processors in favor of larger volume accounts. This strategy relies primarily
on two programs.  First, a passive program that relies on third-party
relationships that contacts and directs merchants to the Company, and
secondly, active programs wherein the Company takes the lead in new merchant
contact and sales;

2)  to maximize its non-credit card transaction volume by developing
applications for niche markets and national customers.

As part of the tactical implementation of the POS dual marketing strategy,
agreements have been reached with third-party sales organizations which bring
additional processing relationships to the Company.  These sales organizations
are focused primarily on Internet processing and home-based merchant activity. 


CBC intends to market its electronic products to its existing customers and to
develop similar relationships with customers who have similar needs on a
national basis, focusing primarily on the USPS and banking markets. 

The Company has several active marketing programs either underway or in
development and its processing volume continues to grow.  Markets, however,
can change for numerous reasons, e.g., new technology, economic factors,
regulatory requirements, etc., that are not within the control of the Company
so it can not be assured that the marketing efforts of the Company will
continue to be effective or that the Company will continue to see increasing
processing volume in the future.

Competition

The industries in which the Company operates are highly competitive and are
characterized by rapid technological change, rapid rates of product
obsolescence and introductions of competitive products often at lower prices
and/or with greater functionality than those currently on the market.  The
Company currently is not a major factor in the industries in which it
competes, and, in management's opinion, the Company's share of the markets in
which it competes is relatively small in comparison to most of its
competitors.  Most, if not all, of the Company's competitors have
substantially greater financial and marketing resources than the Company.  As
a result, they are probably better able to respond more quickly to new or
emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their products and
services than is the Company.  Furthermore, in the future, the Company may
encounter substantial additional competition.  There can be no assurance that
the Company's current products and services will not become obsolete, or that
the Company will have the financial resources, technical expertise, marketing
capabilities or manufacturing and support facilities to compete successfully
in the future.  

The markets in which the Company competes are characterized by rapid
technological change, frequent new product and service introductions, evolving
industry standards and changes in customer demands.  The introduction of
products and services embodying new technologies and the emergence of new
industry standards can, in a relatively short period of time, render existing
products obsolete and unmarketable.  The Company believes that its success
will depend upon its ability continuously to develop new products and services
and to enhance its current products and to introduce them promptly into the
market.  There can be no assurance that the Company will be successful in
developing and marketing new product enhancements, new products or services
that respond to technological change or evolving industry standards, that the
Company will not experience difficulties that could delay or prevent the
success or development, introduction and marketing of these products,
enhancements and services, or that any new product, product enhancement and
services it may introduce will achieve market acceptance.  Failure to develop
and introduce new products, product enhancements or services, or to gain
customer acceptance of such products, product enhancements or services in a
timely fashion could harm the Company's competitive position and materially
adversely affect it.


Employees

The Company employed 76 persons at September 30, 1997, none of whom are
represented by a labor union.  The employees are based in Agoura Hills,
California.  Management believes that its employee relations are good at the
present time.

Forward Looking Statements

When used in the Business section (Item 1.) or elsewhere in this document, the
words "believes", "anticipates", "contemplates", and similar expressions are
intended to identify forward-looking statements.  Such statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially from those projected.  Those risks and uncertainties included
changes in economic conditions locally and nationally, and changes in laws and
regulations affecting the Company's primary lines of business. The Company
undertakes no obligation to publicly release the results of any revisions to
those forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


ITEM 2.      Properties

In October 1994, the Company purchased for $880,000 the three-story, 13,500
square foot building it currently occupies, making a down payment of $320,000
and borrowing $560,000, with a monthly debt service of approximately $4,000. 
This building houses the Company's headquarters and computer facilities.

The Company's book value of real estate held for investment was $528,000 for
fiscal years ended 1997 and 1996. A $276,000 reserve allowance was set up as
of September 30, 1997 and 1996 to reflect the $252,000 net book estimated fair
market value less estimated cost to sell the properties. The Company owns
several pieces of raw land for investment consisting of four noncontiguous
parcels in Missouri totaling approximately five acres, two noncontiguous
parcels in Texas totaling approximately forty-four acres, one acre in Castilla
County, Colorado, one-third acre in Eureka County, Nevada, a single lot in
Arrowhead County, Washington, a single lot in Ventura County, California,
three acres in Independence County, Arkansas, and 498 acres in San Bernardino
County, California. The Company has entered into an agreement with a party to
represent and sell its properties.


ITEM 3.     Legal Proceedings

As is the case with many businesses that serve thousands of customers, the
Company routinely encounters legal actions that may or may not have substance. 


The Company is currently involved in lawsuits against twenty-five merchants
for losses incurred from chargebacks that the Company has paid on behalf of
those merchants.  These lawsuits aggregate to more than $483,000. 
Additionally, the Company has hired outside counsel to bring suit against
three out-of-state merchants for chargeback losses of more than $466,000, as
of the fiscal year ended September 30, 1997.  One out-of-state merchant has
brought suit against the Company for breach of contract which the Company
feels is without merit and is currently being defended against.

The Company encounters other legal actions routinely in the course of doing
business but none are considered significant and none are known at the date of
filing other than those discussed above.


ITEM 4.     Submission of Matters to a Vote of Security Holders

Three matters were submitted to a vote of Security Holders during the fiscal
year ended September 30, 1997 at the Annual Shareholders' Meeting held on
February 6, 1997.  A majority of shareholders' votes approved three issues:
(1) approval to increase the authorized Common Stock of the Company from
20,000,000 shares to 26,000,000 shares; (2) amendment of the Incentive Stock
Option Plan; and (3) ratification and approval of auditors.    
<PAGE>
                                     PART II

ITEM 5.     Market for Registrant's Common Equity and Related Stockholder
Security Matters 

Since January 17, 1986, the Company has been trading on the over-the-counter
market under the name Electronic Clearing House, Inc.  On October 2, 1989, the
Company was accepted for listing on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") and trades under the symbol of
"ECHO".  The following table sets forth the range of high and low prices for
the Company's Common Stock during the fiscal periods indicated.  The prices
set forth below represent quotations between dealers and do not include retail
markups, markdowns or commissions and may not represent actual transactions. 
Moreover, due to the lack of an established trading market for the Company's
Common Stock, such quotations may bear no relationship to the fair market
value of the Company's Common Stock and may not indicate prices at which the
Company's Common Stock would trade in an established public trading market.

<TABLE>
<CAPTION>

      FISCAL YEAR ENDED                 High           Low   
      SEPTEMBER 30  

             1997         
      <S>                            <C>           <C>
      First Quarter                  $1.50         $0.72
      Second Quarter                 $2.09         $1.12
      Third Quarter                  $1.69         $1.00
      Fourth Quarter                 $1.56         $1.25

<CAPTION>
             1996         
      <S>                            <C>           <C>
      First Quarter                  $0.84         $0.31
      Second Quarter                 $0.96         $0.34
      Third Quarter                  $1.53         $0.66
      Fourth Quarter                 $1.16         $0.72

<CAPTION>
             1995         
      <S>                            <C>           <C>
      First Quarter                  $0.56         $0.34
      Second Quarter                 $0.94         $0.41
      Third Quarter                  $0.53         $0.41
      Fourth Quarter                 $0.66         $0.25

</TABLE>

The prices set forth above are not necessarily indicative of liquidity of the
trading market.  Trading in the Company's Common Stock is limited and
sporadic, as indicated by the average monthly trading volume of 1,058,320
shares for the period from October 1996 to September 1997.  The above prices
represent quotations between NASDAQ dealers, which do not reflect retail
markups, markdowns or commissions, and may not represent actual transactions. 
On December 22, 1997, the closing representative price per share of the
Company's Common Stock, as reported through NASDAQ in the over-the-counter
market, was $0.94.

Holders of Common Stock

As of September 30, 1997, there were 961 record holders of the Company's
Common Stock, with 14,600,541 shares outstanding. The number of holders of
record is based on the actual number of holders registered on the books of the
Company's transfer agent and does not reflect holders of shares in "street
name" or persons, partnerships, associations, corporations or other entities
identified in security position listings maintained by depository trust
companies.

Dividend Policy

The Company has not paid any dividends in the past and has no current plan. 
The Company intends to devote all funds to the operation of its businesses.


ITEM 6.     Selected Consolidated Financial Data

The following table sets forth certain selected consolidated financial data,
which should be read in conjunction with the Consolidated Financial Statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included at items 7 and 8 below.  The following data, insofar as
they relate to each of the five years ended September 30, have been derived
from annual financial statements, including the consolidated balance sheet at
September 30, 1997 and 1996 and the related consolidated statement of
operations and of cash flows for the three years ended September 30, 1997, and
notes thereto appearing elsewhere herein. 

<TABLE>
<CAPTION>
                                        Year Ended September 30       
                                        1997   1996   1995  1994   1993  
                                  (Amounts in thousands, except per share) 
Statement of Operations Data:
<S>                                 <C>     <C>     <C>     <C>     <C>
Revenues . . . . . . . . . . .     $18,623  $14,342 $14,101  $9,585$15,867
Costs and Expenses . . . . . .      18,103   14,526  14,238  10,466 16,495
Income (loss) from operations.         520     (184)   (137)   (881)  (628)
Interest expense, net. . . . .        (138)    (228)   (169)    (45)   (210)
Other income (expense), net. .         (50)    (182)    135               
Income (loss) before income 
 tax benefit benefit (provision) 
 and extraordinary items . . .         332     (594)   (171)   (926)  (838)
Income tax benefit (provision)          (4)      (5)     (5)     (5)     (5)    
   . . . . . . . . . . . . . . 
Net Income (loss). . . . . . .      $  328  ($  599)($  176)($  931)($  843)

Net Income (loss) per share
 -primary. . . . . . . . . . .      $ .025   ($.053) ($.016) ($.117)($.127)
Net Income (loss) per share
 -fully diluted<F1>. . . . . .      $ .017     n/a     n/a     n/a    n/a 

Weighted Average Number of 
 Common Shares and Equivalents 
 Outstanding . . . . . . . . .      19,851   11,297  11,039   7,969  6,645

Balance Sheet Data:
Working Capital surplus (deficit)   $2,054     $238 ($  119)     $6   $625
Current assets . . . . . . . .       3,047    2,254   1,721   4,215  2,563
Total assets . . . . . . . . .       6,084    4,682   4,063   5,963  4,129
Current liabilities. . . . . .         993    2,016   1,840   4,209  1,938
Long-term debt, and payable to 
 stockholders and related parties, 
 less current portion. . . . .         681      597     724      79    428
Total stockholders' equity . .      $4,410   $2,069  $1,499  $1,675 $1,701

<FN>
<F1>
Includes 13,336,701 shares of weighted average number of common stock,
3,160,014 shares of weighted average number of common stock as a result of the
stock options conversion, 1,179,315 shares of weighted average number of
common stock as a result of the stock warrants conversion, and 2,174,840
shares of weighted average number of common stock as a result of the preferred
stocks conversion.  The total number of weighted average number of common
shares and equivalents outstanding as of September 30, 1997 was 19,850,870. 
</FN>
</TABLE>



ITEM 7.     Management's Discussion and Analysis of Financial Condition and
Results of Operations

Results of Operations

Fiscal years 1997 and 1996

Revenues.    Electronic Clearing House, Inc. recorded a net income of $328,000
for the fiscal year ended September 30, 1997, compared with a net loss of
$599,000 for the fiscal year ended September 30, 1996.  Total revenues
increased by 30%, from $14,342,000 for fiscal 1996 to $18,623,000 for fiscal
1997.  The increase reflected revenue growth of 34% in Bankcard processing and
transactions revenue and a 7% increase in terminal sales and lease revenue
from prior fiscal year.

Revenue derived from the electronic processing of transactions are recognized
at the time the transactions are processed by the merchant.  The increase in
bankcard processing revenue and transaction revenue is primarily from the
increase in the number of active retail merchant accounts and the increased
transaction revenue generated from the increase in the number of dealers
associated with a major equipment rental customer.  As of  September 30, 1997,
the Company processed for approximately 8,300 active merchants, compared with
6,600 active merchants at September 30, 1996, a  26% increase.  The number of
installed equipment rental dealers increased from approximately 3,100 to
6,000, a 94% increase.

The Company's expanding merchant base and profitability is primarily
attributable to: (i) the effective sales efforts of an independent processing-
related sales organization that presently accounts for about 70%
of the Company's new merchant relationships; (ii) the referral from the
Company's existing merchant base; (iii) the direct response to the Company's
Internet Home Page, which accounts for approximately 20% of the Company's
merchant growth; (iv) marketing to targeted retail merchant industry segments
which generally have higher discount rates and processing volume as compared
to a typical retail merchant; and (v) the growing number of installed
equipment rental dealers. 

An important contingency related to processing profitability is the
consistency and multiplicity of the Company's primary bank relationships. 
Primary bank relationships are necessary to assure access to the major credit
card issuing organizations.  Additional primary bank relationships diminish
the potential for disruptions in processing operations that might occur due to
changes in management or ownership of one of the Company's primary banks. 
During fiscal 1997, the Company added two additional primary banks, bringing
its primary bank relationships to a total of four banks.

The Company's Internet-related product, ECHONLINE, was introduced in January
1997 and is being adopted by several Internet Service Providers ("ISP").  The
Company anticipates additional growth in merchant volume as ISP's finalized
their interface program to ECHONLINE.  A new feature, called Merchant
Fulfillment Service, has been added to the ECHONLINE service which 1) delivers
the Internet-generated order directly to the merchant, 2) requires the
merchant to electronically advise the Company when they have shipped to the
customer, and 3) allows the merchant to issue credits on a customer order
directly with the Company.  By providing these services, ECHONLINE becomes
easier for the ISP to adopt and improves its marketability.

Revenue related to terminal sales are recognized when the equipment is
shipped.  Terminal sales and lease revenue increased from $2,189,000 for
fiscal 1996 to $2,348,000 for fiscal 1997, a  7% increase.  This increase is
primarily related to the sale of terminals to a major equipment rental
customer, from 1,800 systems  for fiscal 1996 to 2,400 systems for fiscal
1997. 

Check guarantee fees decreased from $135,000 for fiscal 1996 to $82,000 for
fiscal 1997, a 40% decrease.  This is a result of the absence of active
marketing or development of the Company's check guarantee service.  The
Company is currently evaluating whether check guarantee should be retained as
a product line and, if retained, what its total product line should include
and how it can be effectively marketed outside the state of California.

Cost and Expenses.    Bankcard processing expenses have generally remained
constant as a percentage of processing revenue.  A majority of the Company's
bankcard processing expenses are fixed as a percentage of each transaction
amount, with the remaining costs being based on a fixed rate applied to the
transaction processed.  Bankcard processing expense increased from $9,023,000
for fiscal 1996 to $12,308,000 for fiscal 1997, a 36% increase.  The increase
in bankcard processing expense is directly related to the 34% increase in
bankcard processing revenue for fiscal 1997.  Additionally, chargeback losses
increased from $189,000 for fiscal 1996 to $836,000 for fiscal 1997, a 327%
increase.  This increase is attributable to the $429,000 provision of 
chargeback losses for two former merchants.  The Company is currently pursuing
to recover these chargeback losses through legal means (see LEGAL
PROCEEDINGS).  

Cost of terminals sold and leased decreased  from $1,866,000 for fiscal 1996
to $1,726,000 for fiscal 1997, a 7% decrease.  This was the result of a higher
gross margin on terminals sold during fiscal 1997.

Research and development expense increased from $325,000 for fiscal 1996 to
$420,000 for fiscal 1997, a 29% increase.  This is reflective of the strategic
investments made by the Company, both personnel and products needed, in order
to compete in the electronic commerce industry.

General and administrative expenses increased 13%, from $2,799,000 for fiscal
1996 to $3,157,000 for fiscal 1997.  However, when expressed as a percentage
of total revenues, selling and general and administrative expenses decreased
from 20% of total revenues for fiscal 1996 to 17% of total revenues for fiscal
1997.

Interest expense decreased  from  $266,000 for fiscal 1996 to $206,000 for
fiscal 1997, a 23% decrease.  This was mainly due to the note conversions
during fiscal 1997 and which was partially offset by the increase in capital
lease obligations.

Liquidity and Capital Resources

As of September 30, 1997, the going concern opinion which has been part of the
Company's independent accountant's report  for the past eleven years has been
lifted.  This was mainly due to (i) the Company's working capital ratio as of
September 30, 1997 (ii) a profitable fiscal year (iii) a $1,742,000 equipment
order from U-Haul International received subsequent to the year end, and a
three year agreement with U-Haul executed during fiscal 1997, and (iv)
anticipated positive earnings from operations for fiscal 1998.
    
At September 30, 1997, the Company had a $2,054,000 working capital as
compared to a $238,000 working capital at September 30, 1996.  The increase in
working capital was mainly attributable to the $900,000 note conversions which
took place during fiscal 1997.  Cash and restricted cash increased from
$688,000 at September 30, 1996 to $1,095,000 at September 30, 1997, a $407,000
increase.  Additionally, net accounts receivable increased $228,000 as a
result of increased processing, increase in chargeback receivable, and leasing
activities. 

A significant source of  cash flow during fiscal year 1997 was from financing
activities.  Total proceeds from issuance of preferred stock, exercise of
stock warrants and stock options was approximately $994,000.  

The Company's subsidiary Computer Based Controls, Inc. ("CBC") received the
First Article Test approval for its EMOD in February 1997 from the USPS. 
Additionally, 175 "Stand-Alone" EMOD units were delivered to the USPS in April
1997 and a phased deployment began in the Dallas, Texas area in May 1997.  The
USPS has advised the Company that they are having difficulty in securing a
printing company that is able to economically produce the desired EMOD form
stock with the necessary security components.  This may delay decisions
regarding further deployment after the pilot program and/or may generate the
need for a redesign of the existing systems to accommodate a modified paper
stock.  There is no assurance that a redesign of the existing systems will be
economically feasible for both the Company and USPS.  The Company has been
informed by the USPS that it will review the pilot program in January 1998 and
decisions regarding further deployment after the pilot program will be made at
that time. 

In October 1997, CBC received an equipment order from U-Haul for 3,100
terminals for a total of $1,742,000. This equipment will be available for
shipment during the second fiscal quarter of 1998.  After the full deployment
period, the Company expects the total number of dealers utilizing the
Company's inventory tracking systems to be approximately 9,000 dealers. 

At September 30, 1997, the ratio of current assets to current liabilities was
3.08:1 as compared to 1.12:1 at September 30, 1996.

When used in the Management's Discussion and Analysis of Financial Condition
and Results of Operations or elsewhere in this document, the words "believes",
"anticipates", "contemplates", and similar expressions are intended to
identify forward-looking statements.  Such statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those projected.  Those risks and uncertainties included changes in
economic conditions locally and nationally, and changes in laws and
regulations affecting the Company's primary lines of business.  The company
undertakes no obligation to publicly release the results of any revisions to
those forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Results of Operations

Fiscal years 1996 and 1995
Electronic Clearing House, Inc. recorded a net loss of $599,000 for the fiscal
year ended September 30, 1996, compared with a net loss of $176,000 for the
fiscal year ended September 30, 1995.  The increase in net loss for fiscal
year 1996 was mainly attributable to a $97,000 increase in research and
development expenses primarily related to a pilot program for the United
States Postal Service ("USPS"), the $327,000 of non-recurring lawsuit
settlement income recorded in fiscal year 1995, and a $70,000 increase in
interest expense during fiscal 1996. The Company showed a loss of $184,000
from operations which can be attributed to its equipment subsidiary, Computer
Based Controls, Inc. ("CBC") and expenses related to the USPS pilot and other
direct and indirect costs associated with CBC.

Profitable operations of the Company's processing activities was attained in
the latter part of fiscal 1995 and gradually increased through fiscal 1996. 
The Company is expected to be able to continue to increase its profitability
from its bankcard processing operations for fiscal 1997 due to the anticipated
increase in its merchant base from its existing marketing programs, increased
transaction activity from its association with a national rental organization,
and from the newly developed Telemerchant and Internet processing programs
initiated during the first quarter of 1997.

Bankcard processing revenue, bankcard transactions fees, and check guarantee
fees for fiscal year 1996 increased 43% to $12,053,000 from $8,447,000 for
fiscal year 1995.  Revenues derived from the electronic processing of
transactions are recognized at the time the transactions are processed by the
merchant.  The increase in bankcard processing revenues resulted primarily
from the increase in the number of active merchant accounts from 4,886 as of
September 30, 1995 to 6,595, a 35% increase.  The Company's expanding merchant
base and profitability is primarily attributable to the following programs. 
The first factor is the effective sales efforts of an independent processing-
related sales organization that is presently accounting for approximately 70%
of the Company's new merchant relationships.  Secondly, referral from the
Company's existing merchant base and the direct response to the Company's
Internet Home Page account for approximately 20% of the Company's merchant
growth.  Third, the Company's new agent bank program, actively promoted in the
first quarter of fiscal 1996, is resulting in increased merchant relationships
and increased processing volume as a result of the acquisition of the existing
merchants already processing with the agent banks.  Fourth, inventory
transactions revenue for a national rental organization increased 92% from
fiscal 1995.  Additionally, during fiscal year 1996, the Company targeted
merchant industry types which generally have higher discount rates and
processing volume as compared to the typical retail merchant.        

A primary contingency related to processing profitability is the consistency
and multiplicity of the Company's primary bank relationships.  Primary bank
relationships are necessary to assure access to the major credit card issuing
organizations and, presently, the Company has two primary bank relationships. 
Additional primary bank relationships diminish the potential for disruptions
in processing operations that might occur due to changes in management or
ownership of one of the Company's primary banks.  The Company has signed
letters of intent with two additional banks as primary banks.  The Company is
making the necessary software enhancements to allow the new primary banks to
become active by the second quarter of fiscal 1997. 

Bankcard processing expenses have generally remained constant as a percentage
of processing revenue.  A majority of the Company's bankcard processing
expenses are fixed as a percentage of each transaction amount, with the
remaining costs being based on a fixed rate applied to the transactions
processed.  Processing-related expenses, consisting of bankcard processing
expense, check guarantee expense and customer service expense, increased 41%
to $9,505,000 from $6,758,000 for fiscal 1995.  This was in direct relation to
the increase in processing revenues.

Check guarantee fees have decreased 30% from $194,000 to $135,000 and related
expenses have decreased 29% from $93,000 to $66,000, reflecting the absence of
active marketing or development of the Company's check guarantee services. 
Check guarantee services are not presently actively promoted for two primary
reasons; 1) negative check writer data are only available on California
activity while much of the Company's base of merchants are in other states,
and 2) development focus and resources are being placed in bankcard processing
and terminal sales programs that are viewed by management to have a higher
growth and revenue potential.

The primary variables affecting equipment sales are inventory levels, software
design and development by the Company, the timing of customer orders and the
lead time required for delivery of such orders.  The Company's primary
terminal system, the EB920, is a highly customer-specific terminal and for
this reason, as well as the financial costs related thereto, the Company does
not maintain significant on-hand inventory beyond depot requirements. 
Customer orders have historically been in large quantities that exceed the
inventory amounts the Company maintains and such orders are typically received
only one or two times per year per customer.  The time from receipt of the
customer's order to the delivery of the systems is presently a four (4) month
period, primarily due to the lead-times of electronic components for the
system.  Subsequent to September 30, 1996, the Company received an order for
2,379 EB920A terminals from its national rental organization customer.

Revenue related to terminal sales are recognized when the equipment is
shipped.  Terminal sales and lease revenue for fiscal 1996 decreased 61% to
$2,189,000 from $5,617,000 for fiscal 1995.  This significant reduction in
revenue between the two periods can be attributed to two primary causes. 
First, the Company's equipment subsidiary focused much of the year on
performance under an award by the USPS that generated no revenue during the
year.  Secondly, 6,000 systems were delivered to two major accounts in 1995
and 1,800 to one account in 1996.  Due to the type of customer who finds the
Company's equipment useful, larger orders placed annually are the norm rather
than small orders placed more frequently.  This inherent difference in similar
periods makes revenue comparison more difficult.  Related costs have decreased
57%, directly related to the lower sales.

Research and development revenue increased from $37,000 for fiscal 1995 to
$100,000 for fiscal 1996, reflecting an increase in fee-paid developmental
work for existing customers.  Research and development expense increased 43%
from $228,000 to $325,000 for the same period, reflecting primarily the
developmental effort required under a pilot program to design and deploy
electronic money order systems for the USPS that was awarded to the Company in
November 1995.  The Company decided to invest a significant portion of its
resources in the USPS pilot program for two primary reasons; 1) the potential
exists for a national program with the USPS if the pilot program proves to be
successful, and 2) the new system will meet the needs of other customers and
markets that the Company feels it can solicit effectively.  

There was a 67% decrease in equipment sales expense from $93,000 for fiscal
1995 to $31,000 for fiscal 1996.  This decrease reflects a reduction in the
direct sales efforts on behalf of the Company's equipment subsidiary, CBC.  

General and administrative expense decreased marginally from $2,823,000 for
fiscal 1995 to $2,799,000 for fiscal 1996.  This is a result of the Company's
ability to effectively control costs and the effects of an in-house automation
program that lowers operating costs while allowing increased processing
volume.               
Interest expense increased 36% from $196,000 for fiscal 1995 to $266,000 for
fiscal 1996.  This is mainly attributable to the interest amortization expense
related to warrants issued during 1996 as a consideration for the extension of
certain existing and new term loans.

Liquidity and Capital Resources

At September 30, 1996, the Company had a $238,000 working capital as compared
to $119,000 negative working capital in fiscal year 1995.  This increase in
working capital primarily reflects the increase in cash and restricted cash as
of September 30, 1996.  The Company had available cash of $172,000 and
$516,000 of restricted cash in reserve with its primary processing bank as of
September 30, 1996.  Subsequent to September 30, 1996, the Company received a
$438,000 downpayment on an order for 2,379 EB920A terminals.

Accounts receivable increased $194,000 from September 30, 1995 to September
30, 1996.  This increase was the result of increases in the number of
merchants and the increases in processing volume in fiscal year 1996. 
Inventory increased $186,000 from September 30, 1995 to September 30, 1996. 
This increase was primarily related to the inventory build-up for the USPS
pilot program.  Short-term borrowings increased $213,000 as a result of
$200,000 convertible notes which are due in March 1997.

Capital expenditures were approximately $138,000 for fiscal 1996 as compared
to $299,000 for fiscal 1995. Capital expenditures in 1996 were primarily the
result of purchase of tooling for the Company's manufacturing processes and
upgrades to computer systems.

The significant increase in cash provided by financing activities for fiscal
year 1996 resulted from the sale of $850,000 of Series K Preferred Stock, the
issuance of $200,000 of short-term notes, and $139,000 from the proceeds of
warrants and options exercised.

The report of the Company's independent accountants during the past ten years
has contained an explanatory paragraph as to the uncertainty of the Company's
ability to continue as a going concern resulting from recurring losses.  The
profitability of the Company's processing activities diminishes this risk
significantly even though CBC is expected to continue to operate at a loss for
fiscal year 1997.

CBC's activities are being focused almost entirely on the performance under
the USPS pilot program and other developmental projects are being postponed. 
This concentration of energy and resources has resulted in an operating loss
in the fiscal year 1996 from CBC activities alone that exceeds the total
operating loss shown by the Company in fiscal year 1996.  Since the
development portion of the USPS pilot program is nearing completion, continued
investment at the current level into CBC is not expected to be necessary in
fiscal year 1997 and as a result, the operating losses for CBC are expected to
be reduced significantly.

In November, 1995, CBC was awarded a contract to design and build 575
Electronic Money Order Dispensers (EMOD) for the USPS. The First Article Test
of the CBC beta system was done in September 1996 and passed approximately 85%
of the necessary criteria. A re-testing is scheduled for the first quarter,
fiscal 1997, and, if successful, it is anticipated that a phased deployment of
the systems will occur in the Dallas, Texas area beginning in the first
quarter of calendar year 1997. The USPS has advised the Company that they are
having difficulty in securing a printing company that is able to economically
produce the desired EMOD form stock with the necessary security components. 
This may delay decisions regarding further deployment after the pilot program
begins and/or may generate the need for a redesign of the existing systems to
accommodate a modified paper stock. Such events are not certain but possible. 


Based upon continued growth in its processing operations and the recent order
of 2,379 EB920A terminals, cash flow from operations is expected to be
positive in fiscal year 1997.  As described above in "Results of Operations",
contingencies that could impact liquidity are mitigated by continuing
successes in the expansion of the customer base and by the establishment of
multiple banking relationships.

In November 1996, $100,000 of short-term debt was converted into 250,000
shares of common stock. The remaining $800,000 of short-term debt is also
convertible into common stock at $.40-$.50 a share.  The Company is reviewing
its options to either 1) refinance the $800,000 debt or 2) effect repayment
through private placement funds when the notes become due in March and April
of 1997 if the conversion option has not been exercised by the noteholders at
that time.

At September 30, 1996, the ratio of current assets to current liabilities was
1.12:1 as compared to 0.94:1 at September 30, 1995.  The twelve-month average
collection period for receivables was 20 days for fiscal year 1996 as compared
to 25 days for fiscal year 1995.  The Company's annualized inventory turnover
ratios for fiscal year 1996 was 4.50, as compared to 5.12 for fiscal year
1995.

When used in the Management's Discussion and Analysis of Financial Condition
and Results of Operations or elsewhere in this document, the words "believes",
"anticipates", "contemplates", and similar expressions are intended to
identify forward-looking statements.  Such statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those projected.  Those risks and uncertainties included changes in
economic conditions locally and nationally, and changes in laws and
regulations affecting the Company's primary lines of business. The Company
undertakes no obligation to publicly release the results of any revisions to
those forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


ITEM 8.    Financial Statements and Supplemental Data

The Financial Statements and Supplementary Data are listed under "Item 14.
Exhibits, Financial Statement Schedules and Reports on Form 8K".


ITEM 9.     Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures

None<PAGE>
                                    PART III


ITEM 10.     Directors and Executive Officers of the Registrant

The officers and directors of the Company are:

<TABLE>
<CAPTION>
                                                         Date first became
Name                                      Position      Officer or Director 
<S>                                      <C>                    <C>
Larry Thomas <F1>                        Director, President,   1996
                                         Chief Operating 
                                         Officer

Joel M. Barry <F1><F3>                   Chairman of the 
                                         Board, Chief Executive 
                                         Officer                1986

Donald R. Anderson                       Vice President         1986

Patricia Atlas                           Vice President         1996

Jesse Fong                               Vice President         1994

David Griffin                            Vice President         1990

Jack Wilson                              Vice President         1994

Alice L. Cheung                          Chief Financial 
                                         Officer, Treasurer     1996
                          
Donna L. Camras                          Corporate Secretary    1990

R. Marshall Frost                        Counsel                1994

Fariborz Hamzei <F2><F3><F4>             Director               1988

Carl W. Schafer <F1><F2><F3><F4>         Director               1986

Herbert L. Lucas <F1><F3><F4>            Director               1991

---------------------------------------------                   
<FN>
<F1>
Member, Finance Committee
<F2>
Member, Audit Committee
<F3>
Member, Nominating Committee
<F4>
Member, Executive Compensation Committee
</FN>
</TABLE>

LARRY THOMAS, age 51, joined the Company in November 1995, has served as
Senior Vice President since June 1996, and was appointed President and Chief
Operating Officer in October 1997.  Prior to joining the Company, Mr. Thomas
was a charter member of the Cellular Digital Packet Data (CDPD) specification
effort and through the company he founded, XYNet Software Technologies,
managed the development and delivery to several carriers of CDPD accounting
and provisioning software.  Mr. Thomas served Unisys/Burroughs Corporation for
20 years as a system software/hardware developer, manager, and division
general manager, with his last position as Vice President of Unisys Network
Management Systems.  Mr. Thomas has been a consultant, author, and speaker on
Internet and OSI related technologies, network management protocols, complex
software systems and large-network solutions for major system integration
firms.  Mr. Thomas holds an MSEE and BSEE from Rice University in Houston,
Texas, as well as a BA in Economics from Rice.


JOEL M. BARRY, age 47, has been a Director of the Company since July 8, 1986,
Chairman of the Board since December 26, 1986, served as Chief Financial
Officer from May 1, 1987 to June 9, 1990, and Executive Vice President from
October 12, 1987 to June 29, 1990, when he was designated Chief Executive
Officer of the Company.  Mr. Barry is also a Director and Chief Executive
Officer of the NCCR and CBC subsidiaries.  Since approximately August 1981,
Mr. Barry has been a lecturer and investment counselor regarding investment
partnerships.  Mr. Barry was the founder and President of Basics Financial
Planning & Investments, Inc. ("Basics"), a financial management firm, formed
in August 1983 and dissolved in June 1991.  Basics is the successor to Dynamic
Seminars, a firm founded by Mr. Barry in August 1981.     

DONALD R. ANDERSON, age 62, has been President and a Director of the Company
since December 1986. Mr. Anderson was Chief Executive Officer from December
1986 to June 1990, at which time he became Chief Operating officer of the
Company.  Mr. Anderson was appointed Vice President of ECHO in October 1997
and will also serve in the capacity of consultant to the Company.  Mr.
Anderson received his B.S. degree in mathematics and his M.S. degree in
engineering from California State University. He participated in the founding
of Science Dynamics Corporation, a medical information systems company, in
August 1969, and served as its Vice President until October 1984, when Science
Dynamics was purchased by McDonnell Douglas Corporation.  From October 1984
until December 1986, Mr. Anderson was employed by McDonnell Douglas
Corporation as Vice President, Market Research and Product Planning.  In
August 1992, he was appointed to the Board of Directors of Hope International
University (formerly Pacific Christian College) and currently is Chairman of
the Board of Cornerstone Christian School, serving since September 1994.

PATRICIA ATLAS, age 32, joined the Company in September 1996, serving as
Director of Program Management and has recently been appointed Vice President. 
Prior to joining ECHO, Ms. Atlas was an Operations Manager for Bank of America
at their San Francisco headquarters.  Ms. Atlas holds a B.A. degree in
communications from the University of California, Los Angeles. 

JESSE FONG, age 46, has served as Vice President since September 1994.  Mr.
Fong joined the Company in 1984 and has served as programmer, Data Processing
manager and MIS director.  He received a degree major in M.E. and minor in
Computer Science in 1972, received an International Marketing certificate in
1975 and a Business Administration certificate in 1976.  Mr. Fong worked as
Marketing manager, Sales manager and Trainer with the Xerox Corporation in
Taiwan from 1974 to 1978.  After that, he joined Abbott Laboratory as Country
manager for two years.  After immigrating to the United States in 1980, he
worked as International Marketing manager in a trading firm for four years.  

DAVID GRIFFIN, age 49, has served as Vice President since June 1990.  Previous
to this capacity, he was Vice President of Operations for the Company from
January 1986 until September 1989, at which time he became a consultant to the
Company.  Mr. Griffin has served as Senior Vice President and General Manager
for TeleCheck, Los Angeles, from May 1983 to August 1985.  Prior to these
appointments, he was Regional Manager of TeleCheck Services, a franchiser of
check guarantee services, a division of Tymshare Corporation, which was
subsequently acquired by McDonnell Douglas Corporation.  Mr. Griffin holds a
business administration degree with a major in accounting from the University
of Houston.  

JACK WILSON, age 53, has served as Vice President since June 1994 and was
Director of Bank Card Relations for the Company from October 1992 until May
1994.  Mr. Wilson served as Vice President for Truckee River Bank from August
1989 until September 1992.  Previously, he was Senior Vice President/Cashier
of Sunrise Bancorp and a Vice President of First Interstate Bank.  Mr. Wilson
holds a teaching credential from the California Community College System in
business and finance.

ALICE L. CHEUNG, age 40, has served as Treasurer and Chief Financial Officer
since July 1996.  Ms. Cheung received her BS degree in business
administration/accounting from California State University in Long Beach,
California and became a Certified Public Accountant in May 1982.  Prior to
joining the Company, Ms. Cheung was the Treasurer and Chief Financial Officer
of American Mobile Systems from February 1988 to January 1996, prior to its
merger with Nextel Communications, Inc. Ms. Cheung is an active member of the
American Institute of Certified Public Accountants. 

DONNA L. CAMRAS, age 48, joined the Company in 1988.  For three years prior
thereto, she was self-employed in Woodland Hills, California in educational
books and toys.  She attended Southern Illinois University in  Carbondale and
was employed as an administrative assistant in Chicago for 4 years and Los
Angeles for 5 years.

R. MARSHALL FROST, age 50, has served the Company in varying capacities since
1987 and is currently In-House Counsel.  Mr. Frost received his BA degree in
business administration with emphasis in accounting from California State
University at Fullerton, his AA degree in pre-med from Fullerton College, his
JD degree from Ventura College of Law, and his MBA degree from the University
of Redlands.  Mr. Frost is an active member of the California Bar, a member of
the American Bar Association and the International Bar Association, and a
certified broker with the California Department of Real Estate.

FARIBORZ HAMZEI, age 39, has been a Director since 1988.  Mr. Hamzei is
currently an independent financial consultant, specializing in real estate
investments and is Vice President of Market Analysts of Southern California, a
non-profit organization conducting technical analyses of financial markets. 
Mr. Hamzei was President of Caspian Capital Corporation, Los Angeles,
California, from July, 1990 to December, 1991, and Executive Vice President of
Caspian Capital Corporation from August, 1988 to July, 1990.  Previously, he
was President and Chief Executive Officer of International Message Switching
Corporation, a publicly held company from August 1987 to October 1987.  Mr.
Hamzei has also held various positions in two high tech start-up companies,
and from 1978 through 1982 held various management positions at Northrop's
Aircraft Division.  Mr. Hamzei holds a BSE degree from Princeton University.

CARL W. SCHAFER, age 61, has been a Director since July 1986.  Mr. Schafer was
Financial Vice President and Treasurer (Chief Financial Officer) of Princeton
University from July 1976 to October 1987.  From October 1987 to April 1990, 
Mr. Schafer was a Principal of Rockefeller & Co., Inc. of New York, an
investment management firm.  He is a Trustee of The Atlantic Foundation and
Harbor Branch Institution and became President of the Atlantic Foundation in
April 1990.  Mr. Schafer also holds the following positions:  Director/Trustee
of the Paine Webber and Guardian Families of Mutual Funds; Director of Roadway
Express, Inc., a trucking company; Director of Wainoco Oil Corporation, an oil
and gas refiner; Director of Evans Systems, Inc., a petroleum product
marketer, convenience store, and diversified company; Director of Nutraceutix,
Inc., a bio technology company; and Chairman of The Johnson Atelier and School
Of Sculpture.  He graduated from the University of Rochester in 1958, and
served with the U.S. Bureau of the Budget, successively, as Budget Examiner,
Legislative Analyst, Deputy Director and Director of Budget Preparation.  He
resides in Princeton, New Jersey.

HERBERT L. LUCAS, age 71, has been a Director since 1991.  Mr. Lucas received
a BA degree in History in 1950 from Princeton University and an MBA degree in
1952 from Harvard University Graduate School of Business Administration.  He
served as President from 1972 to 1981 of Carnation International in Los
Angeles and a member of the Board of Directors of the Carnation Company. 
Since 1982, Mr. Lucas has managed his family investment business.  He has
served on the Board of Directors of various financial and business
institutions including Wellington Management Company, Arctic Alaska Fisheries,
Inc., Nutraceutix, and Sunworld International Airways, Inc.  Mr. Lucas also
serves as a Trustee of The J. Paul Getty Trust, the Los Angeles County Museum
of Art, and Winrock International Institute for Agricultural Research and
Development.  He also was formerly a member of the Board of Trustees of
Princeton University.

All directors are to be elected to specific terms, from one year to three
years, by the stockholders and serve until the next annual meeting or until
their terms have expired. The annual meeting of stockholders was held on
February 6, 1997, and the election of directors was held at that time.



ITEM 11.     Executive Compensation

The following table sets forth the total compensation paid and stock options
and warrants offered by the Company to its Chief Executive Officer and to each
of its most highly compensated executive officers, other than the Chief
Executive Officer, whose compensation exceeded $100,000 during the fiscal
years ended September 30, 1997, 1996 and 1995.

<TABLE>

Summary Compensation Table
<CAPTION>



                                                     Annual        Long Term
                                                  CompensationCompensation

                                  Capacities in                    Securities 
Name             Which Served         Year    Salary<F1>Underlying Options<F2>

<S>              <C>                  <C>     <C>                 <C>
Joel M. Barry    Chairman/Chief      1997     $160,282 <F3>       -   
                 Executive Officer   1996      120,000            650,000
                                     1995      115,000            
 

D.R. Anderson    President/Chief     1997     $174,851 <F4>       -   
                 Operating Officer   1996      160,000 <F5>       310,000
                                     1995      160,000 <F5>       50,000

Larry Thomas     Sr. Vice President  1997     $111,250 <F6>       
                 President<F7>       1996       85,000            300,000
                                     1995         -0- 
------------------------------------------

<FN>
<F1>
The Company provides Messrs. Barry, Anderson, and Thomas with an automobile. 
Mr. Barry, Mr. Anderson, and Mr. Thomas are participants of a Company
sponsored 401(K) plan. There has been no compensation paid other than that
indicated in the above table.  No bonuses pursuant to employment agreements
were granted in the three fiscal years presented.
<F2>
None of these options has been exercised.  See "Stock Option Plan" and
"Warrants".
<F3>
Mr. Barry's salary includes an $18,000 bonus and a $12,282 vacation paydown.
<F4>
Mr. Anderson's salary includes $29,851 of deferred income and $7,500 of
retroactive pay.
<F5>
According to the terms of Mr. Anderson's employment agreement, $125,000 of Mr.
Anderson's salary was annual income and $35,000 was repayment of deferred
income.
<F6>
Mr. Thomas's salary includes a bonus of $11,250.    
<F7>
Mr. Thomas became President of the corporation on October 16, 1997.     
</FN>
</TABLE>

Fiscal 1997 Option Grants Table

The following table sets forth the stock options granted to the Company's
Chief Executive Officer and each of its executive officers, other than the
Chief Executive Officer, whose compensation exceeded $100,000 during fiscal
1997.  Under applicable Securities and Exchange Commission regulations,
companies are required to project an estimate of appreciation of the
underlying shares of stock during the option term.  The Company has chosen to
project this estimate using the potential realizable value at assumed annual
rates of stock price appreciation for the option term at assumed rates of
appreciation of 5% and 10%.  However, the ultimate value will depend upon the
market value of the Company's stock at a future date, which may or may not
correspond to projections below.

<TABLE>
<CAPTION>

                                                      Potential Realization
                                                        Value at Assumed
                                                         Annual Rates of
                                                           Stock Price
                        Percent of                      Appreciation for
                       Total Granted  Exercise             Option Term
              Options to Employees in   Price Expiration        
Name          Granted   Fiscal Year    ($/sh)    Date   5% ($)   10% ($)

<S>             <C>         <C>          <C>      <C>     <C>     <C>
Joel M. Barry    none        n/a          -        -       n/a      n/a
D.R. Anderson    none        n/a          -        -       n/a      n/a
Larry Thomas     none        n/a          -        -       n/a      n/a


The following table sets forth the number of unexercised options and warrants
held by the Company's Chief Executive Officer and each of its executive
officers other than the Chief Executive Officer whose compensation exceeded
$100,000 during fiscal 1997.  No options/warrants have been exercised.

</TABLE>




<TABLE>

Aggregated Option/SAR Exercises and Fiscal-Year Option/SAR Value Table

<CAPTION>
                                                                  Value of
                                                 Number of       unexercised
                      Shares                    unexercised     in-the-money
                    acquired on      Value     options/SARS     Options/SARS
Name                exercise #    realized $     FY-end #      at FY-end $<F1>

<S>                    <C>           <C>         <C>           <C>
Joel M. Barry          -0-           -0-         650,000       $611,000
D.R. Anderson          -0-           -0-         510,000       $373,000
Larry Thomas           -0-           -0-         300,000       $184,000

-----------------------------------
<FN>
<F1>
Based on the closing sales price of the Common Stock on September 30, 1997 of
$1.34 per share, less the option exercise price.

</FN>
</TABLE>

Compensation Committee Interlocks and Insider Participation

Joel M. Barry, Chairman of the Board and Chief Executive Officer, Herbert L.
Lucas, Jr., Director, and Fariborz Hamzei, Director, serve on the compensation
committee.  No executive officer of the Company serves on the compensation
committee of another entity or as a director of another entity with an
executive officer on the Company's compensation committee.  

Director Compensation

Outside directors are compensated at the rate of $1,500 per quarterly meeting
plus reasonable expenses incurred in connection therewith.  Directors are not
compensated for special meetings other than regular quarterly meetings.  Each
one of the outside directors was awarded 125,000 shares of stock options at
market price during fiscal 1997.

Employment Agreements

Mr. Anderson entered into a three-year employment agreement, effective October
1, 1994, which provided for a salary of $120,000 during fiscal 1995, $125,000
during fiscal 1996 and $130,000 during fiscal 1997.
In connection with this agreement, the Company also issued Mr. Anderson
310,000 options, each to purchase one share of Common Stock at $0.50 per
share, vested over the three years of this agreement.  Mr. Anderson's
employment agreement expired on October 1, 1997.

Mr. Thomas entered into a four-year employment contract, effective October 16,
1997, which provides for a salary of $137,500 with $5,000 salary increases
annually.  At the time the employment contract was signed, Mr. Thomas owned
300,000 shares of the Company's stock options which became fully vested
immediately.  Additionally, Mr. Thomas was awarded 100,000 shares of stock
options within one month after signing of the contract, and 100,000 shares of
stock options each year for three additional years within one month after the
anniversary of the contract, issued under the five-year vesting criteria and
having a strike price equal to the existing market bid price on the day of the
award.

Bonus, Profit-Sharing and Other Remuneration Plans and Pension and Retirement
Plans

The Company is considering a bonus plan which will apply to all of its
officers.  Each participant could earn from 10% to 50% of their annual salary
as a bonus based on their position, each individual's performance, and the
overall performance of the Company. In the absence of any formal plan, in
fiscal 1997, the Board of Directors approved specific bonuses for several
officers ranging from $1,000 to $24,000.  Total bonuses awarded in 1997 were
$64,800.  

Mr. Thomas is entitled to receive an annual bonus which ranges between 20% to
50% of his base salary compensation provided he meets the target performance
as agreed upon and set each fiscal year by the Company's Chief Executive
Officer and approved by the Board of Directors.  Additionally, Mr. Thomas is
entitled to various performance-based stock options and cash bonuses upon
meeting certain predetermined levels of net income and earnings per share
generated by the Company during the term of the contract. 


The Company has a contributory 401(K) Retirement Pension Plan which covers all
employees who are qualified under the plan provisions.


Stock Option Plan

On May 13, 1992, the Company's Board of Directors authorized adoption of a
Directors and Officers Stock Option Plan ("Plan"), ratified by the
shareholders at the Annual Meeting held July 10, 1992.  The Plan provided for
the issuance of up to 325,000 stock options, each to purchase one share of the
Common Stock for $0.85 per share, subject to adjustment in the event of stock
splits, combinations of shares, stock dividends or the like.  

On September 30, 1995, Joel M. Barry was granted 650,000 five-year options
each to purchase one share of common stock at $0.40 per share.

On January 2, 1996, Larry Thomas was granted 100,000 five-year options each to
purchase one share of  common stock at $0.50 per share.

On August 30, 1996, Larry Thomas was granted 200,000 five-year options each to
purchase one share of common stock at $0.84 per share.

On November 18, 1996, the Company's Board of Directors authorized an increase
in the Plan to 3,375,000 options and was ratified by the shareholders at the
Annual Meeting held in February 1997.

On October 29, 1997, Donald R. Anderson was granted 20,000 five-year options
each to purchase one share of common stock at $1.12 per share.

On October 29, 1997, Larry Thomas was granted 100,000 five-year options each
to purchase one share of common stock at $1.12 per share.

With the exception of the foregoing, the Company has no stock option plans or
other similar or related plans in which any of its officers or directors
participate.


ITEM 12.     Security Ownership of Certain Beneficial Owners and Management

As of September 30, 1997, there were 14,600,541 shares of the Company's Common
Stock outstanding.  The following table sets forth the beneficial owners of
more than 5% of the Company's voting securities.


<TABLE>
<CAPTION>

Title     Name and Address              Amount and Nature     Percent
of Class  of Beneficial Owner        of Beneficial Ownership of Class

<C>       <C>                             <C>                <C>
Common    Arthur Geiger                   1,215,000 <F1>      8.03%
          P.O. Box 309
          Morristown, NJ  07963
          
Common    Robert Feury                      837,000 <F2>      5.60%
          15 East Union Street
          East Rutherford, NJ 07073

Common    Herbert Smilowitz               1,090,000 <F3>      7.20%
          15 East Union Street
          East Rutherford, NJ 07073                 
                                                          

---------------------------------------------------------
<FN>
<F1>
325,000 shares are warrants issued in connection with various loans; 210,000
shares are underlying common shares in connection with Series K Preferred
Stock upon conversion.
<F2>
225,000 shares are warrants issued in connection with various loans; 125,000
shares are underlying common shares in connection with Series K Preferred
Stock upon conversion.
<F3>
300,000 shares are warrants issued in connection with various loans; 225,000
shares are underlying common shares in connection with Series K Preferred
Stock upon conversion.

</FN>
</TABLE>
To the Company's knowledge, no other individual has beneficial ownership or
control over 5% or more of the Company's outstanding Common Stock.  

The following table sets forth the number of shares of Common Stock owned
beneficially by the Company's officers and directors, individually, and as a
group, as of September 30, 1997.

<TABLE>
<CAPTION>

                                   Amount and            Percentage of
                             Nature of Beneficial    Outstanding Stock<F1>
Name and Address                  Ownership              At 9/30/97  

<S>                              <C>                       <C>
Donald R. Anderson                608,659 <F2><F3><F6><F9>  4.02%
28001 Dorothy Drive
Agoura Hills, CA  91301

Joel M. Barry                     691,250 <F6>              4.53%  
28001 Dorothy Drive
Agoura Hills, CA  91301

Donna Camras                       50,000 <F6>              0.34%  
28001 Dorothy Drive
Agoura Hills, CA  91301

Alice L. Cheung                   150,000 <F6>              1.02%
28001 Dorothy Drive
Agoura Hills, CA  91301

Jesse Fong                        130,110 <F6>              0.89%
28001 Dorothy Drive
Agoura Hills, CA 91301

R. Marshall Frost                  40,000 <F6>              0.27%
28001 Dorothy Drive
Agoura Hills, CA 91301

David Griffin                     203,312 <F6><F8>          1.37%  
28001 Dorothy Drive
Agoura Hills, CA  91301

Fariborz Hamzei                   325,000 <F4>              2.18%
28001 Dorothy Drive
Agoura Hills, CA  91301                   
        
Herbert L. Lucas                  466,889 <F4><F7>          3.13%
12011 San Vicente Boulevard 
Los Angeles, CA  90049

Carl W. Schafer                   375,000 <F4>              2.51%  
28001 Dorothy Drive
Agoura Hills, CA 91301                    

Larry Thomas                      650,000 <F5><F6>          4.33%
28001 Dorothy Drive
Agoura Hills, CA  91301

Jack Wilson                       160,000 <F6>              1.08%
28001 Dorothy Drive
Agoura Hills, CA 91301

All officers and directors
as a group (12 persons)         3,850,220                    21.51%          


------------------------------------------------------
<FN>

<F1>
Outstanding Common Shares with effect given to conversion of preferred stock
and options described in footnotes 2 through 9.
<F2>
Includes 45,473 shares owned by the Anderson Family Trust of which Mr.
Anderson is a co-trustee and 1,775 shares owned by Mr. Anderson's wife.
<F3>
Reflects conversion of Series H Convertible Preferred Stock into Common Stock.
(F4>
Includes options granted to outside directors.
<F5>
Includes Common Shares as payment for acquisition.
<F6>
Includes options according to the terms of the Incentive Stock Option Plan. 
See "Item 11. Options, Warrants or Rights".
<F7>
Includes 141,889 shares indirectly owned by Mr. Lucas through a trust for his
wife.
<F8>
Includes 675 shares owned by Mr. Griffin's wife. 
<F9>
Includes 310,000 options granted to Mr. Anderson pursuant to his employment
agreement of September 15, 1994.  See "Item 11. Employment Agreements".

</FN>
</TABLE>

ITEM 13.     Certain Relationships and Related Transactions 

There were no material related-party transactions.  <PAGE>

                                     PART IV


ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form 8K

(a) The following documents are filed as part of this report:
 
   (1) Consolidated Financial Statements                                       
                                                                          Page
       
       Report of Independent Accountants . . . . . . . . . . . . . . . . .  F-1

       Consolidated Balance Sheet at September 30, 1997 and 1996 . . . . . .F-2

       Consolidated Statement of Operations for each of the 
       three years in the period ended September 30, 1997. . . . . . . . . .F-3
  
       Consolidated Statement of Changes in Stockholders' 
       Equity for each of the three years in the period 
       ended September 30, 1997. . . . . . . . . . . . . . . . . . . . . . .F-4

       Consolidated Statement of Cash Flows for each of the 
       three years in the period ended September 30, 1997. . . . . . . . . .F-5

       Notes to Consolidated Financial Statements. . . . . . . . . . . . . .F-6

    (2) Financial Statement Schedules:

       Schedule VIII - Valuation and Qualifying Accounts and Reserves. . . S-1 

All other schedules are omitted because they are not applicable or the
required information is shown in the Consolidated Financial Statements or
Notes thereto.

(b) Reports on Form 8K for fourth quarter ending September 30, 1997: none  

(c) Exhibits:

 Exhibit
 Number        Description of Document

1.1      Form of Underwriting Agreement between the Company and J.W. Gant &
         Associates, Inc. <F3>
1.2      Form of Agreement among Underwriters. <F3>
1.3      Form of Selected Dealer's Agreement. <F3>
3.1      Articles of Incorporation of Bio Recovery Technology, Inc., filed with
         the Nevada Secretary of State on December 11, 1981. <F1>
3.2      Certificate of Amendment to Articles of Incorporation of Bio Recovery
         Technology, Inc., filed with the Nevada Secretary of State on
         September 1, 1983. <F1>
3.3      Certificate of Amendment of Articles of Incorporation of Bio Recovery
         Technology, Inc., filed with the Nevada Secretary of State on January
         17, 1986. <F1>
3.4      By-Laws of Bio Recovery Technology, Inc. <F1>
4.1      Proposed Form of Purchase Option between the Company and J.W. Gant &
         Associates, Inc. <F3>
4.2      Specimen Common Stock Certificate. <F3>
10.5     Copy of Refinancing Agreement dated June 20, 1989 between Electronic
         Clearing House, Inc., Kenneth Van Zyl Living Trust, and Mrs. Alice A.
         Haessler. <F2>
10.7     Copy of Imperial Bank Agreement dated October 31, 1989 between
         Electronic Clearing House, Inc. and Imperial Bank. <F2>
10.11    Form of Warrants to Purchase Common Stock of Registrant. <F3> 
10.12    Form of Agreement to be entered into by the Officers, Directors, and
         5% or more Stockholders of the Company with J.W. Gant & Associates,
         Inc. <F3>
10.27    Copy of Agreement between Electronic Clearing House, Inc. and Francis
         David Corporation, dated May 18, 1992. <F4> 
10.28    Copy of Addendum Authorizing Evaluation and Calculation of Loss
         Reserve Requirement and Designation of Las Vegas, Nevada Territory,
         dated July 9, 1992. <F4> 
10.31    Copy of Merchant Marketing and Processing Services Agreement between
         Electronic Clearing House, Inc. and First Charter Bank, dated January
         25, 1994. <F6>
10.32    Copy of Escrow Statement of Electronic Clearing House, Inc. for
         purchase of building located at 28001 Dorothy Drive, Agoura Hills,
         California. <F6>
10.33    Copy of Employment Agreement dated October 1, 1994 between Electronic
         Clearing House, Inc. and Donald R. Anderson. <F6>
10.34    Copy of Asset Purchase Agreement between Electronic Clearing House,
         Inc. and Larry Thomas, dated December 31, 1995. <F7>
10.35    Copy of Merchant Marketing and Processing Services Agreement between
         Electronic Clearing House, Inc. and First Regional Bank, dated June
         24, 1997.
10.36    Copy of Merchant Marketing and Processing Services Agreement between
         Electronic Clearing               House, Inc. and The Berkshire Bank,
         dated July 31, 1997.
10.37    Copy of Employment Contract dated October 16, 1997 between Electronic
         Clearing House, Inc. and Larry J. Thomas. 
22.0     Subsidiaries of Registrant. <F2>


--------------------------------------------------------
[FN]
<F1>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1988 and incorporated herein by reference.
<F2>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1989 and incorporated herein by reference.
<F3>
Filed as an Exhibit to Registrant's Form S-1, Amendment No. 3, effective
November 13, 1990 and incorporated herein by reference.
<F4>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1992 and incorporated herein by reference.
<F5>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1993 and incorporated herein by reference.
<F6>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1994 and incorporated herein by reference.
<F7>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1996 and incorporated herein by reference.

</FN>



                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.



               ELECTRONIC CLEARING HOUSE, INC.


               By:                                                           
                     Larry Thomas, President
                     and Chief Operating Officer





Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons in the capacities and on the
dates indicated.


Signature                  Title                           Date




                           Director, President, and   )    December 29, 1997
Larry Thomas               Chief Operating Officer    )
                                                      )
                                                      )
                           Chairman of the Board      )                
Joel M. Barry              and Chief Executive        )
                           Officer                    )
                                                      )
                                                      )
                           Director                   )                
Fariborz Hamzei                                       )
                                                      )
                                                      )
                           Treasurer and              )                
Alice L. Cheung            Chief Financial Officer    )
                                                      )
                                                      )
                           Controller                 )
Marjan Hewson                                         )
                                        






                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
and Stockholders of
Electronic Clearing House, Inc.

In our opinion, the accompanying consolidated financial statements listed in
the index appearing under Item 14(a)(1) on page 35 present fairly, in all
material respects, the financial position of Electronic Clearing House, Inc.
and its subsidiaries at September 30, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period
ended September 30, 1997, in conformity with generally accepted accounting
principles.  These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits.  We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation.  We believe that our audits provide a
reasonable basis for the opinion expressed above.



Los Angeles, California
November 14, 1997
<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>
                           CONSOLIDATED BALANCE SHEET
<CAPTION>

                                                         September 30,       
                                                        1997         1996

                                     ASSETS

<S>                                                 <C>         <C>
Current assets:
  Cash and cash equivalents                       $   772,000  $   172,000
  Restricted cash (Note 1)                            323,000      516,000
  Accounts receivable less 
   allowance of $1,025,000 and 
    $289,000 (Note 1)                               1,129,000      901,000
  Inventory less allowance of $70,000 and 
   $20,000                                            749,000      579,000
  Prepaid expenses and other assets                    23,000       36,000
  Notes receivable from stockholders and 
   related parties less allowance of 
   $148,000 and $98,000 (Note 5)                       51,000       50,000

            Total current assets                    3,047,000    2,254,000

Noncurrent assets:
  Long term receivables (Note 6)                      373,000       75,000
  Property and equipment, net (Note 7)              1,570,000    1,489,000
  Real estate held for investment, 
    net (Note 8)                                      252,000      252,000
  Other assets, net (Note 9)                          842,000      612,000

                                                   $6,084,000   $4,682,000

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Short-term borrowings and current 
    portion of long-term debt (Note 10)          $    150,000  $ 1,044,000
  Accounts payable                                    112,000      178,000
Accrued expenses (Note 11)                            731,000      794,000

            Total current liabilities                 993,000    2,016,000


Long-term debt (Note 10)                              681,000      597,000

            Total liabilities                       1,674,000    2,613,000

Commitments and contingencies (Note 15)

Stockholders' equity (Note 13):
  Convertible preferred stock, $.01 
    par value, 5,000,000 shares authorized;
   Series "H", 23,511 shares issued 
    and outstanding                                    
   Series "K", 375,000 and 425,000 shares 
    issued and outstanding                              4,000        4,000
   Series "L", 172,000 shares issued and 
     outstanding                                        2,000
  Common stock, $.01 par value, 26,000,000 shares 
   authorized; 14,600,541 and 11,571,804 
    shares issued; 14,594,300 and 11,565,563 
    shares outstanding                                146,000      116,000
  Additional paid-in capital                       13,865,000   11,884,000
  Accumulated deficit                              (9,607,000)  (9,935,000)
  
         Total stockholders' equity                 4,410,000    2,069,000

                                                   $6,084,000   $4,682,000

          See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>
                      CONSOLIDATED STATEMENT OF OPERATIONS


<CAPTION>

                                                Year ended September 30,  
                                             1997         1996         1995

<S>                                  <C>            <C>         <C>
REVENUES:
   Bankcard processing revenue       $ 11,299,000   $ 8,926,000 $ 6,078,000
   Bankcard transaction fees            4,708,000     2,992,000   2,175,000
   Terminal sales and lease revenue     2,348,000     2,189,000   5,617,000
   Check guarantee fees                    81,000       135,000     194,000
   Research and development               187,000       100,000      37,000


                                       18,623,000    14,342,000  14,101,000

COSTS AND EXPENSES:
   Bankcard processing                 12,308,000     9,023,000   6,292,000
   Cost of terminals sold and leased    1,726,000     1,866,000   4,335,000
   Check guarantee                         38,000        66,000      93,000
   Customer service                       417,000       416,000     373,000
   Selling                                 37,000        31,000      94,000
   General and administrative           3,157,000     2,799,000   2,823,000
   Research and development               420,000       325,000     228,000


                                       18,103,000    14,526,000  14,238,000

Income (loss) from operations             520,000      (184,000)   (137,000)

Interest income                            68,000        38,000      27,000
Interest expense                         (206,000)     (266,000)   (196,000)
Legal settlement (Note 17)                   -0-           -0-      327,000
Write down of real estate held for 
 investment (Note 8)                         -0-        (84,000)   (192,000)   
Loss reserve for notes 
 receivable (Note 5)                      (50,000)      (98,000)      -0-      
  

Income (loss) before income tax 
 benefit (provision)                      332,000      (594,000)   (171,000)

Income tax provision                     (216,000)       (5,000)     (5,000)
Income tax benefit from a 
 NOL utilization                          212,000        - 0 -       - 0 - 

Net income (loss)                      $  328,000    ($ 599,000) ($ 176,000)

Net income (loss) per share 
  - Primary                                 $.025        ($.053)     ($.016)

Net income (loss) per share 
  - Fully Diluted                           $.017                N/A   N/A 


          See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>

                         ELECTRONIC CLEARING HOUSE, INC.
<TABLE>

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>



                                                                           
                                                                           
                                                     Stock                   
                                                                        
                                Treasury      Common      Preferred     Amount

<S>                              <C>       <C>            <C>        <C> 
Balance at 
 September 30, 1994               6,241   10,870,344      36,396    $  109,000

Conversion of preferred 
 to common                                   176,460      (8,823)        2,000
Net loss                                                                      

Balance at 
 September 30, 1995               6,241   11,046,804      27,573       111,000

Exercise of warrants                         125,000                     1,000
Exercise of 
 stock options                               150,000                     2,000
Issuance of 
 preferred stock                                         425,000         4,000
Issuance of 
 common stock                                250,000                     2,000
Issuance of warrants                                                          
Net loss                                                                      

Balance at 
 September 30, 1996               6,241   11,571,804     452,573       120,000 

Exercise of warrants                         275,617                     3,000
Exercise of 
 stock options                               220,000                     2,000
Conversion of debt                         2,270,345                    23,000
Conversion of 
 preferred to common                         250,775     (54,062)        2,000
Issuance of 
 preferred stock                                         172,000         2,000
Issuance of common stock                      12,000                          
Stock issuance expenses                                                       
Net income                                                                    

Balance at 
 September 30, 1997               6,241   14,600,541     570,511    $  152,000 


CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY CONTINUED:
   

                                            Accumulated
                                              Deficit
                              Additional       from
                                Paid-in     October 1,        
                                Capital        1987         Total
<S>                        <C>          <C>              <C>                  
Balance at
 September 30, 1994        $10,726,000  $(9,160,000)     $1,675,000

Conversion of 
 preferred to common            (2,000)                     -0-               
Net loss                                   (176,000)       (176,000)

Balance at
 September 30, 1995         10,724,000   (9,336,000)      1,499,000

Exercise of warrants            62,000                       63,000
Exercise of stock options       74,000                       76,000
Issuance of
 preferred stock               846,000                      850,000
Issuance of common stock        98,000                      100,000
Issuance of warrants            80,000                       80,000
Net loss                                   (599,000)       (599,000)

Balance at
 September 30, 1996         11,884,000   (9,935,000)      2,069,000

Exercise of warrants           125,000                      128,000
Exercise of 
 stock options                 160,000                      162,000
Conversion of debt             934,000                      957,000
Conversion of
 preferred to common            (2,000)                     -0- 
Issuance of 
 preferred stock               858,000                      860,000
Issuance of
 common stock                   12,000                       12,000
Stock issuance expenses       (106,000)                    (106,000)
Net income                                  328,000         328,000

Balance at
 September 30, 1997        $13,865,000  $(9,607,000)     $4,410,000

          See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>

                                                                          
                                                  Year ended September 30,     
                                                1997        1996        1995
<S>                                         <C>         <C>         <C>
Cash flows from operating activities:
   Net income (loss)                        $ 328,000  ($ 599,000) ($ 176,000)
   Adjustments to reconcile net 
    loss to net cash
    (used in) provided by 
    operating activities:
     Depreciation                             209,000     199,000     189,000
     Amortization                              82,000      99,000      66,000
     Provisions for losses on 
      accounts and notes receivable           786,000     252,000    (158,000)
     Provision for loss on real estate 
      held for investment                                  84,000     192,000
     Provision for obsolete inventory          50,000      20,000            
     Fair value of stock warrants 
      issued in connection with debt                       80,000
     Fair value of stock issued 
      in connection with legal settlement      12,000
     Changes in assets and liabilities:
      Restricted cash                         193,000    (203,000)   (212,000)
      Accounts receivable                  (1,262,000)   (336,000)    682,000
      Inventory                              (336,000)   (205,000)    907,000
      Prepaid expenses and other assets        13,000     (20,000)    156,000
      Other assets                           (146,000)   (186,000)    161,000
      Accounts payable                        (57,000)   ( 67,000) (1,557,000)
      Accrued expenses                        (15,000)     30,000  (1,394,000)
      Other liabilities                                     5,000            


      Net cash used in operating activities  (143,000)   (847,000) (1,144,000)

Cash flows from investing activities:
    Purchase of equipment                    (199,000)   (138,000)   (299,000)
    Investment in real estate                                        (880,000)

      Net cash used in investing activities   (199,000)  (138,000) (1,179,000)

Cash flows from financing activities:
    (Increase) decrease in notes 
      receivable from stockholders 
      and related parties                                  10,000      (5,000)
    Proceeds from issuance of notes payable   150,000     200,000   1,373,000
    Repayment of notes payable               (202,000)   (139,000)   (146,000)
    Proceeds from issuance of preferred stock 753,000     850,000            
    Common stock warrants exercised           129,000      63,000             
    Proceeds from exercise of stock options   112,000      76,000            

      Net cash flows provided by
       financing activities                   942,000   1,060,000   1,222,000

Net increase (decrease) in cash               600,000      75,000  (1,101,000)
Cash and cash equivalents at 
 beginning of year                            172,000      97,000   1,198,000

Cash and cash equivalents at end of year    $ 772,000   $ 172,000   $  97,000

          See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>

                         ELECTRONIC CLEARING HOUSE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Electronic Clearing House, Inc. (ECHO or the Company) is a Nevada corporation. 
The accounting and reporting policies of the Company and its subsidiaries
conform to generally accepted accounting principles.  The following comments
describe the more significant policies.


Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries.  All significant intercompany transactions and
accounts have been eliminated.

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted cash balances only.  Cash
equivalents are considered to be all highly liquid debt instruments purchased
with an original maturity of three months or less.  

Restricted Cash

Under the terms of a five year processing agreement effective from January 25,
1994, the Company maintains a cash reserve account at its primary processing
bank as a contingency against chargeback losses. As processing fees are
received by the processing bank, they are allocated per the processing
agreement to the reserve account. 

Chargeback

Chargeback losses occur when a credit card holder presents a valid claim
against one of the Company's merchants and the merchant has insufficient funds
or is no longer in business resulting in the charge being absorbed by the
Company.  The Company records a receivable for those chargebacks for which the
merchant is liable but has not made payment.  A reserve is established for all
chargebacks not received within ninety (90) days or for those that are deemed
uncollectible. Additionally, under the terms of the Company's processing
agreement with the bank, the Company is responsible for all external costs of
the program and for all back room functions including daily accounting,
settlement and security (see Note 16).   

Inventory

Inventory is stated at the lower of cost or market, cost being determined on
the first-in, first-out method.  Inventory consists of terminals and printers
held for sale or lease and related component parts.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and
amortization.  Expenditures for additions and major improvements are
capitalized.  Repair and maintenance costs are expensed as incurred.  When
property and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the accounts.  Gains or losses
from retirements and disposals are credited or charged to income. 
Depreciation and amortization are computed using the straight-line method over
the shorter of the estimated useful lives of the respective assets or terms of
the related leases.  The useful lives and lease terms for depreciable assets
are as follows:


         Building                               39 years
         Computer equipment and software       3-5 years
         Furniture, fixtures and equipment       5 years
         Building improvements                  10 years
         Tooling equipment                       2 years
         Automobile                              5 years      

Purchased Technology, Capitalized Software, and Patents

Costs related to the purchase of technology are amortized over the estimated
useful life of five years using the straight-line method.  Capitalized
software costs which are primarily labor costs, are being amortized over three
years.  Costs related to establishing a patent are being capitalized and
amortized over the life of the patent, once the patent is granted and
officially issued. If the patent application is denied, the associated
capitalized costs are expensed.

In March 1995, the Financial Accounting Standard Board issued Statement of
Financial Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" (FAS No. 121) which
requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever event or circumstances indicated that the
carry amount of the asset may not be recoverable.  As of September 30, 1997
and 1996, in Management's opinion, no such impairment exists.

Revenues and Expenses

Processing and check guarantee fees are recognized at the time the
transactions are processed by the merchant. Processing costs paid to banks are
included in costs and expenses.  Terminal leases are recorded as sales-type
leases.  Interest income related to such leases is recognized over the life of
the lease.  Revenue is recognized on such leases, and on sales of terminals,
upon installation.  Additional revenue is also recognized when a lease is
assigned and sold to a third party.  

The Company expensed $807,000, $189,000, and $65,000 for the years ended
September 30, 1997, 1996 and 1995, respectively for bankcard processing
chargeback losses.  The Company provided for other uncollectible leases and
notes receivable balances of $72,000, $217,000 and $132,000 for the years
ended September 30, 1997, 1996 and 1995, respectively.

The Company has one customer that accounted for approximately $2,697,000 and
$2,135,000 of revenues for the years ended 1997 and 1996, respectively and two
customers that accounted for approximately $5,094,000 for the year ended 1995.

Income Taxes

Income taxes are provided based on earnings reported for financial statement
purposes.  Deferred income taxes are provided for timing differences between
financial and taxable income.

In October 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (FAS 109), "Accounting for Income Taxes".  The adoption of
FAS 109 changes the Company's method of accounting for income taxes from the
deferred method under Accounting Principles Board (APB) Opinion No. 11 to an
asset and liability approach.  Previously, the Company deferred the past tax
effects of timing differences between financial reporting and taxable income. 
The asset and liability approach requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases of assets and
liabilities.  The adoption of FAS 109 had no material impact on the financial
position or results of operations of the Company.

Net Income (Loss) Per Share (amounts in whole numbers)

Net income (loss) per share is based on the weighted average number of common
shares and dilutive common equivalent shares outstanding during the period. 
The shares issuable upon conversion of preferred stock and exercise of options
and warrants are included in the weighted average for the calculation of net
income per share except where it would be anti-dilutive.  For the net income
per common share, the convertible preferred stock is not considered to be
equivalent to common stock.  Net income (loss) per share amounts included in
the consolidated statement of operations are based upon average shares
outstanding of 13,336,701, 11,297,316, and 11,039,451 in fiscal years 1997,
1996, and 1995, respectively.  Net income (loss) per share assuming full
dilution for fiscal year 1997 was determined on the assumption that the
convertible preferred stock was converted and the warrants was exercised on
October 1, 1996 or the issuance date, whichever is later.

Issuance of Common Stock, Warrants and Options

Costs associated with the issuance of common stock are accounted for as a
reduction of paid-in capital in the year of issuance of the common stock.
Gains or losses on the sale of treasury stock are recorded as a charge to
additional paid-in capital.


Stock purchase warrants issued with debt are accounted for as additional paid-
in capital.  Warrants are valued at their estimated fair value at the time of
issuance, reflected as a discount which is amortized to interest expense using
the interest method.

Stock Based Compensation

In October 1995, the Financial Accounting Standard Board issued Statement of
Financial Standards No. 123, "Accounting for Stock Based Compensation" ("FAS
123").  FAS 123 establishes market value accounting and reporting standards
for stock based employee compensation plans.  Companies may elect to continue
to account for stock-based compensation using the intrinsic value approach
under APB Opinion No 25.  The Company was required to adopt FAS 123 for its
1997 fiscal year.  The Company has elected to account for its stock-based
compensation plans in accordance with APB Opinion No. 25 and to adopt only the
disclosure requirements of FAS 123.  As a result, the adoption of FAS 123 will
not have an impact on the financial position or results of operations of the
Company.  The pro-forma disclosure required by FAS 123 is included in Note 14
of Notes to Consolidated Financial Statements.

Compensation expense is recognized in association with the issuance of stock
options and warrants as the difference, if any, between the trading price of
the stock at the time of issuance and the price to be paid by an officer or
director.  Compensation expense is recorded over the period the officer or
director performs the related service.

Accounting Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the reported
amounts of revenues and expenses during the reporting period.  Actual results
could differ from those estimates.

NOTE 2 - NATURE OF OPERATIONS

The Company operates principally in the electronic transaction processing and
related equipment sales and leasing industry.  The Company also occasionally
engages in real estate transactions; however, the real estate portion of the
Company's business historically has not, and is not expected to, generate a
significant part of the Company's revenues.  ECHO provides credit card
authorizations, electronic deposit services and check guarantee services for
retail and wholesale merchants and banks.  In addition, the Company develops
and sells electronic terminals for use by its customers and other processing
companies.  The Company has five wholly owned subsidiaries:  ECHO Payment
Services, Inc. (formerly GCLC Corporation), Computer Based Controls, Inc.,
ECHO R&D Corporation (inactive), XpressCheX, Inc. and National Credit Card
Reserve Corporation.

During fiscal 1997, the Company continued to seek additional banking
relationships and expanded its merchant base.  The Company currently has
processing agreements and relationships with four (4) different banks. 
Management expects processing operations to continue to contribute
significantly to cash flow in 1998 and that short term assets will be
sufficient to meet current liabilities.  

NOTE 3 - STATEMENT OF CASH FLOWS:

In fiscal years 1997, 1996 and 1995, cash payments for interest were $174,000,
$220,000, and $137,000, respectively.

Significant non-cash transactions for fiscal 1997 are as follows:


-  Capital equipment of $141,000 was acquired under capital leases.

-  Accounts payable of $57,000 was paid by the issuance of 70,345 shares of the
   Company's common stock.

-  A note receivable of $51,000 was obtained from an officer upon the issuance
   of 60,000 shares of the Company's common stock based on the exercise of
   stock options.
 
Significant non-cash transactions for fiscal 1996 are as follows:

-  Computer equipment and Internet specific programs totaling $100,000 were
   purchased for 250,000 shares of the Company's common stock.

-  An automobile for $21,000 was acquired under capital lease.  

Significant non-cash transactions for fiscal 1995 are as follows:

-  8,823 shares of Class F Preferred Stock were converted to 176,460 shares of
   common stock.

-  Computer equipment of $34,000 and testing equipment of $32,000 were acquired
   under capital leases.


NOTE 4 - INVENTORY

The components of inventory are as follows:

<TABLE>
<CAPTION>

                                          September 30     
                                    1997              1996

<S>                            <C>                 <C>
Raw materials                    $120,000            $  406,000       

Finished goods                    699,000               193,000       

                                  819,000               599,000       

Less: Allowance for 
  obsolescence                     70,000                20,000       

                               $  749,000            $  579,000       

</TABLE>


NOTE 5 - NOTES RECEIVABLE FROM STOCKHOLDERS AND RELATED PARTIES:

The Company occasionally engages in transactions with stockholders and related
parties, the terms of which may not be the same as those that would result
from transactions among wholly unrelated parties.

Notes receivable from stockholders and related parties are comprised of the
following:

<TABLE>
<CAPTION>


                                                                     
                                                          September 30    
                                                         1997      1996

<S>                                                    <C>        <C>
Note receivable from 
 officer bearing 8% interest, 
 secured by 60,000 shares
 of the Company's common stock, 
 due July 1998                                         $51,000     - 0 -

Note receivable, net of loss 
 reserve of $148,000, $98,000 
 at September 30, 1997 and 1996, 
 respectively. Non-interest bearing, 
 due on demand, secured by common 
 shares of closely held company 
 and personal guarantee of owner, 
 a previous stockholder.                                 -0-      50,000
                                                       $51,000   $50,000
</TABLE>


NOTE 6 - LONG TERM RECEIVABLES

Long term receivables consist of the following:





<TABLE>
<CAPTION>
                                                           September 30
                                                        1997       1996

<S>                                                  <C>        <C>
Lease receivables -  consist of
  long term portion of equipment 
  leases to merchants, net of 
  deferred interest                                  $84,000    $75,000

Accounts receivable - chargebacks, 
  subsequent to fiscal year ended 
  September 30, 1997, the Company 
  received two notes receivable from 
  two merchants as a repayment of certain 
  chargeback receivable, secured by 230,345 
  shares of the Company's common stock, 
  due in November 1999, bears 6% interest            289,000     -0-   
                                                   $ 373,000   $ 75,000
</TABLE>

NOTE 7 - PROPERTY AND EQUIPMENT:

Book value of property and equipment comprise of the following:

<TABLE>
<CAPTION>
                                                                       
                                                          September 30    
                                                       1997          1996


<S>                                              <C>           <C>
Land and building                               $    880,000   $  880,000
Computer equipment 
  and software                                     1,617,000    1,410,000
Furniture, fixtures 
  and equipment                                      669,000      578,000
Building improvements                                 45,000        5,000
Tooling equipment                                    285,000      333,000
Automobile                                            21,000       21,000
Cost                                               3,517,000    3,227,000
Less:  accumulated depreciation 
  and amortization                                (1,947,000)  (1,738,000)

Net book value                                   $ 1,570,000  $ 1,489,000

</TABLE>

Included in property and equipment are assets under capital lease of $322,000
and $215,000 at September 30, 1997 and 1996, with related accumulated
depreciation of $149,000 and $114,000, respectively.  



NOTE 8 - REAL ESTATE HELD FOR INVESTMENT:

Investments in real estate consist of undeveloped land. The undeveloped land
was contributed to the Company as part of the original capitalization.

The Company presently owns undeveloped land in seven western states.  The
Company has entered into an agreement with a party to seek to sell all of its
real estate holdings. The Company has held all of its land properties for over
ten years and does not have current appraisals nor title insurance on its real
estate holdings. Some of the properties are held pursuant to quit claim deeds. 
The real estate holdings are carried on the Company's books at estimated fair
market value less estimated costs to sell.

The Company provided $84,000 and $172,000 allowance for estimated losses for
the years ended September 30, 1996 and 1995 on its investment in real estate
to reflect the estimated fair market value less estimated costs of
disposition, no further increases to the allowance during fiscal 1997 were
deemed necessary.


NOTE 9 - OTHER ASSETS:

Other assets comprise of the following:

<TABLE>
<CAPTION>
                                                              September 30  
                                                         1997         1996

<S>                                                   <C>          <C>
Purchased technology, net of 
 accumulated amortization of 
 $106,000 and $101,000                                $  -0-       $ 5,000

Printer technology, net of 
 accumulated amortization of 
 $3,000 and -0-                                         197,000    200,000

Patents and associated cost, 
 net of accumulated amortization 
 of $10,000 and $4,000                                  159,000    111,000

Software costs, net of 
 accumulated amortization of 
 $201,000 and $134,000                                  475,000    272,000

Other                                                    11,000     24,000

                                                      $ 842,000  $ 612,000

</TABLE>

The Company capitalized $317,000 and $134,000 software costs related to the
United States Postal Service (USPS) Pilot Program and $34,000 and $88,000 for
the development of in-house software for the years ended 1997 and 1996,
respectively.  The printer technology for the Company's electronic money order
device (EMOD) was purchased during fiscal year 1994.  As of September 30,
1997, this technology has been incorporated in the EMOD under the USPS Pilot
Program and being amortized over the estimated number of units to be produced.
Total amortization of intangible assets was $78,000, $99,000, and $66,000 for
the fiscal years ended 1997, 1996, and 1995, respectively.


NOTE 10 - SHORT-TERM BORROWINGS AND LONG-TERM DEBT:

Short-term borrowings and long-term debt consist of the following:

<TABLE>
<CAPTION>

                                                              September 30   
                                                          1997        1996

<S>                                                     <C>       <C>
Convertible notes payable with detached 
 warrants, unsecured, due March 15, 1997, 
 stated interest of 12%, convertible at the option
 of the holder to common stock at $.40 per share       $  - 0 -   $200,000

Convertible notes payable with detached warrants, 
 unsecured, due April 1, 1997, stated interest of 
 12%, convertible at the option of the holder to 
 common stock at $.50 per share                           - 0 -    100,000     
    
Convertible notes payable with detached warrants, 
 unsecured, due March 31, 1997, stated interest 
 of 12%, convertible at the option of the holder 
 to common stock at $.40 per share                        - 0 -    600,000

Note payable, secured by corporate headquarters 
 building, due October 2004.  Interest at 3.5% 
 above 11th District cost of funds, which was 
 8.38% as of September 30, 1997.                        539,000    550,000

Term loan, secured by computer equipment,
 bearing interest at 11%                                 17,000     94,000

Term loan, secured by lease pool, bearing
 interest at 13%                                        110,000     - 0 - 

Capital leases (Note 15)                                160,000     91,000

Other                                                     5,000      6,000
                                                        831,000  1,641,000
Less:  current portion                                 (150,000)(1,044,000)

Total long-term debt                                   $681,000   $597,000

</TABLE>

Concurrent with purchasing the corporate office building in fiscal year 1995,
the Company issued a secured note payable for $560,000 to the bank, its
previous owner, amortized over thirty years due in October 2004. Monthly debt
service for principal and interest approximates $4,200. Interest on this note
is tied to the index of the 11th District cost of funds.

In December 1994, the Company issued 12% convertible notes payable aggregating
$600,000 with detached warrants to purchase 600,000 shares of common stock at
$0.40-$0.50 per share.  During fiscal year 1997, all the notes were converted
into common stock of the Company.

In fiscal 1995, the Company opened a line of credit for $150,000 with its
primary processing bank to upgrade the Company's bankcard processing system. 
The line was converted to a 2 year term loan at January 1, 1996, bearing 11%
interest and secured by the computer equipment.

In March 1996, the Company issued 12% convertible notes payable aggregating
$200,000 with detached warrants to purchase 200,000 shares of common stock at
$.40 per share. The notes were converted into the Company's common stock
during fiscal year 1997.

In February 1997, the Company borrowed $150,000 from a bank, bearing 13%
interest, to be repaid over 24 months.  This term loan is collateralized by
certain lease pools and is fully guaranteed by the Company.

Future maturities of debt are as follows:

<TABLE>
<CAPTION>

            Fiscal year ended September 30

              <S>                                     <C>
              1998                                   $ 150,000
              1999                                      77,000
              2000                                      36,000
              2001                                      32,000            
              2002                                      26,000
              thereafter                               510,000
                                                     $ 831,000

</TABLE>


NOTE 11 - ACCRUED EXPENSES:

Accrued expenses are comprised of the following:

<TABLE>
<CAPTION>

                                                        September 30   
                                                       1997      1996

<S>                                                 <C>      <C>
Accrued bank card fees                              $123,000 $116,000
Accrued compensation and taxes                       121,000  158,000
Accrued communication costs                          167,000  171,000
Accrued professional fees                            148,000  112,000
Accrued commission                                    79,000  118,000
Other                                                 93,000  119,000
                                                    $731,000 $794,000
</TABLE>



NOTE 12 - INCOME TAXES:

At September 30, 1997, the Company recorded an income tax benefit of $212,000
for a net operating loss (NOL) utilization. No such benefit was recognized in
1996 or 1995.  The Company has federal tax loss carryforwards of approximately
$5,683,000 and $5,910,000, and state tax loss carryforwards of $1,267,000 and
$3,126,000 for the fiscal years ended 1997 and 1996, respectively. These
carryforwards will expire from 1997 through 2010 if not utilized against
future taxable income.  The utilization of a portion of the carryforwards is
subject to limitations under Internal Revenue Code Section 382 (Section 382)
due to a change in ownership of the Company which occurred during fiscal year
1987, and may be further reduced upon future changes of control.  Investment
tax credits of $51,000 are also available to reduce future federal income
taxes and expire in years 1997 through 2000.  The utilization of these credits
is also subject to Section 382 limitations.

The Company has a $2,050,000 and $2,300,000 deferred tax asset for the loss
carryforwards against which it has recorded a 100% valuation reserve based on
the uncertainty of utilization of the federal and state loss carryforwards for
the fiscal years ended 1997 and 1996.  The amount of the deferred tax asset is
based on the current federal and state loss carryforwards after Section 382
limitations. Tax rates of 34% and 9.3%, respectively, were applied to
determine the potential future values of the loss carryforwards.  No tax
effect for temporary differences is recognized as the total deferred taxes
that would result from such differences is minor.


NOTE 13 - STOCKHOLDERS' EQUITY:


Preferred Stock

On March 31, 1994, the Company issued 23,511 shares of Series H Preferred
Stock (Class H Stock) to two noteholders in exchange for $329,000 of debt and
accrued interest.  1,116 of these Class H shares were issued to the Company's
president.  Class H Stock has a stated value of $14.00 and is convertible into
20 shares of common stock.  The Company may call Class H Stock at any time at
a price of $14.50 per share.  Class H Stock has priority in liquidation over
the Company's common stock but is junior in liquidation to all previous
classes of preferred stock.

During fiscal 1996, the Company issued 425,000 shares of Series K Preferred
Stock (Class K Stock) for an aggregated price of $850,000.  Class K Stock has
a stated value of $2.00 per share and is convertible into four shares of
common stock.  Class K Stock has priority in liquidation over the Company's
common stock but is junior in liquidation to all previous classes of preferred
stock. During fiscal 1997, 50,000 shares of series K Preferred stock were
converted into 200,000 shares of the Company's common stock.

During fiscal 1997, the Company issued 172,000 shares of Series L Preferred
Stock (Class L Stock) for an aggregate price of $860,000.  Class L Stock has a
stated value of $5.00 per share and is convertible into four shares of common
stock.  Class L Stock has priority in liquidation over the Company's common
stock, but is junior in liquidation to all previous classes of preferred
stock.

Common Stock Warrants

At September 30, 1997, the following warrants were outstanding:

<TABLE>
<CAPTION>

          Warrants         Option       Expiration
         Outstanding        Price          Date

   

          <S>                <C>            <C>
           100,000            0.50           May 1998
           500,000            0.40           February to March 1999
           500,000            0.40           December 1999
         1,100,000       

</TABLE>

-  Warrants to purchase 600,000 shares of common stock at $.50 per share were
   issued in December 1994 in connection with notes with an aggregate face
   value of $600,000 and stated interest rate of 12%.  The warrants are
   exercisable for five years subsequent to date of grant.  300,000 of these
   warrants can be called at $0.50 per share by the Company after a period of
   thirty months. If the warrants are called, the holder shall be given thirty
   days to exercise the warrants or permit them to expire.  The exercise price
   of the 600,000 warrants was reduced to $.40 per share in February 1996.  In
   addition, 300,000 warrants were issued in February 1996, exercisable at $.40
   per share for three years in connection with several term loan extensions.

-  Warrants to purchase 200,000 shares of common stock at $.40 per share were
   issued in March 1996 in connection with notes with an aggregated face value
   of $200,000 and stated interest rate of 12%.  The warrants are exercisable
   for three years subsequent to date of grant.


NOTE 14 - COMMON STOCK OPTIONS:

Stock option activity during 1995, 1996, and 1997 was as follows:

<TABLE>
<CAPTION>

                                                             Exercise
                                        Options           Price
             
   <S>                                <C>              <C>
   Outstanding September 30, 1995     2,800,000        $0.40 - $0.85

     Granted                            925,000         0.40 - 1.03
     Forfeited                         (270,000)        0.50
     Exercised                         (150,000)        0.50 - 0.56
   Outstanding September 30, 1996     3,305,000         0.40 - 1.03

     Granted                            595,000         1.06 - 1.47
     Forfeited                         (200,000)        0.85
     Exercised                         (220,000)        0.50 - 0.85
   Outstanding September 30, 1997     3,480,000        $0.40 - $1.47

</TABLE>

During fiscal 1995, the President of the Company, as part of a new employment
agreement, was granted 310,000 options to purchase one share of common stock
for $.50, vesting over three years.  In addition, the Chief Executive Officer
and Chairman was granted 650,000 options to purchase one share of common stock
for $.40 each and an officer was granted 50,000 options to purchase one share
of common stock at $.50 each.  Also during fiscal 1995, an officer's warrants
to purchase 100,000 shares of common stock at $.85 each were converted to
100,000 options each to purchase one share of common stock for $0.85.  150,000
options previously issued to an officer expired during the year.  

During fiscal 1996, the Company's Board of Directors granted each of its
outside directors options to purchase 100,000 shares of common stock ranging
from $.40 to $1.03 per share during the term of their respective service on
the board.  In addition, the Company also granted an aggregate of 625,000
options to four officers and an employee to purchase common stock ranging from
$.50 to $.84 per share.

During fiscal 1997, the Company's Board of Directors granted each of its
outside directors 125,000 shares of options exercisable ranging from $1.15 to
$1.47 per share.  In addition, the Company also granted an aggregate of
220,000 options to several officers and key employees to purchase common stock
ranging from $1.06 to $1.47 per share.

All officer options, with the exception of the 310,000 options granted under
the president's employment agreement, are granted under the Company's
incentive stock option plan.  Options granted to outside directors and
employees are not included in the plan. The exercise price of both the
incentive stock options and directors' and employees' options shall be 100% of
the fair market value on the date the option is granted.

On May 13, 1992, the Company's Board of Directors authorized adoption of an
Incentive Stock Option Plan ("Plan"), which was ratified by the shareholders
at the Annual Meeting, held July 10, 1992.  The Plan provided for the issuance
of up to 325,000 stock options, each to purchase one share of the Common Stock
for $0.85 per share, subject to adjustment in the event of stock splits,
combinations of shares, stock dividends or the like.  On November 18, 1996,
the Company's Board of Directors authorized an increase in the Plan to
3,375,000 options.  This Plan amendment was ratified by the shareholders at
the Annual Meeting held in February of 1997. Since grants are made at not less
than fair market value, no compensation cost has been recognized.

The weighted average fair value of the options granted, under the plan in
effect at September 30, 1997, during the fiscal years ended September 30, 1996
and September 30, 1997 were $0.44 and $0.80, respectively.  Fair value was
determined using the Black Scholes options pricing formula.  For options
granted in fiscal 1996, the risk free interest rate was approximately 6%, the
expected life was 3-5 years, the expected volatility was approximately 81.9%
and the expected dividend yield was 0%, all calculated on a weighted average
basis.  For options granted in fiscal 1997, the risk free interest rate was
approximately 6%, the expected life was 3-5 years, the expected volatility was
approximately 81.9% and the expected dividend yield was 0%, all calculated on
a weighted average basis.

On a pro-forma basis under the provision of FAS 123, net loss and net loss per
share would have increased by $143,000 and $0.013 for the year ended September
30, 1996, respectively, and net income and net income per share would have
decreased by $390,000 and $0.029 for the year ended September 30, 1997,
respectively.

NOTE 15 - COMMITMENTS AND CONTINGENCIES:

Terminal equipment leases

The Company leases terminals to customers under agreements that are classified
as sales.  Sales-type lease terms are for two to three years. A total lease
receivable net of unearned income of $441,000 and $233,000 was outstanding at
September 30, 1997 and 1996, respectively.  $85,000 and $28,000 have been
reserved for against lease cancellations at September 30, 1997 and 1996,
respectively.  The interest income recognized on the leases was $60,000,
$31,000 and $20,000 for the years ended September 30, 1997, 1996 and 1995,
respectively.  

Prior to March 1993, the majority of receivables resulting from sales-type
leases were sold to the Company's primary processing bank upon origination. 
During fiscal 1997, the Company pledged as collateral $200,000 of lease
payment streams to American Independent Bank regardless of the collectibility
of any specific lease(s) in the bank's portfolio.  The Company charged
$22,000, $46,000 and $37,000 to expense for leases that became uncollectible
for the years ended September 30, 1997, 1996, and 1995, respectively.  

The Company's future payment stream on in-house leases is as follows:

            Fiscal Year                Payments
            1998                      $ 307,000
            1999                         90,000

                                      $ 397,000


Lease Commitments

In November 1994, the Company entered into a five-year lease for a 4,200
square foot warehouse facility to house its manufacturing repair facility at a
monthly rental of $2,600.

The Company's future minimum rental payments for capital and operating leases
(Note 9) at September 30, 1997 are as follows:

<TABLE>
<CAPTION>

                                                                 
   Fiscal Year                     Capital Leases     Operating Leases

   <S>                               <C>                <C>
   1998                              $68,000            $32,000
   1999                               49,000             31,000
   2000                               38,000               -0- 
   2001                               30,000               -0- 
   2002                               20,000               -0- 

   Total minimum lease payments   $  205,000         $   63,000
   Less: imputed interest             45,000
   Present value of net 
     minimum lease payments       $  160,000

</TABLE>

NOTE 16 - LITIGATION

The Company is currently involved in lawsuits against twenty-five merchants
for losses incurred from chargebacks that the Company has paid on behalf of
those merchants.  These lawsuits aggregate to more than $483,000. 
Additionally, the Company has hired outside counsel to bring suit against
three out-of-state merchants for chargeback losses of more than $466,000, as
of the fiscal year ended September 30, 1997.  The Company has approximately
$1,025,000 in reserve against total chargeback receivables as of September 30,
1997.  In Management's opinion, the reserve established is sufficient to
provide for any losses which may be sustained against such receivables. One
out-of-state merchant has brought suit against the Company for breach of
contract which the Company believes is without merit and is currently being
defended against.














<PAGE>


          ELECTRONIC CLEARING HOUSE, INC. AND CONSOLIDATED SUBSIDIARIES

<TABLE>


                            SCHEDULE VIII TO FORM 10K

            RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<CAPTION>
                                                     REDUCTION  IN       
                                                      RESERVE AND        
                           BALANCE  AT    CHARGED TO   ACCOUNTS     BALANCE AT
DESCRIPTION                  9/30/95        EXPENSE   RECEIVABLE      9/30/96


<S>                        <C>            <C>         <C>          <C>
Allowance for
 trade receivables/
 chargeback receivables    $824,000      $242,000    $777,000      $289,000 

Allowance for
 notes receivable            -0-           98,000      -0-           98,000 


Allowance for
 obsolete inventories        -0-           20,000      -0-           20,000 


SCHEDULE VIII TO FORM 10K CONTINUED:

                                         REDUCTION IN
                                          RESERVE AND
                            CHARGED TO     ACCOUNTS  BALANCE AT
                              EXPENSE     RECEIVABLE   9/30/97


<S>                        <C>            <C>       <C>
Allowance for
 trade receivables/
 chargeback receivables    $836,000      $100,000  $1,025,000

Allowance for
 note receivable             50,000         - 0 -     148,000

Allowance for
 obsolete inventories        50,000         - 0 -      70,000

</TABLE>
                                       S-1



                                                                 EXHIBIT 10.35 




              MERCHANT MARKETING AND PROCESSING SERVICES AGREEMENT



THIS MERCHANT MARKETING AND PROCESSING SERVICES AGREEMENT ("Agreement") is
made effective as June 24, 1997, by and between First Regional Bank, ("Bank"),
and Electronic Clearing House, Inc. ("ECHO").

                                    RECITALS

WHEREAS, Bank desires to provide Merchant Services to Merchants, and 

WHEREAS, ECHO is engaged in the business of providing various marketing and
data processing services which will support Bank's Merchant Services to
Merchants, and

WHEREAS, Bank desires that ECHO provide these various marketing and data
processing services to Bank as support for Bank's provision of Merchant
Services.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:

                             ARTICLE 1 - DEFINITIONS

The definitions appearing in this Agreement or any supplement or addendum to
this Agreement shall be applicable to both singular and plural forms of the
defining terms:

         1.1   "ACH" means the Federal Reserve Bank's Automated Clearing House
         system.

         1.2   "ACH Data" means debit and credit transactions authorized by
               account holder.

         1.3   "Authorization Log" means the monthly transaction detail summary
         setting forth individual transactions sorted by Merchant, including,
         but not limited to, (i) the Merchant account number, (ii) the
         Cardholder's account number, (iii) the transaction amount, (iv) the
         transaction date and time, (v) the method of entry, and (vi) whether
         the transaction was authorized only, or authorized and captured.

         1.4   "Authorization" means the alpha numeric characters by the Card
         issuing bank acknowledging that (i) the account number represents a
         valid Cardholder account, (ii) the transaction amount is within the
         Cardholder's spending limit, and (iii) the Card has not been reported
         lost or stolen at the time of the authorization.

         1.5   "Card" means an unexpired Visa or MasterCard credit card.

         1.6   "Cardholder" means the individual whose name is embossed on a
         Card.

         1.7   "Chargeback" means an electronic debit to a Settlement initiated
         by a Cardholder dispute.

         1.8   "Chargeback Reserve Account" means ECHO's demand deposit account
         at Bank established and funded by ECHO pursuant to the provisions of
         Section 6.4.5 and to be used to reimburse Bank according to the
         provisions of Section 6.5.1.

         1.9   "Credit Voucher" means the Merchant's record of return or refund
         to be credited to Cardholder's account.

         1.10  "Demand Deposit Account" means the Merchant demand deposit
         and/or money market account at Bank or other financial institution
         designated for use in conjunction with Merchant Services.

         1.11  "Draft Capture Service" means the acquisition, electronically by
         ECHO, of the               information necessary to submit a Sales
         Draft and/or Credit Voucher to Visa and/or MasterCard for Settlement.

         1.12  "Funds Distribution Instructions" means electronic
         files containing debit and credit instructions pertaining to
         Merchant Demand Deposit Accounts.

         1.13  "Independent Service Organization" means an Independent
         Service Organization as defined from time to time by Visa.

         1.14  "MasterCard" means MasterCard International.

         1.15  MasterCard/Visa Reserve Account" means the demand deposit
         account at Bank established and funded by ECHO pursuant to the
         provisions of Section 6.4.5 and to be used to reimburse Bank according
         to the provisions of Section 6.3.6.

         1.16  "Merchant" means businesses accepting Card.

         1.17  "Merchant Service Provider" means the Merchant Service
         Provider as defined by MasterCard from time to time.

         1.18  "Merchant Services" means the services provided to
         Merchant by Bank, or by ECHO on behalf of Bank, under this
         Agreement.

         1.19  "Pricing Guidelines" means the pricing guidelines
         established by Bank which are the charges, fees and discounts
         to be assessed to and collected from Merchants by ECHO for
         Merchant Services provided on Bank's behalf by ECHO in
         connection with Bank's Merchant Services program.

         1.20  "Sales Draft" means Merchant's record of Cardholder purchase.

         1.21  "Settlement" means the movement of information and
         funds via a Settlement Processor or ACH that results in the
         withdrawal or deposit of funds from Visa and MasterCard member
         banks per their authorized transactions.

         1.22  "Settlement Data" means the daily sales and return
         transactions and any adjustments made in processing of
         chargebacks or resubmitted rejects needed by the Settlement
         Processor in connection with each Merchant for each business
         day.

         1.23  "Settlement Processor" means the entity designated by
         ECHO to perform the withdrawal or deposit of funds from Visa
         and MasterCard member banks in conjunction with authorized
         transactions and the transmission of such funds to the entity
         entitled thereto.

         1.24  "Settlement Processor Reserve Account" means the ECHO demand
         deposit account at Bank established and funded by ECHO pursuant to the
         provisions of Section 6.4.5 and to be used to reimburse Bank according
         to the provisions of Section 6.3.5.

         1.25  "Total DDA Balances" means the end of month total funds on
         deposit in Demand Deposit Accounts, Money Market Accounts, and reserve
         accounts at Bank.

         1.26  "Visa" means Visa U.S.A.

               ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF ECHO

ECHO represents and warrants that as of the effective date of this Agreement:

         2.1   Due Organization.  ECHO is duly organized and validly
         existing in good standing under the laws of the jurisdiction
         of its organization, and is duly qualified to conduct business
         in each jurisdiction which its business is conducted.

         2.2   Authorization, Validity and Enforceability.  The
         execution, delivery and performance of this Agreement executed
         by ECHO is within ECHO's powers, has been duly authorized, and
         is not in conflict with ECHO's articles of incorporation or
         by-laws, or the terms of any charter or other organizational
         document of ECHO; and that this Agreement constitutes a valid
         and binding obligation of ECHO, enforceable in accordance with
         its terms.

         2.3   Compliance with Applicable Laws.  ECHO has complied
         with all licensing, permit and fictitious name requirements to
         lawfully conduct the business in which it is engaged.


         2.4   No Conflict.  The execution, delivery and performance
         by ECHO of this Agreement is not in conflict with any law,
         rule, regulation, order or directive, or any indenture,
         agreement, or undertaking to which ECHO is a party or by which
         ECHO may be bound or affected.

         2.5   No Event of Default.  No Event of Default has occurred
         and is continuing.

               ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BANK

Bank represents and warrants that as of the effective date of this Agreement:

         3.1   Due Organization.  Bank is duly organized and validly
         existing in good standing under the laws of the jurisdiction
         of its organization, and is duly qualified to conduct business
         in each jurisdiction which its business is conducted.

         3.2   Authorization, Validity and Enforceability.  The
         execution, delivery and performance of this Agreement executed
         by Bank is within Bank's powers, has been duly authorized, and
         is not in conflict with Bank's articles of incorporation or
         by-laws, or the terms of any charter or other organizational
         document of Bank; and that this Agreement constitutes a valid
         and binding obligation of Bank, enforceable in accordance with
         its terms.

         3.3   Compliance with Applicable Laws.  Bank has complied
         with all licensing, permit and fictitious name requirements to
         lawfully conduct the business in which it is engaged.

         3.4   No Conflict.  The execution, delivery and performance
         by Bank of this Agreement is not in conflict with any law,
         rule, regulation, order or directive, or any indenture,
         agreement, or undertaking to which Bank is a party or by which
         Bank may be bound or affected.

         3.5   No Event of Default.  No Event of Default has occurred
         and is continuing.

                    ARTICLE 4 - CONDITIONS PRECEDENT OF BANK

        4.1    Required Delivery.  The obligation of ECHO to perform any 
         services under this Agreement is subject to the condition that, on or
         before the date of any requested service by Bank, there shall have
         been delivered to ECHO, in form and substance satisfactory to ECHO,
         and duly executed as required by ECHO:



               (a)  This Agreement;

               (b)  Any and all documents or agreements required
               by ECHO to evidence approval by Visa and/or
               MasterCard, of Bank to become a primary credit
               card processing bank;

               (c)  Such authorization documents as ECHO may
               require evidencing the authorization, validity
               and enforceability of this Agreement as executed
               by Bank;

               (d)  Evidence from the appropriate governmental
               or regulatory authority or authorities, if
               required, such as the California State Banking
               Department, evidencing the approval and/or
               consent to any transactions or events related to
               the implementation of this Agreement and any
               services and/or transactions contemplated hereby;

               (e)  Such other documents, instruments or agreements as ECHO may
               require.

                    ARTICLE 5 - CONDITIONS PRECEDENT OF ECHO

         5.1   Required Delivery.  The obligation of Bank under this Agreement
         is subject to the condition that, on or before the date of the
         performance of any activities by Bank hereunder, there shall have been
         delivered to Bank, in form and substance satisfactory to Bank, and
         duly executed as required by Bank:

               (a)  This Agreement;

               (b)  Such authorization documents as Bank may
               require evidencing the authorization, validity
               and enforceability of this Agreement as executed
               by ECHO;

               (c)  Such other documents, instruments or
               agreements as Bank may require;

                           ARTICLE 6 - DUTIES OF ECHO

ECHO agrees to assist Bank in filing its applications to Visa and MasterCard
to become a primary credit card processing bank.

During the term of this Agreement ECHO will, unless Bank otherwise consents in
writing:


         6.1   SALES AND MARKETING

               6.1.1  Sales and Marketing Compliance.  Conduct its Merchant
               solicitation activities in strict compliance with the rules and
               regulations of Visa, MasterCard and this Agreement.

               6.1.2  Use of Employees.  Staff sales, installation, service and
               other positions performing functions under this Agreement with
               employees who are individuals under the exclusive control of
               ECHO.  Should ECHO determine it necessary, in its sole
               discretion, to utilize the services of non-employees, ECHO shall
               be responsible to assure that all acts performed by any such
               non-employees are conducted in accordance with the terms and
               conditions of this Agreement.

               6.1.3  Marketing Materials.  Produce marketing materials for the
               purpose of marketing Bank's Merchant Services program.  The
               amount and type of any such marketing materials shall be within
               the sole discretion of ECHO, provided, however, all such
               marketing materials shall not be used or implemented by ECHO
               without the approval of Bank.  The cost of creating and
               producing any such marketing materials shall be the sole cost
               and expense of ECHO.

               6.1.4  Merchant Documentation.  Obtain completed, properly
               executed applications and other documentation, as required by
               Bank, from each prospective Merchant, provide same to Bank for
               review according to Bank's Merchant approval criteria as defined
               by Bank from time to time.

               6.1.5  Installation and Training.  Provide such installation and
               training activities necessary and adequate for the
               implementation of Bank's Merchant Services at all Merchant
               locations.

               6.1.6  Registration of ECHO.  Provide Bank with sufficient
               copies of ECHO's current audited financial statements, as well
               as any other documentation reasonably necessary to allow Bank to
               register ECHO as (i) a remote originator with the Federal
               Reserve Bank, (ii) Merchant Service Provider ("MSP") with
               MasterCard, and (iii) an Independent Service Organization
               ("ISO") with Visa on an annual basis.  ECHO further agrees to
               reimburse Bank, upon receipt of written demand, for all out-of-
               pocket registration fees imposed by Visa and MasterCard and the
               Federal Reserve Bank, incurred by Bank in connection with the
               registration of ECHO with Visa and MasterCard and the Federal
               Reserve Bank, as well as any out-of-pocket costs imposed in
               connection with Bank's assistance to ECHO as set forth in
               section 7.20.

        6.2    AUTHORIZATION

               6.2.1  Authorization Services.  ECHO agrees to provide computer
               systems necessary and sufficient to permit Authorization
               consistent with the requirements of Visa or Mastercard for
               Merchants utilizing Settlement.  ECHO shall not be required to
               provide "Authorization Only" services to any Merchant.

        6.3    SETTLEMENT

               6.3.1  Update of Settlement Processor Files.  Provide
               appropriate Merchant information directly to the Settlement
               Processor necessary and sufficient to identify each Merchant to
               permit Settlement.  The decision to commence or terminate a
               Merchant's processing with Visa or MasterCard shall be the sole
               decision of Bank.

               6.3.2  Daily Settlement Data.  Prepare and transmit to the
               Settlement Processor, on behalf of Bank, information pertaining
               to the sales and return transactions and any adjustments made in
               the processing of chargebacks or resubmitted rejects in
               connection with each Merchant for the previous business day. 
               The time for transmission of the daily Settlement Data and the
               format for such information shall be as agreed between ECHO and
               the Settlement Processor.

               6.3.3  Settlement Funds.  Cooperate with Bank in the process of
               balancing funds transmitted to Bank by the Settlement
               Processor's bank.

               6.3.4  Merchant Charges.  ECHO agrees to assess each Merchant,
               either directly or through the ACH system, charges, fees and
               discounts in such amounts and at such times as set forth in the
               credit card agreement between Merchant and Bank.  Bank and ECHO
               acknowledge and agree that the nature, type and amounts of each
               charge, fee or discount to be assessed to each Merchant shall be
               as agreed upon between Bank and ECHO from time to time.

               6.3.5  Settlement Processor Fees and Charges.  At the weekly
               disbursements, reimburse Bank for all fees and charges incurred
               by Bank for Settlement services provided to Bank by the
               Settlement Processor.

               6.3.6  MasterCard/Visa Fees, Charges and Discounts.  Reimburse
               Bank for all fees, charges and discounts incurred by Bank for
               credit card services provided to Bank by MasterCard and Visa.

               6.3.7  Daily ACH Data.  ECHO shall submit ACH Data daily to
               fulfill any and all authorized requests. 


        6.4    FUNDS DISTRIBUTION

               6.4.1  Merchant Bank Card Processing Funds.  Arrange for all
               Merchant bank card processing funds to be deposited directly
               with Bank and available to each Merchant pursuant to the terms
               of the appropriate Merchant agreement, as amended from time to
               time, between each Merchant and Bank.  ECHO further agrees to
               provide Bank with all data necessary and sufficient to fully
               reconcile daily deposit transactions of merchant bank card
               processing funds and any further assistance in connection with
               reconciliation as Bank may request from time to time.

               6.4.2  Funds Distribution Instructions.  Each business day,
               transmit Funds Distribution Instructions to the appropriate
               Federal Reserve Bank ("FRB") in ACH format.

               6.4.3  Bank Compensation.  ECHO agrees that Bank shall be
               entitled to receive a specified percentage of the sum of each
               day's sales transactions, exclusive of returns and Chargebacks,
               for each Merchant, payable weekly, and calculated on aggregate
               monthly sales transactions, exclusive of returns and
               Chargebacks, in accordance with the following table:


                  Percentage<PAGE>
Previous End-of-Month
Aggregate DDA Balances of ECHO
Merchants
                    00.10%<PAGE>
Less than and up to $20 million
                    00.09%<PAGE>
Greater than $20 million and up
to $30 million
                    00.08%<PAGE>
Greater than $30 million and up
to $40 million
                    00.07%<PAGE>
Greater than $40 million and up
to $50 million
                    00.06%<PAGE>
Greater than $50 million and up
to $60 million
                    00.05%<PAGE>
Greater than $60 million
               Bank acknowledges and agrees that it will perform all reasonable
               activities requested of it by ECHO for the purpose of reconciling
               each week's sales and return activity for the purpose of 
               assisting ECHO in calculating the amount of compensation 
               payable to Bank.

               6.4.4  ECHO Compensation.  As compensation for its services under
               this Agreement, Bank agrees that ECHO shall be entitled to 
               receive all charges, fees and discounts received from each 
               Merchant, either directly or through the ACH system, subject 
               to ECHO's obligations under Article 6, Section 6.4, payable 
               weekly.

               6.4.5  Reserve Accounts.  ECHO agrees to establish with Bank the
               following reserve accounts.

                    (a)  Chargeback Reserve Account.

                    (b)  Settlement Processor Reserve Account.

                    (c)  MasterCard/Visa Reserve Account.

               Bank acknowledges and agrees that ECHO shall be the account 
               holder on each reserve account and is the owner of all funds 
               deposited in each reserve account, and of all interest on each 
               account which shall accrue at the then current money market 
               account rate, subject to the terms and conditions of this 
               Agreement.

               ECHO agrees to contribute to each reserve in such amounts and at
               such times as agreed upon between ECHO and Bank, in writing.

        6.5    CHARGEBACKS

               6.5.1  Reimbursement For Chargebacks and/or Merchant Fraud. 
               Immediately, reimburse Bank for losses actually incurred as a
               result of Chargebacks and/or Merchant fraud.  Should ECHO fail to
               reimburse Bank, Bank may charge such amounts against ECHO's
               chargeback reserve account.  Upon request by ECHO, Bank shall
               assign to ECHO any and all Merchant agreements, Demand Deposit
               Accounts, Money Market Accounts, and reserve accounts pertaining
               to each Merchant for which Bank has received a Chargeback loss or
               Merchant fraud loss reimbursement.  ECHO shall have the right to
               notify the Bank that it will not continue to process for any
               specific Merchant.  Such notice shall be given in writing and
               shall not negate ECHO's reimbursement obligation to the Bank up 
               to the date of such notice.  Bank may require by written 
               notice that ECHO continue to process for such merchant, but 
               in such case, Bank shall assume all chargeback and fraud 
               liability for any activity processed after ECHO's notice was 
               given to Bank.


        6.6    SECURITY; MONITORING

               6.6.1  Supervision/Monitoring of Chargebacks, Security in New
               Accounts.  Participate with Bank in the performance of security
               exception monitoring on a daily basis, in accordance with
               parameters established by Bank and using reports generated by 
               ECHO and the Settlement Processor.  Such security exception 
               monitoring shall be undertaken for the purpose of evaluating 
               and identifying Merchants with significant increases in 
               average daily and/or weekly deposits, significant variations 
               in average tickets amounts, significant variations in 
               non-magnetic card entry activity, and any other subsequently 
               identified categories.  ECHO further agrees to participate 
               with Bank in researching a Merchant for which Bank and ECHO 
               have identified questionable or suspicious transactions.  At 
               Bank's direction, ECHO agrees to follow Bank's policies and 
               procedures for freezing, halting, and/or delaying the 
               availability of ACH fund transfers or suspensions of current 
               day and subsequent deposit or withdrawal activity for any 
               Merchant until such time as Bank informs ECHO to make any ACH 
               fund transfers available to the Merchant.  Within 2 business 
               days of preparation, ECHO agrees to provide daily and
               monthly security reports to Bank.  ECHO agrees to notify Bank
               immediately upon receipt, of any information received by ECHO
               pertaining to the insolvency or bankruptcy, of any Merchant or 
               any other adverse information indicating a violation of Visa 
               and/or MasterCard regulations or information indicating 
               illegal activity by or adverse information about any Merchant 
               or any information which may indicate that a Merchant is using
               the Bank's Merchant Services for other than the sale of 
               products and services initially approved for Merchant's 
               business location.  Bank acknowledges and agrees that ECHO has
               no affirmative obligation or responsibility to seek out any 
               such information pertaining to a Merchant, but only has the 
               obligation to report any such information as it may be 
               received by ECHO from time to time.  ECHO agrees to follow 
               Bank's policies and procedures regarding Merchant change of 
               ownership and/or change of address that may occur from
               time to time.

               6.6.2  Merchant Review After Commencement of Processing.  Perform
               a review of each Merchant application, business activities and
               retail location within 60 days after any Merchant processing
               volume exceeds $30,000.00 per month for the first time.  Within 
               10 days after the end of each calendar month, ECHO will 
               provide to Bank a listing of Merchants that meet this criteria
               for the immediately preceding calendar month.  The review of 
               any such Merchant's retail location may include on-going 
               visits to such Merchant's retail location by ECHO field 
               service personnel at ECHO's sole expense.  Upon completion of 
               each Merchant review pursuant to this paragraph, ECHO agrees 
               to provide to Bank a written summary of said Merchant review 
               for the Merchant account file within 10 business days of 
               completion.


        6.7    CUSTOMER SERVICE

               6.7.1  Customer Service.  Provide customer service to Merchants 7
               days a week during the period 3:00 a.m. to 2:00 a.m. Pacific 
               Time. This customer service activity shall be available to 
               Merchants via 800 number line access for the purpose of 
               responding to Merchant inquiries regarding credit card 
               transactions, equipment operation, and repair services 
               offered.  At ECHO's sole election and determination, ECHO may 
               provide field service to merchants.

               6.7.2  Merchant Supplies; Invoice Merchants.  Provide all 
               supplies to Merchants needed to participate in Bank's Merchant
               Services program, such as printer paper, ribbons, extra 
               transaction detail reports, imprinters, and imprinter plates. 
               ECHO shall submit accumulated electronic files to Bank 
               reflecting Merchant charges for supplies, transaction fees, 
               discount fees and equipment lease fees for ECHO's billing each 
               calendar month no later than the 5th business day following 
               the end of each calendar month, utilizing the ACH system.  
               ECHO shall incur the costs of generating and submitting such 
               files and Bank shall be appropriately identified
               as the source of the automatic deductions notice mailed to
               Merchants reflecting the deduction of such charges from each
               Merchant Demand Deposit Account.

               6.7.3  Merchant Qualification.  Provide the technical 
               enhancements needed to permit the qualification of Merchant 
               sales and return transactions for any discounted interchange 
               programs offered by Visa and/or MasterCard.

               6.7.4  Electronic File Processing.  Coordinate the Authorization,
               Settlement, Draft Capture Services, electronic deposit, and
               Chargeback processing services for Bank for Merchant Service by
               ECHO.  Any such services shall be provided via access only to
               ECHO's proprietary computer system/network, 7 days each week 24
               hours a day.

               6.7.5  On-Line Access.  Provide Bank with access to individual
               Merchant's credit card activity.  All costs and expenses such as
               telecommunication, software and hardware costs related to the
               conduct of such retrieval access to Merchant data files shall be
               the sole responsibility and liability of Bank.

               6.7.6  Insolvency or Bankruptcy of ECHO.  Provide Bank with 
               ECHO's data files reasonably necessary and sufficient to 
               permit Bank to convert Merchants serviced by ECHO pursuant to 
               this Agreement to another processing servicer in the event of 
               the insolvency or bankruptcy of ECHO and which results in 
               ECHO's inability to materially perform its duties under this 
               Agreement.  Upon the completion of any conversion pursuant to 
               this paragraph, all compensation to ECHO shall cease.

               6.7.7  Disaster Contingency Plan.  Develop a contingency plan to
               assure continuity of service to Merchants by ECHO under this
               Agreement in the event of disaster.  Bank agrees that any
               technical, operational, software or hardware methods or systems
               that ECHO discloses to Bank will only be used in the event of and
               in accordance with occurrences, circumstances and conditions
               described in the contingency plan.  ECHO agrees that any
               technical, operational, software or hardware methods or systems
               that Bank discloses to ECHO will only be used in the event of and
               in accordance with occurrences, circumstances and conditions
               described in the contingency plan.

               6.7.8  Financial Statements.  Provide Bank with copies of ECHO's
               (i) annual audited financial statements and statement of
               operations within 10 calendar days of completion and (ii) 10Q and
               10K reports within 10 days of filing with the Securities and
               Exchange Commission.

         6.8   Financial Covenant.  ECHO agrees to remain qualified for NASDAQ. 
         Bank acknowledges and agrees that it shall not be a breach of this
         covenant if ECHO fails to remain qualified for NASDAQ unless such 
         failure is a material cause of ECHO's inability to perform its 
         duties under this Agreement.

         6.9   Press Releases.  Provide Bank with copies of any press release
         proposed by ECHO pertaining or relating to Merchant Services.  ECHO
         further agrees not to issue any press release pertaining or relating to
         Merchant Services provided through Bank except in form and content
         satisfactory to Bank.


                           ARTICLE 7 - DUTIES OF BANK

During the term of this Agreement Bank will, unless ECHO otherwise consents in
writing:

         7.1   Merchant Services Program Management.  Establish policies and
         procedures applicable to the provision of Merchant Services, including,
         but not limited to, policies and procedures for Merchant qualification,
         approval, Pricing Guidelines and contracts and agreements to be entered
         into by Merchants.  

         7.2   Registration of ECHO.  Register, and annually re-register, ECHO 
         as a Merchant Service Provider ("MSP") with MasterCard and as an 
         Independent Service Organization ("ISO") with Visa.

         7.3   Forms.  Provide sufficient copies of all appropriate Merchant
         applications, agreements, forms, and other documents, including all
         supplements and addenda thereto, for use by ECHO in connection with its
         sales and marketing activities to Merchants in connection with Bank's
         Merchant Services program.  Bank agrees that the cost and expense of
         preparing and providing all of the necessary Merchant applications,
         agreements, forms and documents shall be the sole responsibility of 
         Bank.

         7.4   Merchant Documentation.  Review applications, agreements, forms,
         and documentation completed by or with respect to all prospective
         Merchants utilizing the qualification criteria established by Bank from
         time to time as the basis for acceptance or rejection of each 
         prospective Merchant.  Any decision to accept or reject a 
         prospective Merchant, or terminate an existing Merchant, shall be 
         the sole responsibility of Bank.  Bank acknowledges and agrees that 
         it will not accept a prospective Merchant that utilizes paper draft 
         processing.

         7.5   Exclusivity; Non-competition.  (i) Market and process its 
         Merchant Services program and related activities exclusively through 
         and with ECHO and one other processor, herein identified as 
         Processor B, as long as ECHO can originate and Bank approves, an 
         average of 300 or more new merchants per month, for the first 18 
         months of this Agreement, (ii) limit the new merchants Bank 
         establishes under and with the assistance of Processor B to a total 
         of 3,000 merchants over the first 18 months of this Agreement, and 
         (iii) not enter into any relationship with any other
         person or entity which would interfere or compete with ECHO's
         relationship with Bank pursuant to this Agreement.  Bank 
         acknowledges and agrees that ECHO may provide its services through 
         other credit card processing banks and financial institutions in 
         addition to Bank pursuant to this Agreement.

         7.6   Registration of ECHO with the Federal Reserve Bank.  Register 
         ECHO with the Federal Reserve Bank ("FRB") as a remote originator 
         with ACH or any other registration necessary to permit electronic 
         funds transfer activity in connection with Bank's Merchant Services 
         program.

         7.7   Supervision of Chargeback, Security and New Accounts.  Bank may,
         but is not required to, provide supervision of ECHO's management,
         compliance and reporting functions relating to chargeback 
         processing, new account management and any other duties agreed upon 
         between Bank and ECHO.  ECHO agrees that no advance notice will be 
         necessary and that Bank shall be able to perform such supervision at 
         any time Bank chooses.  Any and all costs and expenses incurred by 
         Bank in connection with such supervision shall be the sole 
         responsibility of Bank.

         7.8   Security Exception Monitoring.  Bank may, but is not required to,
         perform, in cooperation with ECHO, security exception monitoring on a
         daily basis, according to parameters established by Bank and using
         reports generated by ECHO and the Settlement Processor.  The security
         exception monitoring parameters established by Bank shall be 
         provided by Bank to ECHO and the Settlement Provider in writing.

         7.9   Settlement Processor Reports.  Cause the Settlement Processor to
         deliver duplicate daily settlement reports to ECHO daily, for the
         immediately preceding business day, in form and content sufficient to
         permit timely reconciliation of rejects and chargebacks.

         7.10  ACH Rejects.  Each business day, provide ECHO with a list of all
         ACH rejects received by Bank for the immediately preceding business day
         in form and content satisfactory to ECHO.

         7.11  Demand Deposit Account Information.  Provide ECHO with the name,
         address, account number and account balance, via on-line, real time
         computer access, of each Merchant Demand Deposit Account with Bank. All
         costs and expenses related to such access to Demand Deposit Account
         Information shall be the sole responsibility of ECHO.

         7.12  Dispute of Settlement Processor Charges.  Provide all reasonable
         assistance and information requested by ECHO and deemed by it as
         necessary to dispute charges assessed to Bank by the Settlement
         Processor.  Bank acknowledges and agrees that its assistance to ECHO
         shall include, but not be limited to, communication by Bank with the
         Settlement Processor pertaining to ECHO's relationship with Bank and 
         any disputed fees or charges assessed by the Settlement Processor.

         7.13  Visa and MasterCard Policies and Procedures.  Provide ECHO, 
         within 5 calendar days of receipt, with copies of all written 
         materials received from Visa and MasterCard including, but not 
         limited to, each company's credit card interchange policies, 
         procedures, operations manuals, updates, bulletins, rules and 
         regulations necessary and sufficient to permit ECHO to perform all 
         of its duties under this Agreement.

         7.14  Settlement Processor Policies and Procedures.  Provide ECHO,
         within 5 calendar days of receipt, with copies of all written materials
         received from the Settlement Processor, including, but not limited to,
         the Settlement Processor's credit card processing policies, procedures,
         operation manuals, updates, bulletins, rules and regulations necessary
         and sufficient to permit ECHO to perform all of its duties under this
         Agreement.

         7.15  Bank Assistance with Visa and MasterCard.  Bank will actively
         promote ECHO and its association with ECHO to Visa and MasterCard. 
         Should either Visa or MasterCard make requests upon Bank regarding ECHO
         or Bank's Merchant Services, Bank will inform ECHO of such requests
         immediately and, if necessary, assist ECHO in satisfying such 
         requests.  Such assistance will not require additional compensation 
         by ECHO to Bank but all expenses incurred by Bank will be paid by 
         ECHO including but not limited to legal fees and administrative 
         expenses.  Bank acknowledges this role as a facilitator in such a 
         situation is one of their primary responsibilities in this Agreement.

         7.16  Bank Credit Card Profitability.  Within 10 days after the end of
         each month, provide ECHO with such reports, in form and content
         satisfactory to ECHO, that will demonstrate the on-going profitability
         of Bank's bankcard department or division.

         7.17  Financial Statements.  Provide ECHO with copies of Bank's Annual
         Report, and Quarterly Call Reports within 10 days of filing.

         7.18  Press Releases.  Provide ECHO with copies of any press release
         proposed by Bank pertaining or relating to Merchant Services.  Bank
         further agrees not to issue any press release pertaining or relating to
         Merchant Services provided through ECHO except in form and content
         satisfactory to ECHO.

         7.19  Merchant Termination.  Permit ECHO to notify each Merchant on
         behalf of Bank for which Bank has authorized the termination of the
         provision of Merchant Services.  Bank acknowledges and agrees that, in
         the event ECHO advises Bank that ECHO will no longer process for a
         specific Merchant, the Bank will either terminate said Merchant or 
         assume any and all liabilities, including chargeback and fraud 
         activity, that may arise out of future processing services provided 
         to said Merchant.

         7.20  Settlement Processor Certification.  Bank agrees to perform any
         and all acts reasonably requested of it by ECHO necessary and 
         sufficient to assist ECHO in the process of becoming certified by 
         Visa and MasterCard as the authorized Settlement Processor for Bank 
         pursuant to this Agreement.  ECHO agrees to reimburse Bank for all 
         out-of-pocket costs incurred by Bank and charged by the Federal 
         Reserve Bank, Visa and/or MasterCard relating thereto.

         7.21  Merchant Termination Coordinator.  Permit ECHO to coordinate and
         determine the disengagement plan for any merchant Bank desires to
         terminate. Such plan shall take no longer than four months to conclude
         termination and shall be provided to Bank in writing and shall be 
         subject to Bank's reasonable approval.  ECHO's guarantee against 
         chargeback losses shall be invalid immediately for all chargeback 
         losses from the merchant being terminated on the day Bank fails to 
         follow disengagement plan set out by ECHO under this section or 
         takes such action that would negatively effect the disengagement 
         plan in such a way to generate greater liability to ECHO or Bank.

                               ARTICLE 8 - GENERAL

         8.1   Notices.  Any notice given by any party under this Agreement 
         shall be in writing and personally delivered, deposited in the 
         United States mail, postage prepaid, or sent by tested telex, or 
         facsimile transmission or other authenticated message, charges 
         prepaid, and addressed as follows:

TO BANK:<PAGE>
                                                     

First Regional Bank
28310 Roadside Dr., #152
Agoura Hills, CA 91301
Attention:  Merchant Services
FAX or Telex No.:  (818) 735-
9699<PAGE>
TO ECHO:
Electronic Clearing House, Inc.
28001 Dorothy Drive
Agoura Hills, CA 91301-2697
Attn:  Donald R. Anderson
FAX or Telex No.:  (818) 597-
8999
Each party may change the address to which notices, requests and other
communications are to be sent by giving written notice of such change to either
party.

         8.2   Binding Effect.  This Agreement shall be binding upon and 
         enure to the benefit of ECHO and Bank and their successors and 
         assigns; provided, however, that neither Bank nor ECHO may assign or 
         transfer either party's rights or obligations under this Agreement 
         without the prior written consent of the other party.


         8.3   No Waiver.  Any waiver, permit, consent or approval by either
         party of any event of default or breach of any provision, condition or
         covenant of this Agreement must be in writing and shall be effective 
         only to the extent set forth in writing.  No waiver of any breach or 
         default shall be deemed a waiver of any later breach or default of 
         the same or any other provision of this Agreement.  Any failure or 
         delay on the part of either party in exercising any power, right or 
         privilege under this Agreement shall not operate as a waiver 
         thereof, nor shall any single or partial exercise of any such power, 
         right or privilege preclude any further exercise thereof.

         8.4   Rights Cumulative.  All rights and remedies existing in this
         Agreement are cumulative to, and not exclusive of, any other rights or
         remedies available under contract or applicable law.

         8.5   Unenforceable Provisions.  Any provision of this Agreement which
         is prohibited or unenforceable in any jurisdiction, shall be so only as
         to such jurisdiction and only to the extent of such prohibition or
         unenforceability, but all remaining provisions of this Agreement shall
         remain valid and enforceable.

         8.6   Execution in Counterparts.  This Agreement may be executed in any
         number of counterparts which, when taken together, shall constitute but
         one agreement.

         8.7   Further Assurances.  At any time or from time to time upon the
         request of either party, the other party will execute and deliver such
         further documents and do such other acts as the requesting party may
         reasonably request in order to effect fully the purposes of this
         Agreement and provide for the performance of all contemplated acts and
         activities in accordance with the terms of this Agreement.

         8.8   Indemnification By ECHO.  ECHO shall indemnify Bank against, and
         hold Bank harmless from and against, all claims, actions, losses and
         expenses, including attorneys' fees and costs incurred by Bank, arising
         from, related to or in connection with any breach by ECHO of any of its
         duties or obligations under this Agreement.  This indemnification shall
         survive the termination of this Agreement.

         8.9   Indemnification By Bank.  Bank shall indemnify, defend and hold
         harmless ECHO, from and against all claims, actions, losses, and
         expenses, including attorneys' fees and costs incurred by ECHO, arising
         from, related to, and in connection with, any breach by Bank of any of
         its duties or obligations under this Agreement.  This indemnification
         shall survive the termination of this Agreement.

         8.10  Term.  This Agreement will be for an initial term of three years
         from the effective date set forth in the preamble and full execution
         hereof and shall be subject to automatic renewals for one (1) year
         periods unless previously terminated by either party in accordance with
         the terms herein.

         8.11  Non-Circumvention.  Bank hereby acknowledges and agrees that ECHO
         "owns" all Merchants processing under this Agreement.  Bank also
         acknowledges ECHO's significant investment in Merchant processing
         services and in building a volume of Merchant processing activity.  
         Bank agrees that it will not attempt to circumvent ECHO by soliciting
         Merchants who process through ECHO to process through another source.

         8.12  Termination.  Either party may terminate this Agreement, for any
         reason, or no reason at all, during the first six months with thirty 
         (30) days advance written notice.  Ninety (90) days advance written 
         notice is required to terminate, for any reason, or no reason at 
         all, after the first six months. Bank acknowledges and agrees that a 
         reasonable period of time is required after notice period expires to 
         gracefully conclude the program since pending applications will be 
         in the sales process.  

Except as otherwise provided for in Section 8.14, if this Agreement is 
terminated by either party, the Chargeback Reserve Account shall remain at 
Bank for a period of one (1) year following termination, unless another 
qualified sponsoring bank assumes liability for all chargebacks and merchant 
fraud.

         8.13  Termination For Cause.  In addition to the termination provisions
         set forth in Section 8.12, either Bank or ECHO may terminate this
         Agreement, for cause, at any time if either party commits fraud or any
         material breach of this Agreement, or is declared insolvent or 
         bankrupt, and such insolvency or bankruptcy results in that party's 
         inability to perform any of its respective duties under this 
         Agreement.  In addition, ECHO may (i) terminate this Agreement, and 
         (ii) transfer Merchants to any other bank performing Merchant 
         Services for Visa and/or MasterCard upon the occurrence of any of 
         the following events:

               i)   Bank fails to qualify for, or maintain, Visa or MasterCard
                    qualification as a credit card processing Bank; or
               ii)  Bank's capital falls below the level required by the
                    regulatory agency overseeing state chartered banks, 
                    presently the California State Banking Department, to be an
                    "adequately" capitalized bank; or
               iii)      Bank is merged with, or acquired by, any other entity  
                         and is not the survivor;

Bank may terminate this Agreement in the event ECHO does not qualify as a remote
originator due to the gross negligence of ECHO, or if any of the above items
under (i) or (ii) were caused by the wilful act of ECHO.

In the event ECHO terminates this Agreement for any of the causes set forth
above, Bank agrees to assign all of its rights under any agreement between Bank
and each Merchant, immediately upon ECHO's written request, to any bank
identified by ECHO provided the new bank assumes all liability for any fraud or
chargeback losses.  Bank further agrees to transfer all Merchant files, records,
and related documentation to the bank identified by ECHO and to provide all
reasonable assistance requested by ECHO in the conversion and transfer of
Merchant processing activity, Demand Deposit Accounts, Merchant reserve accounts
established under any agreement between Bank and the Merchant, and the Reserve
Accounts established pursuant to Section 6.4.5, or any other activity related to
the provision of Merchant Services to any bank identified by ECHO.


         8.14  Post Notice Of Termination Relationship.  (i) In the event ECHO
         terminates this Agreement, pursuant to the provisions of Section 8.12,
         ECHO shall continue to process under the sponsorship of Bank those
         Merchants approved by Bank under the terms of this Agreement, as 
         well as new Merchants approved by Bank during the period following 
         notice of termination.  Adding new Merchants may continue following 
         notice of termination.  During such period, following notice of 
         termination, Bank shall not withhold its reasonable approval for any 
         new Merchants marketed and added for processing by ECHO under the 
         terms of this Agreement.  All compensation and processing costs 
         shall continue to be paid and ECHO's chargeback reserve account 
         would continue to be maintained as set forth under this Agreement 
         following notice of termination and for a period of 1 year following 
         termination.  Thereafter, ECHO shall have the right to transfer 
         Merchants to another qualified sponsoring Bank and Bank shall
         execute all necessary transfer and assignment documents to accommodate
         such transfer and all compensation to Bank shall cease upon transfer of
         Merchants.  Bank shall not solicit Merchants to leave ECHO nor shall 
         ECHO solicit Merchants to leave Bank.  (ii) In the event ECHO 
         terminates this Agreement pursuant to any of the provisions of 
         Section 8.13, ECHO shall have the right to transfer Merchants to 
         another qualified sponsoring bank and Bank shall execute all 
         necessary transfer and assignment documents to accommodate such 
         transfer and all compensation to Bank shall cease upon transfer of 
         Merchants.  If this Agreement is terminated for cause as defined in 
         Section 8.13, the post termination relationship as set forth in this 
         Section 8.14 does not apply except for ECHO's ability to add new 
         Merchants as provided for in this Section.

         8.15  Confidential Information and Trade Secrets.  In connection with
         the services to be rendered by ECHO pursuant to this Agreement, ECHO 
         will be providing Bank with certain information.  Bank acknowledges 
         and agrees that such information constitutes the Proprietary 
         Information and trade secrets of ECHO ("Proprietary Information").  
         Bank further acknowledges and agrees that such Proprietary 
         Information are the sole property of ECHO and that ECHO has the sole 
         right, title and interest thereto, and Bank agrees that it shall not 
         acquire, directly or indirectly, any rights, title or interest in or 
         to any of such Proprietary Information.  Bank agrees to treat such 
         Proprietary Information on a secret and confidential basis and shall 
         retain such Proprietary Information in secrecy and confidence during 
         the term of this Agreement and for a period of three years after the 
         termination of this Agreement.  The Bank further agrees that access 
         to any such Proprietary Information shall be strictly limited by 
         Bank only to those persons in the Bank who have a need to
         evaluate and review the same.  Bank further agrees to undertake all
         necessary steps to require its employees, agents, representatives 
         and all others to whom it might disclose the Proprietary Information 
         to retain the Proprietary Information in confidence during the term 
         of this Agreement and for a period of five years after the 
         termination of this Agreement.  Bank further agrees to keep 
         completely confidential names of any merchants, banks, lending 
         institutions, corporations, organizations, individual or group of 
         individuals, lenders or borrowers, buyers or sellers, introduced by 
         ECHO or any individual or entity related to ECHO to Bank in 
         connection with this Agreement or any of the transactions
         contemplated by this Agreement.  Such names and identities shall remain
         confidential during the term of this agreement and for a period of five
         years thereafter, and such names and identities shall include any
         telephone numbers, addresses, faxes, telex numbers, et al.  Bank 
         further agrees, upon termination of this Agreement, to promptly 
         return any documents or other materials obtained from ECHO prepared 
         and/or delivered by ECHO to or for Bank in connection with this 
         Agreement.  Bank acknowledges and agrees that the services rendered 
         by ECHO under this Agreement and the Proprietary Information 
         provided by ECHO in connection with the rendition of those services 
         are of a special, unique, unusual, extraordinary, and intellectual 
         character, which give this Agreement peculiar value.  Bank further 
         acknowledges and agrees that any direct or indirect disclosure, or 
         other improper use, of ECHO's Proprietary Information cannot be 
         reasonably or adequately compensated in damages in an action at law.  
         Accordingly, in addition to other remedies provided by law or this 
         Agreement, ECHO shall have the right at any time after this 
         Agreement is entered into, to obtain injunctive relief against the
         breach of this Agreement by Bank in connection with the direct or
         indirect disclosure, or other improper use of, ECHO's Proprietary
         Information.

         8.16  Right of Setoff.  Each party shall have a right of setoff with
         respect to any claims for any breach of this agreement.

         8.17  Assignment.  Except as otherwise provided herein, the rights and
         obligations of Bank and ECHO under this Agreement are personal and not
         assignable, either voluntarily or by operation of law, without the 
         prior written consent of ECHO or Bank.  Subject to the foregoing, all
         provisions contained in this Agreement shall extend to and be binding
         upon the parties hereto or their respective successors and permitted
         assigns.

         8.18  Legal Fees.  In the event of any dispute arising out of or in
         connection with this Agreement, the prevailing party shall be entitled
         to recover its reasonable attorney's fees and court costs in 
         addition to any other recovery.

         8.19  Jury Trial Waiver.  In the event of any litigation, trial or 
         other proceeding arising out of, related, or in connection with this 
         Agreement, the parties agree that any such litigation, trial or 
         proceeding shall be tried and heard by the Court only and not by a 
         jury trial.

         8.20  State Law.This Agreement shall be governed by and construed in
         accordance with the laws of the State of California as to all matters
         including validity, construction, effect, performance and remedies
         without giving effect to the principles of choice of law thereof.  For
         purposes of any lawsuit, action, or proceeding arising out of or 
         relating to this Agreement, Bank and ECHO agree that any process to 
         be served in connection therewith shall, if delivered, sent or 
         mailed in accordance with Section 8.1, constitute good, proper and 
         sufficient service thereof.

         8.21  Headings.  The headings listed after each section number in this
         Agreement are inserted for convenience only, do not constitute a 
         part of the Agreement, and are not to be considered in connection 
         with the interpretation or enforcement of this Agreement.

         8.22  Force Majeure.  If performance by ECHO of any service or
         obligation under this Agreement is prevented, restricted, delayed or
         interfered with by reason of labor disputes, strikes, acts of God,
         floods, lightning, severe weather, shortage of materials, rationing,
         utility or communication failures, failure of Visa or MasterCard or
         Settlement Processor, failure or delay in receiving electronic data,
         earthquakes, war, revolution, civil commotion, acts of public enemies,
         blockages, embargo, or any law, order, proclamation, regulation,
         ordinance, demand or requirement having legal effect of any government
         or any judicial authority or representative of any such government, or
         any other act or omission whatsoever, whether similar or dissimilar to
         those referred to in this clause, which are beyond the reasonable 
         control of ECHO, then ECHO shall be excused from the performance to 
         the extent of the prevention, restriction, delay or interference.

         8.23  Entire Agreement.  This Agreement, including Exhibits, sets forth
         all of the promises, agreements, conditions and understandings between
         the parties respecting the subject matter hereof and supersedes all
         negotiations, conversations, discussions, correspondence, 
         memorandums and agreements between the parties concerning the 
         subject matter.  This Agreement may not be amended or modified 
         except by a writing signed by authorized representatives of both 
         parties to this Agreement.

IN WITNESS WHEREOF, Bank and ECHO have executed this Agreement as of the date 
set forth in the preamble.

ELECTRONIC CLEARING HOUSE, INC.



By:  \s\ Joel M. Barry                                      
Joel M. Barry - Chairman of the Board and
Chief Executive Officer


By:   \s\ Donald R. Anderson                                
Donald R. Anderson - President and
Chief Operating Officer


FIRST REGIONAL BANK



By:  \s\ Charles Arrindell                                 
Charles Arrindell - Senior 
Vice President
<PAGE>
                                                                  EXHIBIT 10.36



              MERCHANT MARKETING AND PROCESSING SERVICES AGREEMENT


THIS MERCHANT MARKETING AND PROCESSING SERVICES AGREEMENT ("Agreement") is
made effective as June  , 1997, by and between The Berkshire Bank ("Bank"), and
Electronic Clearing House, Inc. ("ECHO").

                                    RECITALS

WHEREAS, Bank desires to provide Merchant Services to Merchants, and 

WHEREAS, ECHO is engaged in the business of providing various marketing and
data processing services which will support Bank's Merchant Services to
Merchants, and

WHEREAS, Bank desires that ECHO provide these various marketing and data
processing services to Bank as support for Bank's provision of Merchant 
Services.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt of 
which is hereby acknowledged, the parties hereto agree as follows:

                             ARTICLE 1 - DEFINITIONS

The definitions appearing in this Agreement or any supplement or addendum to 
this Agreement shall be applicable to both singular and plural forms of the 
defining terms:

         1.1   "ACH" means the Federal Reserve Bank's Automated Clearing House
         system.

         1.2   "ACH Data" means debit and credit transactions authorized by
         account holder.

         1.3   "Authorization Log" means the monthly transaction detail summary
         setting forth individual transactions sorted by Merchant, including, 
         but not limited to, (i) the Merchant account number, (ii) the 
         Cardholder's account number, (iii) the transaction amount, (iv) the 
         transaction date and time, (v) the method of entry, and (vi) whether 
         the transaction was authorized only, or authorized and capture.

         1.4   "Authorization" means the alpha numeric characters by the Card
         issuing bank acknowledging that (i) the account number represents a 
         valid Cardholder account, (ii) the transaction amount is within the
         Cardholder's spending limit, and (iii) the Card has not been reported
         lost or stolen at the time of the authorization.

         1.5   "Card" means an unexpired Visa or MasterCard credit card.

         1.6   "Cardholder" means the individual whose name is embossed on a
         Card.
         1.7   "Chargeback" means an electronic debit to a Settlement initiated
         by a Cardholder dispute.

         1.8   "Chargeback Reserve Account" means ECHO's demand deposit account
         at Bank established and funded by ECHO pursuant to the provisions of
         Section 6.4.5 and to be used to reimburse Bank according to the
         provisions of Section 6.5.1.

         1.9   "Credit Voucher" means the Merchant's record of return or
         refund to be credited to Cardholder's account.

         1.10  "Demand Deposit Account (DDA)" means the Merchant demand
         deposit and/or money market accounts at Bank designated for use
         in conjunction with Merchant Services.

         1.11  "Draft Capture Service" means the acquisition, electronically by
         ECHO, of the information necessary to submit a Sales Draft
         and/or Credit Voucher to Visa and/or MasterCard for Settlement.

         1.12  "Funds Distribution Instructions" means electronic files
         containing debit and credit instructions pertaining to Merchant
         Demand Deposit Accounts.

         1.13  "Independent Service Organization" means an Independent
         Service Organization as defined from time to time by Visa.

         1.14  "MasterCard" means MasterCard International.

         1.15  "MasterCard/Visa Reserve Account" means the demand deposit 
         account at Bank established and funded by ECHO pursuant to the 
         provisions of Section 6.4.5 and to be used to reimburse Bank 
         according to the provisions of Section 6.3.6.

         1.16  "Merchant" means businesses accepting Card.

         1.17  "Merchant Service Provider" means the Merchant Service
         Provider as defined by MasterCard from time to time.

         1.18  "Merchant Services" means the services provided to
         Merchant by Bank, or by ECHO on behalf of Bank, under this
         Agreement.

         1.19  "Pricing Guidelines" means the pricing guidelines
         established by Bank which are the charges, fees and discounts to
         be assessed to and collected from Merchants by ECHO for Merchant
         Services provided on Bank's behalf by ECHO in connection with
         Bank's Merchant Services program.

         1.20  "Sales Draft" means Merchant's record of Cardholder purchase.

         1.21  "Settlement" means the movement of information and funds
         via a Settlement Processor or ACH that results in the withdrawal
         or deposit of funds from Visa and MasterCard member banks per
         their authorized transactions.

         1.22  "Settlement Data" means the daily sales and return
         transactions and any adjustments made in processing of
         Chargebacks or resubmitted rejects needed by the Settlement
         Processor in connection with each Merchant for each business
         day.

         1.23  "Settlement Processor" means the entity designated by ECHO
         to perform the withdrawal or deposit of funds from Visa and
         MasterCard member banks in conjunction with authorized
         transactions and the transmission of such funds to the entity
         entitled thereto.

         1.24  "Settlement Processor Reserve Account" means the ECHO demand
         deposit account at Bank established and funded by ECHO pursuant to the
         provisions of Section 6.4.5 and to be used to reimburse Bank according
         to the provisions of Section 6.3.5.

         1.25  "Total DDA Balances" means the total monthly average funds on
         deposit in   Demand Deposit Accounts and reserve accounts at Bank.

         1.26  "Visa" means Visa U.S.A.

               ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF ECHO

ECHO represents and warrants that as of the effective date of this Agreement:

         2.1   Due Organization.  ECHO is duly organized and validly
         existing in good standing under the laws of the jurisdiction of
         its organization, and is duly qualified to conduct business in
         each jurisdiction which its business is conducted.

         2.2   Authorization, Validity and Enforceability.  The
         execution, delivery and performance of this Agreement executed
         by ECHO is within ECHO's powers, has been duly authorized, and
         is not in conflict with ECHO's articles of incorporation or by-
         laws, or the terms of any charter or other organizational
         document of ECHO; and that this Agreement constitutes a valid
         and binding obligation of ECHO, enforceable in accordance with
         its terms.

         2.3   Compliance with Applicable Laws.  ECHO has complied with
         all licensing, permit and fictitious name requirements to
         lawfully conduct the business in which it is engaged.

         2.4   No Conflict.  The execution, delivery and performance by
         ECHO of this Agreement is not in conflict with any law, rule,
         regulation, order or directive, or any indenture, agreement, or
         undertaking to which ECHO is a party or by which ECHO may be
         bound or affected.

         2.5   No Event of Default.  No Event of Default has occurred and
         is continuing.

               ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BANK

Bank represents and warrants that as of the effective date of this Agreement:

         3.1   Due Organization.  Bank is duly organized and validly
         existing in good standing under the laws of the jurisdiction of
         its organization, and is duly qualified to conduct business in
         each jurisdiction which its business is conducted.
         3.2   Authorization, Validity and Enforceability.  The
         execution, delivery and performance of this Agreement executed
         by Bank is within Bank's powers, has been duly authorized, and
         is not in conflict with Bank's organization certificate or by-
         laws, or the terms of any charter or other organizational
         document of Bank; and that this Agreement constitutes a valid
         and binding obligation of Bank, enforceable in accordance with
         its terms.

         3.3   Compliance with Applicable Laws.  Bank has complied with
         all licensing, permit and fictitious name requirements to
         lawfully conduct the business in which it is engaged.

         3.4   No Conflict.  The execution, delivery and performance by
         Bank of this Agreement is not in conflict with any law, rule,
         regulation, order or directive, or any indenture, agreement, or
         undertaking to which Bank is a party or by which Bank may be
         bound or affected.

         3.5   No Event of Default.  No Event of Default has occurred and
         is continuing.



                    ARTICLE 4 - CONDITIONS PRECEDENT OF BANK

         4.1   Required Delivery.  The obligation of ECHO to perform any 
         services under this Agreement is subject to the condition that, on 
         or before the date of any requested service by Bank, there shall 
         have been delivered to ECHO, in form and substance satisfactory to 
         ECHO, and duly executed as required by ECHO:

               (a)  This Agreement;

               (b)  Any and all documents or agreements required
               by ECHO to evidence approval by Visa and/or
               MasterCard, of Bank to become a primary credit card
               processing bank;

               (c)  Such authorization documents as ECHO may
               require evidencing the authorization, validity and
               enforceability of this Agreement as executed by
               Bank;

               (d)  Evidence from the appropriate governmental or
               regulatory authority or authorities, if required,
               such as the Office of the Comptroller of Currency
               ("OCC"), evidencing the approval and/or consent to
               any transactions or events related to the
               implementation of this Agreement and any services
               and/or transactions contemplated hereby;

               (e)  Such other documents, instruments or agreements as ECHO may
               require.

                    ARTICLE 5 - CONDITIONS PRECEDENT OF ECHO

         5.1   Required Delivery.  The obligation of Bank under this 
         Agreement is subject to the condition that, on or before the date of 
         the performance of any activities by Bank hereunder, there shall 
         have been delivered to Bank, in form and substance satisfactory to 
         Bank, and duly executed as required by Bank:

               (a)  This Agreement;

               (b)  Such authorization documents as Bank may
               require evidencing the authorization, validity and
               enforceability of this Agreement as executed by
               ECHO;

               (c)  Such other documents, instruments or
               agreements as Bank may require;


                           ARTICLE 6 - DUTIES OF ECHO

ECHO agrees to assist Bank in filing its applications to Visa and MasterCard to
become a primary credit card processing bank.

During the term of this Agreement ECHO will, unless Bank otherwise consents in
writing:


         6.1   SALES AND MARKETING

               6.1.1  Sales and Marketing Compliance.  Conduct its Merchant
               solicitation activities in strict compliance with the rules and
               regulations of Visa, MasterCard and this Agreement.

               6.1.2  Use of Employees.  Staff sales, installation, service and
               other positions performing functions under this Agreement with
               employees who are individuals under the exclusive control of 
               ECHO.  Should ECHO determine it necessary, in its sole 
               discretion, to utilize the services of non-employees, ECHO 
               shall be responsible to assure that all acts performed by any 
               such non-employees are conducted in accordance with the terms 
               and conditions of this Agreement.

               6.1.3  Marketing Materials.  Produce marketing materials for the
               purpose of marketing Bank's Merchant Services program.  The 
               amount and type of any such marketing materials shall be 
               within the sole discretion of ECHO, provided, however, all 
               such marketing materials shall not be used or implemented by 
               ECHO without the approval of Bank.  The cost of creating and 
               producing any such marketing materials shall be the sole cost 
               and expense of ECHO.

               6.1.4  Merchant Documentation.  Obtain completed, properly
               executed applications and other documentation, as required by
               Bank, from each prospective Merchant, provide same to Bank for
               review according to Bank's Merchant approval criteria as defined
               by Bank from time to time.

               6.1.5  Installation and Training.  Provide such installation and
               training activities necessary and adequate for the implementation
               of Bank's Merchant Services at all Merchant locations.

               6.1.6  Registration of ECHO.  Provide Bank with sufficient copies
               of ECHO's current audited financial statements, as well as any
               other documentation reasonably necessary to allow Bank to 
               register ECHO as (i) a remote originator with the Federal 
               Reserve Board, (ii) Merchant Service Provider ("MSP") with 
               MasterCard, and (iii) an Independent Service Organization 
               ("ISO") with Visa on an annual basis.  ECHO further agrees to 
               reimburse Bank, upon receipt of written demand, for all 
               out-of-pocket registration fees imposed by Visa and MasterCard 
               and the Federal Reserve Bank, incurred by Bank in connection 
               with the registration of ECHO with Visa and MasterCard and the 
               Federal Reserve Bank, as well as any out-of-pocket costs 
               imposed in connection with Bank's assistance to ECHO
               as set forth in Section 7.20.

               6.1.7  Registration of Bank.  ECHO agrees to reimburse Bank, upon
               receipt of written demand, for all out-of-pocket registration 
               fees imposed by Visa and MasterCard incurred by Bank in 
               connection with the application of Bank to become a primary 
               credit card processing bank.

               6.1.8  Restriction of Solicitation.  After Merchant is 
               approved by Bank, ECHO agrees not to solicit said Merchant to 
               process with another bank during the term of this Agreement.  
               This section, however, shall in no way limit ECHO's rights 
               regarding solicitation and movement of Merchants according to 
               the provisions under Sections 8.12, 8.13, and 8.14.

               6.1.9  Additional Processor.  ECHO agrees that Bank may contact
               with one (1) additional processor and process up to one thousand
               (1,000) new Merchants per year with said processor during the 
               term of this Agreement.

               6.1.10 No Preference.  ECHO shall show no preference among the
               banks to which it provides Merchant applications regarding the
               type, quality and credit-worthiness of new Merchant applications
               referred to Bank versus other banks processed by ECHO, and shall
               maintain procedures that minimize such a situation from 
               occurring. ECHO will keep a balanced approach to assigning 
               Merchant relationships.  If ECHO enters into a Merchant 
               Marketing and/or Processing Agreement with any other bank or 
               financial institution, and such agreement includes Bank's 
               compensation provisions which are more desirable to the Bank 
               than those under this Agreement, the Bank shall have the right 
               to require that this Agreement be amended so that it contains 
               such more favorable provisions.  ECHO will advise the Bank of 
               this new agreement with more favorable provisions and will 
               offer the Bank to amend this Agreement accordingly. This 
               section shall apply to ECHO's Agreement signed or to be signed 
               with First Regional Bank.

               6.1.11 Merchant Application Referrals.  It is understood that 
               ECHO is in the business, among other things, of soliciting 
               Merchants to process their MasterCard and Visa transactions 
               through banks which banks, after review and approval of the 
               Merchant application, then process those transactions through 
               ECHO.  ECHO agrees that it shall incorporate Berkshire Bank 
               Merchant applications into ECHO's standard documentation that 
               ECHO sends to applicant and ECHO further agrees it shall 
               design and monitor its distribution system to assure that 
               one-third (1/3) of ECHO's new Merchant application packets 
               contain Berkshire Bank Merchant Applications.  Monthly
               summary data of all new Merchants establishing a relationship 
               with ECHO for each primary bank shall be provided to Bank and, 
               based upon the percentages of actual new Merchant relationships
               established with Berkshire Bank, adjustment will be made in the
               distribution system the following month in an attempt to either
               increase or decrease the actual results or the desired 1/3 
               level. ECHO agrees such applications presented to Bank shall 
               be provided prior to review by any other bank with a contract 
               with ECHO.   

               If Bank's acceptance percentage, of Merchant applications which
               meet the acceptance guidelines, is too low to ECHO, then ECHO has
               the option to reconsider its commitment of one third of new
               applications to Bank and adjust accordingly.

               ECHO further agrees that if its processing agreement with First
               Charter Bank is terminated and ECHO has the right to refer, 
               assign or reallocate certain Merchants previously processing 
               through such other bank, then ECHO shall refer to Bank all 
               such Merchants with business locations on the east coast of 
               the United States (defined as being any state bordering on the 
               Atlantic Ocean and any other state which borders on such a 
               state).

         6.2   AUTHORIZATION

         Authorization Services.  ECHO agrees to provide computer systems
         necessary and sufficient to permit Authorization consistent with the
         requirements of Visa or MasterCard for Merchants utilizing Settlement. 
         ECHO shall not be required to provide Authorization services only to 
         any Merchant.

         6.3   SETTLEMENT

               6.3.1  Update of Settlement Processor Files.  Provide appropriate
               Merchant information directly to the Settlement Processor
               necessary and sufficient to identify each Merchant to permit
               Settlement.  The decision to commence or terminate a Merchant's
               processing with Visa or MasterCard shall be the sole decision of
               Bank.

               6.3.2  Daily Settlement Data.  Prepare and transmit to the
               Settlement Processor, on behalf of Bank, information 
               pertaining to the sales and return transactions and any 
               adjustments made in the processing of Chargebacks or 
               resubmitted rejects in connection with each Merchant for the 
               previous business day.  The time for transmission of the daily 
               Settlement Data and the format for such information shall be 
               as agreed between ECHO and the Settlement Processor.

               6.3.3  Settlement Funds.  Cooperate with Bank in the process of
               balancing funds transmitted to Bank by the Settlement Processor's
               bank.

               6.3.4  Merchant Charges.  ECHO agrees to assess each Merchant,
               either directly or through the ACH system, charges, fees and
               discounts in such amounts and at such times as set forth in the
               credit card agreement between Merchant and Bank.  Bank and ECHO
               acknowledge and agree that the nature, type and amounts of each
               charge, fee or discount to be assessed to each Merchant shall be
               as agreed upon between Bank and ECHO from time to time.

               6.3.5  Settlement Processor Fees and Charges.  At the weekly
               disbursements, reimburse Bank for all fees and charges 
               incurred by Bank for Settlement services provided to Bank by 
               the Settlement Processor.

               6.3.6  MasterCard/Visa Fees, Charges and Discounts.  Reimburse
               Bank for all fees, charges and discounts incurred by Bank for
               credit card services provided to Bank by MasterCard and Visa.

               6.3.7  Daily ACH Data.  ECHO shall submit ACH Data to fulfill
               authorized requests and, other than funds tied to lease packages
               sold to other financial institutions, shall leave funds so
               procured at Bank for 5 days prior to withdrawal.

        6.4    FUNDS DISTRIBUTION

               6.4.1  Merchant Bank Card Processing Funds.  Arrange for all
               Merchant bank card processing funds to be deposited directly with
               Bank and available to each Merchant pursuant to the terms of the
               appropriate Merchant agreement, as amended from time to time,
               between each Merchant and Bank.  ECHO further agrees to provide
               Bank with all data necessary and sufficient to fully reconcile
               daily deposit transactions of Merchant bank card processing funds
               and any further assistance in connection with reconciliation as
               Bank may request from time to time.

               6.4.2  Funds Distribution Instructions.  Each business day,
               transmit Funds Distribution Instructions to the appropriate
               Federal Reserve Bank ("FRB") in ACH format.

               6.4.3  Bank Compensation.  ECHO agrees that Bank shall be 
               entitled to receive a specified percentage of the sum of each 
               day's sales and return transactions, exclusive of Chargebacks, 
               for each Merchant, payable weekly, and calculated on aggregate 
               monthly sales and return transactions, exclusive of 
               Chargebacks, in accordance with the following table:

                  Percentage<PAGE>
Previous Month Total DDA
Balances
                    00.10%    Less than and up to $20 million
                    00.09%    Greater than $20 million and up
                              to $30 million
                    00.08%    Greater than $30 million and up
                              to $40 million
                    00.07%    Greater than $40 million and up
                              to $50 million
                    00.06%    Greater than $50 million and up
                              to $60 million
                    00.05%    Greater than $60 million
               For this purpose, total DDA balances shall not include DDA
               balances of Merchants brought by Bank, as more fully defined in
               Section 6.10.

               Bank acknowledges and agrees that it will perform all reasonable
               activities requested of it by ECHO for the purpose of reconciling
               each week's sales and return activity for the purpose of 
               assisting ECHO in calculating the amount of compensation 
               payable to Bank.

               6.4.4  ECHO Compensation.  As compensation for its services under
               this Agreement, Bank agrees that ECHO shall be entitled to 
               receive all charges, fees and discounts received from each 
               Merchant, either directly or through the ACH system, subject 
               to ECHO's obligations under Article 6 Section, 6.4, payable 
               weekly.

               6.4.5  Reserve Accounts.  ECHO agrees to establish with Bank the
               following reserve accounts.

                    (a)  Chargeback Reserve Account.

                    (b)  Settlement Processor Reserve Account.

                    (c)  MasterCard/Visa Reserve Account.

               Bank acknowledges and agrees that ECHO shall be the account 
               holder of the Chargeback Reserve Account and is the owner of 
               all funds deposited in the Chargeback Reserve Account, and of 
               all interest
               on such account which shall accrue at the Bank's then prevailing
               money market account rate, subject to the terms and conditions of
               this Agreement, provided, however, that the Bank shall have a
               perfected security interest in such reserve account to secure all
               of ECHO's obligations under this Agreement , and provided further
               that no funds may be withdrawn from the Chargeback Reserve 
               Account without the Bank's consent.  Bank shall be the account 
               holder and owner of Settlement Processor and MasterCard/Visa 
               Reserve Accounts.

               ECHO agrees to contribute to each reserve in such amounts and at
               such times as agreed upon between ECHO and Bank, in writing.  A
               letter defining the initial fee allocations will be signed by 
               both parties to this agreement simultaneous to the signing of the
               agreement and the same letter format requiring both parties
               signatories shall be used to make subsequent changes in the
               future, should it become necessary.

        6.5    CHARGEBACKS

               6.5.1  Reimbursement For Chargebacks and/or Merchant Fraud. 
               Immediately, reimburse Bank for losses actually incurred as a
               result of Chargebacks and/or Merchant fraud.  A loss shall be
               deemed to have occurred upon receipt of a Chargeback not
               immediately repaid by the Merchant without Bank being required to
               take legal action against the Merchant.  Bank shall use 
               Merchant's DDA and the Merchant's specific reserve account to 
               cover all Chargebacks prior to ECHO being required to make 
               payment to the Bank.  Based upon ECHO's legal counsel's 
               written request for assignment of a specific Merchant 
               Agreement for initiation of legal proceedings against 
               Merchant, Bank shall assign the Merchant Agreement to ECHO. 
               ECHO shall have the right to notify the Bank that it will not 
               continue to process for any specific Merchant.  Such notice 
               shall be given in writing and shall not negate ECHO's
               reimbursement obligation to the Bank for all transactions
               presented by the Merchant up to and including the date of receipt
               by Bank of such notice.  Bank may require by written notice that
               ECHO continue to process for such Merchant, but in such case, 
               Bank shall assume all Chargeback and fraud liability for any 
               activity processed after the day ECHO's notice was given and 
               received by Bank.  ECHO shall be responsible for resolving all 
               Chargebacks, fraud claims or processing disputes with Merchants.

         6.6   SECURITY; MONITORING

               6.6.1  Supervision/Monitoring of Chargebacks, Security in New
               Accounts.  Participate with Bank in the performance of security
               exception monitoring on a daily basis, in accordance with
               parameters established by Bank and using reports generated by 
               ECHO and the Settlement Processor.  Such security exception 
               monitoring shall be undertaken for the purpose of evaluating 
               and identifying Merchants with significant increases in 
               average daily and/or weekly deposits, significant variations 
               in average tickets amounts, significant variations in 
               non-magnetic card entry activity, and any other subsequently 
               identified categories.  ECHO further agrees to participate 
               with Bank in researching any Merchant for which Bank and ECHO 
               have identified questionable or suspicious transactions.  At 
               Bank's direction, ECHO agrees to follow Bank's policies and 
               procedures for freezing, halting, and/or delaying the 
               availability of ACH fund transfers or suspensions of current 
               day and subsequent deposit or withdrawal activity for any 
               Merchant until such time as Bank informs ECHO to make any ACH 
               fund transfers available to the Merchant.  Within 2
               business days of preparation, ECHO agrees to provide daily and
               monthly security reports to Bank.  ECHO agrees to notify Bank,
               promptly upon receipt, of any information received by ECHO
               pertaining to the insolvency or bankruptcy, of any Merchant or 
               any other adverse information indicating a violation of Visa 
               and/or MasterCard regulations or information indicating 
               illegal activity by or adverse information about any Merchant 
               or any information which may indicate that a Merchant is using 
               the Bank's Merchant Services for other than the sale of 
               products and services initially approved for Merchant's 
               business location.  Bank acknowledges and agrees that ECHO has 
               no affirmative obligation or responsibility to seek out any 
               such information pertaining to a Merchant, but only has the 
               obligation to report any such information as it may be 
               received by ECHO from time to time.  ECHO agrees to follow 
               Bank's policies and procedures regarding Merchant
               change of ownership and/or change of address that may occur from
               time to time.  ECHO shall provide access to Bank to ECHO's 
               trouble ticket system that is used to track security issues.  
               ECHO shall provide Bank with means to initiate a trouble 
               ticket if it feels a security issue needs to be addressed.

               6.6.2  Merchant Review After Commencement of Processing.  Perform
               a review of each Merchant application, business activities and
               retail locations within 60 days after any Merchant processing
               volume exceeds $30,000.00 per month for the first time.  
               Within 10 days after the end of each calendar month, ECHO will 
               provide to Bank a listing of Merchants that meet this criteria 
               for the immediately preceding calendar month.  The review of 
               any such Merchant's retail location may include on-going 
               visits to such Merchant's retail location by ECHO field 
               service personnel at ECHO's sole expense.  Upon completion of 
               each Merchant review pursuant to this paragraph, ECHO agrees 
               to provide to Bank a written summary of said Merchant review 
               to the Merchant account file within 10 business days of 
               completion.

        6.7    CUSTOMER SERVICE

               6.7.1  Customer Service.  Provide customer service to Merchants 7
               days a week during the period 3:00 a.m. to 2:00 a.m. Pacific 
               Time. This customer service activity shall be available to 
               Merchants via 800 number line access for the purpose of 
               responding to Merchant inquiries regarding credit card 
               transactions, equipment operation, and repair services 
               offered.  At ECHO's sole election and determination, ECHO may 
               provide field service to Merchants.

               6.7.2  Merchant Supplies; Invoice Merchants.  Provide all 
               supplies to Merchants needed to participate in Bank's Merchant 
               Services program, such as printer paper, ribbons, extra 
               transaction detail reports, imprinters, and imprinter plates.  
               ECHO shall submit accumulated electronic files to Bank 
               reflecting Merchant charges for supplies, transaction fees, 
               discount fees and equipment lease fees for ECHO's billing each 
               calendar month no later than the 5th business day 
               following the end of each calendar month, utilizing the ACH
               system.  ECHO shall incur the costs of generating and submitting
               such files and Bank shall be appropriately identified as the
               source of the automatic deductions notice mailed to Merchants
               reflecting the deduction of such charges from each Merchant 
               Demand Deposit Account.

               6.7.3  Merchant Qualification.  Provide the technical 
               enhancements needed to permit the qualification of Merchant 
               sales and return transactions for any discounted interchange 
               programs offered by Visa and/or MasterCard.

               6.7.4  Electronic File Processing.  Coordinate the Authorization,
               Settlement, Draft Capture Services, electronic deposit, and
               Chargeback processing services for Bank for Merchant Service by
               ECHO.  Any such services shall be provided via access only to
               ECHO's proprietary computer system/network, 7 days each week 24
               hours a day.

               6.7.5  On-Line Access.  Provide Bank with access to individual
               Merchant's credit card activity.  All reasonable costs and
               expenses such as telecommunication software and hardware costs
               related to the conduct of such retrieval access to Merchant data
               files shall be the sole responsibility and liability of Bank.

               6.7.6  Insolvency or Bankruptcy of ECHO.  In the event a 
               voluntary or involuntary petition for relief is filed under 
               title 11 of the United States Code by or against ECHO, Bank 
               will not be forced to accept new merchants for processing 
               under this Agreement until this Agreement has been assumed by 
               order of the bankruptcy court, after the appropriate notice 
               and in accordance with the requirements of 11 U.S.C. Section 
               365.  In addition, neither ECHO nor any trustee that is 
               appointed for ECHO shall be able to assign any right, title, 
               or interest under this Agreement without satisfying the 
               requirements of 11 U.S.C. Section 365, including
               curing defaults, compensating for damages, and providing adequate
               assurance of future performance. Bank shall have the right to
               terminate further processing of merchant transactions through 
               ECHO upon the filing of a Bankruptcy petition by or against ECHO
               unless, within five business days after the filing of such
               petition, ECHO shall have provided to Bank a letter of credit,
               surety bond or other guaranty (collectively referred to as a
               "Performance Guaranty") from an independent, financially
               responsible entity, in form and substance satisfactory to Bank,
               guaranteeing to Bank the full and complete payment and 
               performance of all of ECHO's obligations to Bank under Section 
               6.5.1.  ECHO shall remain obligated to pay Bank the amount set 
               forth in Section 8.25 in the event of any sale notwithstanding 
               the termination of processing pursuant to this Section 
               provided, however, that for the purpose of calculating the 
               amount owed under Section 8.25, the six month period for 
               averaging purposes shall be the six months prior to the 
               termination of processing.  If, after a Performance
               Guaranty is provided, such Performance Guaranty shall lapse or be
               terminated, then Bank shall again have the right to terminate
               further processing unless a replacement Performance Guaranty
               satisfactory to Bank is provided within five business days. 


               6.7.7  Disaster Contingency Plan.  Provide a contingency plan to
               assure continuity of service to Merchants by ECHO under this
               Agreement in the event of disaster.  Bank agrees that any
               technical, operational, software or hardware methods or systems
               that ECHO discloses to Bank will only be used in the event of and
               in accordance with occurrences, circumstances and conditions
               described in the contingency plan.  ECHO agrees that any
               technical, operational, software or hardware methods or systems
               that Bank discloses to ECHO will only be used in the event of and
               in accordance with occurrences, circumstances and conditions
               described in the contingency plan.

               6.7.8  Financial Statements.  Provide Bank with copies of ECHO's
               (i) annual audited financial statements and statement of
               operations within 10 calendar days of completion, (ii) 10Q and 
               10K reports within 10 days of filing with the Securities and 
               Exchange Commission, and (iii) should ECHO not remain on 
               NASDAQ, provide Bank with quarterly financial statements 
               within thirty (30) days of the end of each quarter.

         6.8   Financial Covenant.  ECHO agrees to remain qualified for NASDAQ. 
         Bank acknowledges and agrees that it shall not be a breach of this
         covenant if ECHO fails to remain qualified for NASDAQ unless such 
         failure is a material cause of ECHO's inability to perform its 
         duties under this Agreement or due to criminal cause.

         6.9   Training for Bank.  During the first month of active processing,
         and for such longer period as may be reasonably required, ECHO shall
         provide training and documentation to Bank's personnel in the areas of
         new Merchant application processing, Settlement, funds distribution,
         Chargeback processing, security monitoring and customer service.  Jack
         Wilson, Vice President of ECHO, will oversee and coordinate such
         training.

         6.10  Processing for Bank Solicited Merchants.  ECHO shall process for
         Bank solicited Merchants on a direct external "cost plus 10%" basis and
         shall provide all services ECHO provides to its own Merchants such as
         security monitoring, customer service and Chargeback processing to 
         Bank's solicited Merchants.  ECHO acknowledges Bank's right to 
         directly solicit up to 250 Merchants per year and ECHO acknowledges 
         that Bank owns Merchants it directly solicits. Bank agrees ECHO will 
         charge Merchant directly for transaction fees and various processing 
         fees that are common to all Merchants and Bank accepts these fees as 
         ECHO's compensation for providing the communications network 
         services.  ECHO shall have no rights to set or modify the discount 
         rate of Bank solicited Merchants.  ECHO shall treat all Merchants 
         the same for security monitoring purposes but Bank shall be solely 
         responsible for any Merchant losses generated by Bank solicited 
         Merchants.

         6.11  Non-circumvention.  Once a Merchant application is delivered to
         Bank and approved by Bank, ECHO shall take no action, directly or
         indirectly, to cause such Merchant to switch to another bank or obtain
         Merchant services through any other bank during the term of this
         Agreement. 

         6.12  Press Releases.  Provide Bank with copies of any press release
         proposed by ECHO pertaining or relating to Merchant Services.  ECHO
         further agrees not to issue any press release pertaining or relating to
         Merchant Services except in form and content reasonably satisfactory to
         Bank, except as required by law.


                           ARTICLE 7 - DUTIES OF BANK

During the term of this Agreement Bank will, unless ECHO otherwise consents in
writing:

         7.1   Merchant Services Program Management.  Establish policies and
         procedures applicable to the provision of Merchant Services, including,
         but not limited to, policies and procedures for Merchant qualification,
         approval, Pricing Guidelines and contracts and agreements to be entered
         into by Merchants.  

         7.2   Registration of ECHO.  Register, and annually re-register, 
         ECHO as a Merchant Service Provider ("MSP") with MasterCard and as 
         an Independent Service Organization ("ISO") with Visa.

         7.3   Forms.  Provide sufficient copies of all appropriate Merchant
         applications, agreements, forms, and other documents, including all
         supplements and addenda thereto, for use by ECHO in connection with its
         sales and marketing activities to Merchants in connection with Bank's
         Merchant Services program.  Bank agrees that the cost and expense of
         preparing and providing all of the necessary Merchant applications,
         agreements, forms and documents shall be the sole responsibility of 
         ECHO.

         7.4   Merchant Documentation.  Review applications, agreements, forms,
         and documentation completed by or with respect to all prospective
         Merchants utilizing the qualification criteria established by Bank from
         time to time as the basis for acceptance or rejection of each 
         prospective Merchant.  Any decision to accept or reject a 
         prospective Merchant, or terminate an existing Merchant, shall be 
         the sole responsibility of Bank. Bank acknowledges and agrees that 
         it will not accept a prospective Merchant that utilizes paper draft 
         processing.

         7.5   Exclusivity; Non-competition.  (i) Market and process its 
         Merchant Services program and all related activities exclusively 
         through and with ECHO during the term of this Agreement and one 
         other processor, as defined in Section 6.1.9., and (ii) not enter 
         into any relationship with any other person or entity which would 
         interfere or compete with ECHO's relationship with Bank pursuant to 
         this Agreement with the sole exception defined in Section 6.1.9.  
         Bank acknowledges and agrees that ECHO may provide its services 
         through other credit card processing banks and financial 
         institutions in addition to Bank pursuant to this Agreement.

         7.6   Registration of ECHO with the Federal Reserve Board.  Use its 
         best efforts to register ECHO with the Federal Reserve Bank ("FRB") 
         as a remote originator with ACH or any other registration necessary 
         to permit electronic funds transfer activity in connection with 
         Bank's Merchant Services program.

         7.7   Supervision of Chargeback, Security and New Accounts.  Provide
         oversight supervision of ECHO's management, compliance and reporting
         functions relating to Chargeback processing, new account management and
         any other duties agreed upon between Bank and ECHO.  Any and all
         additional costs and expenses incurred by Bank in connection with such
         supervision shall be the sole responsibility of Bank.

         7.8   Security Exception Monitoring.  Perform, in cooperation with 
         ECHO, security exception monitoring on a daily basis, according to 
         parameters established by Bank and using reports generated by ECHO 
         and the Settlement Processor.  The security exception monitoring 
         parameters established by Bank shall be provided by Bank to ECHO and 
         the Settlement Provider in writing.

         7.9   Settlement Processor Reports.  Cause the Settlement Processor to
         deliver duplicate daily Settlement reports to ECHO daily, for the
         immediately preceding business day, in form and content sufficient to
         permit timely reconciliation of rejects and Chargebacks.

         7.10  ACH Rejects.  Each business day, provide ECHO with a list of all
         ACH rejects received by Bank for the immediately preceding business day
         in form and content satisfactory to ECHO.

         7.11  Demand Deposit Account Information.  Consistent with Merchant
         Agreement, provide ECHO with the name, account number and account
         balance, via daily file transmission, of each Merchant Demand Deposit
         Account with Bank.

         7.12  Dispute of Settlement Processor Charges.  Provide all reasonable
         assistance and information requested by ECHO and deemed by it as
         necessary to dispute charges assessed to Bank by the Settlement
         Processor.  Bank acknowledges and agrees that its assistance to ECHO
         shall include, but not be limited to, communication by Bank with the
         Settlement Processor pertaining to ECHO's relationship with Bank and 
         any disputed fees or charges assessed by the Settlement Processor.

         7.13  Visa and MasterCard Policies and Procedures.  Provide ECHO, 
         within 5 calendar days of receipt, with copies of all written 
         materials received from Visa and MasterCard including, but not 
         limited to, each company's credit card interchange policies, 
         procedures, operations manuals, updates, bulletins, rules and 
         regulations necessary and sufficient to permit ECHO to perform all 
         of its duties under this Agreement.

         7.14  Settlement Processor Policies and Procedures.  Provide ECHO,
         within 5 calendar days of receipt, with copies of all written materials
         received from the Settlement Processor, including, but not limited to,
         the Settlement Processor's credit card processing policies, procedures,
         operations manuals, updates, bulletins, rules and regulations necessary
         and sufficient to permit ECHO to perform all of its duties under this
         Agreement.

         7.15  Bank Assistance with Visa and MasterCard.  Bank will use its best
         efforts to promote ECHO and its association with ECHO to Visa and
         MasterCard.  Should either Visa or MasterCard make requests upon Bank
         regarding ECHO or Bank's Merchant Services, Bank will inform ECHO of 
         such requests immediately and, if necessary, assist ECHO in 
         satisfying such requests.  Such assistance will not require 
         additional compensation by ECHO to Bank but all expenses incurred by 
         Bank will be paid by ECHO including but not limited to legal fees 
         and administrative expenses.  Bank acknowledges this role as a 
         facilitator in such a situation is one of their primary 
         responsibilities in this Agreement.  If ECHO is disqualified as an 
         ISO or MSP due to ECHO's actions, Bank shall be under
         no obligation resulting from this section to promote ECHO.

         7.16  Bank Credit Card Profitability.  Within 10 days after the end of
         each month, provide ECHO with such reports, in form and content
         satisfactory to ECHO as will demonstrate the on-going profitability of
         Bank's bankcard department or division.

         7.17  Financial Statements.  Provide ECHO with copies of Bank's Annual
         Report, and Quarterly Call Reports within 10 days of filing.

         7.18  Press Releases.  Provide ECHO with copies of any press release
         proposed by Bank pertaining or relating to Merchant Services.  Bank
         further agrees not to issue any press release pertaining or relating to
         Merchant Services except in form and content reasonably satisfactory to
         ECHO, except as required by law.

         7.19  Merchant Termination.  Permit ECHO to notify each Merchant on
         behalf of Bank for which Bank has authorized the termination of the
         provision of Merchant Services.  Bank acknowledges and agrees that, in
         the event ECHO advises Bank that ECHO will no longer process for a
         specific Merchant, the Bank will either terminate said Merchant or 
         assume any and all liabilities, including Chargeback and fraud 
         activity, that may arise out of future processing services provided 
         to said Merchant.

         7.20  Settlement Processor Certification.  Bank agrees to perform any
         and all acts reasonably requested of it by ECHO necessary and 
         sufficient to assist ECHO in the process of becoming certified as 
         the authorized Settlement Processor for Bank pursuant to this 
         Agreement.  ECHO agrees to reimburse Bank for all out-of-pocket 
         costs incurred by Bank and charged by the Federal Reserve Bank, Visa 
         and/or MasterCard relating thereto.

         7.21  Bank Use of Additional Processor.  If Bank contracts with another
         processor pursuant to Section 6.1.9, Bank acknowledges and agrees such
         utilization shall only be used to generate one-thousand (1,000) new
         Merchants per year.

         7.22  Merchant Termination Coordination.  Permit ECHO to coordinate and
         determine the disengagement plan for any Merchant Bank desires to
         terminate.  Such plan shall be provided to Bank in writing within 48
         hours of ECHO being informed of the Bank's desire to terminate the
         Merchant.  Such plan shall take no longer than four months to conclude
         termination and shall contain reductions of at least 10% in processing
         volume every month.  Additionally, such plan shall include a reserve
         greater than or equal to the six (6) month total Chargebacks processed
         by Merchant and an on-going contribution to such reserve shall be 
         greater than or equal to the Chargeback to processing ratio for the 
         past six (6) month period.  No release of Merchant reserves shall be 
         allowed during the term of the disengagement plan.  ECHO's guarantee 
         against Chargeback losses shall be invalid immediately for all 
         Chargeback losses from the Merchant being terminated on the day Bank 
         fails to follow disengagement plan set out by ECHO under this 
         section or takes such action that would negatively affect the 
         disengagement plan in such a way to generate greater liability to 
         ECHO or Bank.  If Bank does not accept plan, ECHO's
         liability shall be limited to Merchant Chargebacks relating to period
         prior to Bank's termination of said Merchant.  All other liabilities of
         ECHO shall remain in effect.



                               ARTICLE 8 - GENERAL

         8.1   Notices.  Any notice given by any party under this Agreement 
         shall be in writing and personally delivered, deposited in the 
         United States mail, postage prepaid, or sent by tested telex, or 
         facsimile transmission or other authenticated message, charges 
         prepaid, and addressed as follows:

TO BANK:<PAGE>

                          
The Berkshire Bank
600 Madison Avenue
New York, NY  10022
Attention:  Moses Krausz
FAX or Telex No.:  (212) 935-
7480<PAGE>
TO ECHO:
Electronic Clearing House, Inc.
28001 Dorothy Drive
Agoura Hills, CA 91301-2697
Attn:  Donald R. Anderson
FAX or Telex No.:  (818) 597-
8999
Each party may change the address to which notices, requests and other
communications are to be sent by giving written notice of such change to either
party.

         8.2   Binding Effect.  This Agreement shall be binding upon and 
         enure to the benefit of ECHO and Bank and their successors and 
         assigns; provided, however, that neither Bank nor ECHO may assign or 
         transfer either party's rights or obligations under this Agreement 
         without the prior written consent of the other party.

         8.3   No Waiver.  Any waiver, permit, consent or approval by either
         party of any event of default or breach of any provision, condition or
         covenant of this Agreement must be in writing and shall be effective 
         only to the extent set forth in writing.  No waiver of any breach or 
         default shall be deemed a waiver of any later breach or default of 
         the same or any other provision of this Agreement.  Any failure or 
         delay on the party of either party in exercising any power, right or 
         privilege under this Agreement shall not operate as a waiver 
         thereof, nor shall any single or partial exercise of any such power, 
         right or privilege preclude any further exercise thereof.

         8.4   Rights Cumulative.  All rights and remedies existing in this
         Agreement are cumulative to, and not exclusive of, any other rights or
         remedies available under contract or applicable law.

         8.5   Unenforceable Provisions.  Any provision of this Agreement which
         is prohibited or unenforceable in any jurisdiction, shall be so only as
         to such jurisdiction and only to the extent of such prohibition or
         unenforceability, but all remaining provisions of this Agreement shall
         remain valid and enforceable.

         8.6   Execution in Counterparts.  This Agreement may be executed in any
         number of counterparts which, when taken together, shall constitute but
         one agreement.

         8.7   Further Assurances.  At any time or from time to time upon the
         request of either party, the other party will execute and deliver such
         further documents and do such other acts as the requesting party may
         reasonably request in order to effect fully the purposes of this
         Agreement and provide for the performance of all contemplated acts and
         activities in accordance with the terms of this Agreement.

         8.8   Indemnification By ECHO.  ECHO shall indemnify Bank against, and
         hold Bank harmless from and against, all claims, actions, losses and
         expenses, including attorneys' fees and costs incurred by Bank, arising
         from, related to or in connection with any breach by ECHO of any of its
         duties or obligations under this Agreement.  This indemnification shall
         survive the termination of this Agreement.

         8.9   Indemnification By Bank.  Bank shall indemnify, defend and hold
         harmless ECHO, from and against all claims, actions, losses, and
         expenses, including attorneys' fees and costs incurred by ECHO, arising
         from, related to, and in connection with, any breach by Bank of any of
         its duties or obligations under this Agreement.  This indemnification
         shall survive the termination of this Agreement.

         8.10  Term.  This Agreement will be for an initial term of three years
         from the effective date set forth in the preamble and full execution
         hereof and shall be subject to automatic renewals for like periods 
         unless previously terminated by either party in accordance with the 
         terms herein. The automatic extensions are subject to parties not 
         being in default.

         8.11  Non-Circumvention.  Bank hereby acknowledges and agrees that ECHO
         "owns" all Merchants processing under this Agreement with the sole
         exception of Merchants directly solicited by Bank as defined in 
         Sections 6.10 and 7.5.  Bank also acknowledges ECHO's significant 
         investment in Merchant processing services and in building a volume 
         of Merchant processing activity.  Bank agrees that it will not 
         attempt to circumvent ECHO by soliciting Merchants who process 
         through ECHO to process through another source or by entering into 
         additional processing relationships that would directly or 
         indirectly jeopardize ECHO's ongoing business or processing 
         revenues, provided, however, Bank and ECHO agree that Bank may
         solicit Merchants not being processed by ECHO pursuant to Sections 
         6.1.9 and 7.21.

         8.12  Termination.  Either party may terminate this Agreement, for any
         reason, or no reason at all, during the first six months with ninety 
         (90) days advance written notice.  One hundred eighty (180) days 
         advance written notice is required to terminate, for any reason, or 
         no reason at all, after the first six months. If ECHO declares 
         bankruptcy, termination shall be ninety (90) days advance written 
         notice. 
         8.13  Termination For Cause.  In addition to the termination provisions
         set forth in Sections 8.12 and 8.14, either Bank or ECHO may terminate
         this Agreement, for cause, at any time if either party commits fraud or
         any material breach of this Agreement, or is declared insolvent or
         bankrupt, and such insolvency or bankruptcy results in that party's
         inability to perform any of its respective duties under this 
         Agreement.  In the event of a material breach, the breaching party 
         will have ninety (90) days to cure after which time, should 
         resolution not be achieved, action can be taken without further 
         notice by the non-breaching party.  In addition, ECHO may (i) 
         terminate this Agreement, and (ii) transfer Merchants to any other 
         bank performing Merchant Services for Visa and/or
         MasterCard upon the occurrence of any of the following events:

               i)   Bank fails to qualify for, or maintain, Visa or MasterCard
                    qualification as a credit card processing Bank; or
               ii)  Bank's capital falls below the level required by the FDIC or
                    the New York State Banking Department to be an "adequately"
                    capitalized bank and Bank does not resolve said issue within
                    ninety (90) days; or
               iii)      Bank is merged with, or acquired by, any other entity
                    and the new entity materially violates the term of this
                    Agreement;

Bank may terminate this Agreement in the event ECHO does not qualify as a remote
originator, or if any of the above items under (i) or (ii) were caused by the
wilful act of ECHO.

In the event ECHO terminates this Agreement for any of the causes set forth
above, Bank agrees to assign all of its rights consistent with Merchant 
Agreement and Visa/MasterCard regulations under any agreement between Bank 
and each Merchant, immediately upon ECHO's written request, to any bank 
identified by ECHO.  Bank further agrees to transfer all Merchant files, 
records, and related documentation to the bank identified by ECHO and to 
provide all reasonable assistance requested by ECHO in the conversion and 
transfer of Merchant processing activity, Demand Deposit Accounts, Merchant 
reserve accounts established under any agreement between Bank and the 
Merchant, and the Reserve Accounts established pursuant to Section 6.4.5, or 
any other activity related to the provision of Merchant Services to any bank 
identified by ECHO.  ECHO shall secure the written agreement from any new 
bank that any reserves funds moved from Bank to new bank shall be available 
for any and all Chargeback activity that may be presented to Bank while 
liability exists relating thereto.  No termination of this Agreement by Bank 
pursuant to Sections 8.12 or 8.13 shall affect ECHO's liability to Bank 
pursuant to Section 6.5.1 for transactions which were processed by ECHO 
pursuant to this Agreement prior to the actual termination of processing
by ECHO.  Transfer of Merchants shall not be required of Bank's Merchants.

         8.14  Post Notice Of Termination Relationship.  (i) In the event ECHO
         terminates this Agreement, pursuant to the provisions of Section 8.12,
         ECHO shall continue to process under the sponsorship of Bank those
         Merchants approved by Bank under the terms of this Agreement, as 
         well as new Merchants approved by Bank during the period following 
         notice of termination.  Adding new Merchants may continue following 
         notice of termination.  During such period, following notice of 
         termination, Bank shall not withhold its reasonable approval for any 
         new Merchants marketed and added for processing by ECHO under the 
         terms of this Agreement.  All compensation and processing costs 
         shall continue to be paid as set forth under this Agreement 
         following notice of termination and for a period of 1 year following 
         termination.  Thereafter, ECHO shall have the right to
         transfer Merchants to another qualified sponsoring bank and Bank shall
         execute all necessary transfer and assignment documents, consistent 
         with Merchant Agreement and Visa/Mastercard regulations, to 
         accommodate such transfer and all compensation to Bank shall cease 
         upon transfer of Merchants.  Bank shall not solicit Merchants to 
         leave ECHO nor shall ECHO solicit Merchants to leave Bank.  (ii) In 
         the event ECHO terminates this Agreement pursuant to any of the 
         provisions of Section 8.13, ECHO shall have the right to transfer 
         Merchants to another qualified sponsoring bank and Bank shall 
         execute all necessary transfer and assignment documents,
         consistent with Merchant Agreement and Visa/MasterCard regulations, to
         accommodate such transfer and all compensation to Bank shall cease upon
         transfer of Merchants.  If this Agreement is terminated for cause as
         defined in Section 8.13, the post termination relationship as set forth
         in this Section 8.14 does not apply except for ECHO's ability to add 
         new Merchants as provided for in this section.  Transfer of 
         Merchants shall not be required of Bank's Merchants.

         8.15  Confidential Information and Trade Secrets.  In connection with
         the services to be rendered by ECHO pursuant to this Agreement, ECHO 
         will be providing Bank with certain information.  Bank acknowledges 
         and agrees that such information constitutes the Proprietary 
         Information and trade secrets of ECHO ("Proprietary Information").  
         Bank further acknowledges and agrees that such Proprietary 
         Information are the sole property of ECHO and that ECHO has the sole 
         right, title and interest thereto, and Bank agrees that it shall not 
         acquire, directly or indirectly, any rights, title or interest in or 
         to any of such Proprietary Information.  Bank agrees to treat such 
         Proprietary Information on a secret and confidential basis and shall 
         retain such Proprietary Information in secrecy and confidence during 
         the term of this Agreement and for a period of five years after the 
         termination of this Agreement.  The Bank further agrees that access 
         to any such Proprietary Information shall be strictly limited by 
         Bank only to those persons in the Bank who have a need to use
         or evaluate and review the same.  Bank further agrees to undertake all
         necessary steps to require its employees, agents, representatives 
         and all others to whom it might disclose the Proprietary Information 
         to retain the Proprietary Information in confidence during the term 
         of this Agreement and for a period of five years after the 
         termination of this Agreement.  Bank further agrees to keep 
         completely confidential names of any Merchants, banks, lending 
         institutions, corporations, organizations, individual or group of 
         individuals, lenders or borrowers, buyers or sellers, introduced by 
         ECHO or any individual or entity related to ECHO to Bank in 
         connection with this Agreement or any of the transactions
         contemplated by this Agreement.  Such names and identities shall remain
         confidential during the term of this agreement and for a period of five
         years thereafter, and such names and identities shall include any
         telephone numbers, addresses, faxes, telex numbers, et al.  Bank 
         further agrees, upon termination of this Agreement, to promptly 
         return any documents or other materials obtained from ECHO prepared 
         and/or delivered by ECHO to or for Bank in connection with this 
         Agreement except to the extent that it is required by law to retain 
         such information or to the extent such information constitutes 
         documentation of financial transactions conducted by Bank.  Bank 
         acknowledges and agrees that the services rendered by ECHO under 
         this Agreement and the Proprietary Information provided by ECHO in 
         connection with the rendition of those services are of a special, 
         unique, unusual, extraordinary, and intellectual character, which 
         give this Agreement peculiar value.  Bank further acknowledges and 
         agrees that any direct or indirect disclosure, or other improper 
         use, of ECHO's Proprietary Information cannot be reasonably or 
         adequately compensated in damages in an action at law. Accordingly, 
         in addition to other remedies provided by law or this
         Agreement, ECHO shall have the right at any time after this 
         Agreement is entered into, to obtain injunctive relief against the 
         breach of this Agreement by Bank in connection with the direct or 
         indirect disclosure, or other improper use of, ECHO's Proprietary 
         Information. For the purposes of this Agreement, the term 
         "Proprietary Information" shall include solely trade secrets of ECHO 
         in which ECHO has a proprietary interest, and shall not include 
         every item of information provided by ECHO to Bank.  Bank shall be 
         permitted to provide access to such information in connection with 
         regulatory examinations by state and federal bank regulatory 
         agencies and as part of the audit of its financial condition by its 
         independent public accountants and as otherwise required by law or 
         judicial process.

         8.16  Right of Setoff.  Each party shall have a right of setoff with
         respect to any claims for any breach of this agreement.

         8.17  Assignment.  Except as otherwise provided herein, the rights and
         obligations of Bank and ECHO under this Agreement are personal and not
         assignable, either voluntarily or by operation of law, without the 
         prior written consent of the other party.  Subject to the foregoing, 
         all provisions contained in this Agreement shall extend to and be 
         binding upon the parties hereto or their respective successors and 
         permitted assigns.

         8.18  Legal Fees.  In the event of any dispute arising out of or in
         connection with this Agreement, the prevailing party shall be entitled
         to recover its reasonable attorney's fees and court costs in 
         addition to any other recovery.

         8.19  Jury Trial Waiver.  In the event of any litigation, trial or 
         other proceeding arising out of, related, or in connection with this 
         Agreement, the parties agree that any such litigation, trial or 
         proceeding shall be tried and heard by the Court only and not by a 
         jury trial.

         8.20  State Law.This Agreement shall be governed by and construed in
         accordance with the laws of the State of California as to all matters
         including validity, construction, effect, performance and remedies
         without giving effect to the principles of choice of law thereof.  For
         purposes of any lawsuit, action, or proceeding arising out of or 
         relating to this Agreement, Bank and ECHO agree that any process to 
         be served in connection therewith shall, if delivered, sent or 
         mailed in accordance with Section 8.1, constitute good, proper and 
         sufficient service thereof.

         8.21  Headings.  The headings listed after each section number in this
         Agreement are inserted for convenience only, do not constitute a 
         part of the Agreement, and are not to be considered in connection 
         with the interpretation or enforcement of this Agreement.

         8.22  Force Majeure.  If performance by either party of any service or
         obligation under this Agreement is prevented, restricted, delayed or
         interfered with by reason of labor disputes, strikes, acts of God,
         floods, lightning, severe weather, shortage of materials, rationing,
         utility or communication failures, failure of Visa or MasterCard or
         Settlement Processor, failure or delay in receiving electronic data,
         earthquakes, war, revolution, civil commotion, acts of public enemies,
         blockages, embargo, or any law, order, proclamation, regulation,
         ordinance, demand or requirement having legal effect of any government
         or any judicial authority or representative of any such government, or
         any other similar act or omission whatsoever, beyond the reasonable
         control of such party, then such party shall be excused from the
         performance to the extent of the prevention, restriction, delay or
         interference.

         8.23  Entire Agreement.  This Agreement, including Exhibits, sets forth
         all of the promises, agreements, conditions and understandings between
         the parties respecting the subject matter hereof and supersedes all
         negotiations, conversations, discussions, correspondence, 
         memorandums and agreements between the parties concerning the 
         subject matter.  This Agreement may not be amended or modified 
         except by a writing signed by authorized representatives of both 
         parties to this Agreement.

         8.24  Sale of Merchant Base.  Should ECHO decide to sell a portion or
         all of its processing Merchant portfolio, it agrees to notify Bank in
         writing at least thirty (30) days prior to taking any action relating
         thereto.  Bank agrees to keep such notice fully confidential.

         8.25  Continual Revenue after Sale.  Should ECHO sell Merchants
         sponsored by Bank, ECHO guarantees Bank shall continue to receive
         eighteen (18) months of normal monthly revenue from said Merchants 
         either through ECHO's contract with the new owner of Merchants or, 
         in the absence thereof, paid directly from ECHO.  The average monthly
         compensation, including benefit of DDA balances, received by Bank 
         for the prior six month period shall be used to calculate the 
         appropriate compensation due the Bank in the event the Merchants are 
         moved away from the Bank.  In the event a partial move of Merchants 
         is done, ECHO shall only be responsible for the difference between 
         what the Bank earns on the Merchants still processing with the Bank 
         and the calculated average monthly earnings to the Bank over the 
         prior six months. As security for all of ECHO's obligations under 
         this Section 8.25, ECHO hereby grants to Bank a security interest in 
         all of ECHO's "ownership" rights with respect to the merchants 
         sponsored by the Bank, which ownership rights shall include, without 
         limitation, the right and ability of ECHO to sell or otherwise 
         transfer to any other entity the right to process such
         merchants, and any and all other intangible rights related thereto. 
         Simultaneous with the execution of this Agreement, ECHO shall execute
         UCC-1 financing statements with respect to the security interest 
         granted under this Section and all other security interests set 
         forth in this Agreement.  Bank shall also have the right to file 
         financing statements perfecting its security interests without 
         ECHO's signature appearing thereon.  In the event of any default, 
         Bank shall have all the rights of a secured creditor under the 
         Uniform Commercial Code.

         8.26  Cross-Selling by Bank.  Notwithstanding the restrictions and
         limitations contained elsewhere in this Agreement, the Bank shall have
         the right to solicit Merchants to provide additional financial services
         to such Merchants other than credit and debit card processing.

IN WITNESS WHEREOF, Bank and ECHO have executed this Agreement as of the date
set forth in the preamble.

ELECTRONIC CLEARING HOUSE, INC.



By:   \s\ Joel M. Barry                                     
Joel M. Barry - Chairman of the Board and
Chief Executive Officer



THE BERKSHIRE BANK



By:   \s\ Moses Krausz                                      
Moses Krausz - President and 
Chief Executive Officer

<PAGE>
                                                                  EXHIBIT 10.37




CONTRACT FOR EMPLOYMENT

Electronic Clearing House, Inc., a Nevada corporation, headquartered at 28001
Dorothy Drive, Agoura Hills, California 91301, hereinafter referred to as
"Employer", and Larry J. Thomas, hereinafter referred to as "Employee", in
consideration of the mutual promises made herein, agree as follows:

ARTICLE 1: EMPLOYMENT

Acceptance of Employment

Section 1.01.  Employer hereby employs Employee and Employee hereby accepts
employment with Employer.

Term of Employment

Section 1.02.  The employment period will begin on October 16, 1997.  This
agreement and Employee's employment shall continue for a period of four (4)
years, after which time said employment shall cease.

ARTICLE 2: DUTIES OF EMPLOYEE

Position Description and Duties

Section 2.01.  Employee is hereby hired to perform services for Employer in
the capacity of President, and COO of Employer and its wholly-owned
subsidiaries existing on the date of this Contract.  In the capacity of
President, Employee will also fill the remaining term of Employer's current
President on Employer's Board of Directors upon a majority vote of the
remaining directors as authorized under Employer's bylaws, Article III,
section 3.

Time and Attention

Section 2.02. Employee shall devote his entire working energies to his duties
contemplated by the Contract excluding those investment activities related to
managing his personal assets and the dissolution of XYNet Technologies, Inc.

Satisfactory Performance of Duties

Section 2.03.  The employment of Employee is "at will", notwithstanding any
other provision contained in this Contract. In the event of termination of
Employee prior to the end of the employment period as provided in Section
1.02, the other provisions of the Contract shall continue to apply including
Sections 3.08 and 3.09.


Obligations of Third Parties

Section 2.04.  Employee warrants and represents that Employee has the ability
to enter into this Contract, that entering into and performing under this
Contract will not violate Employee's agreement with any third party, and that
there exists no restrictions or obligations to any third parties which will
restrict Employee's performance of duties under this Contract.


ARTICLE 3:  COMPENSATION

Base Compensation

Section 3.01.  For purposes of this Contract, base compensation (hereinafter
referred to as "Base Compensation") shall mean $137,500 plus any increase to
this amount, either defined under this Contract to occur on the anniversary
date of this Contract or approved by the majority vote of Employer's Executive
Compensation Committee. Base Compensation for the services rendered by
Employee under this Contract in the first year shall be a gross salary, prior
to any deductions or withholdings, of $137,500 per year. Automatic raises in
the amount of $5,000 per year shall be awarded on each anniversary of this
Contract, unless modified upwards by Employer's Executive Compensation
Committee.

Stock Options and Restricted Stock

Section 3.02.  (a) Employee's presently held 300,000 Employer's stock options
will become fully vested upon signing this Contract; however, before
exercising such options, Employer requires and Employee agrees that Employee
must review any intention to sell stock over the next two years from the date
of this Contract with the Employer's Board of Directors. Employee shall be
awarded 100,000 options for common stock within one month after signing this
Contract, and 100,000 options each year for three additional years within one
month after the anniversary of the Contract, issued under the 5 year vesting
criteria, as set forth under the Officers' Incentive Stock Option Plan, and
having a strike price equal to the existing market bid price on the day of
award.  

               (b)  Employer represents that the 250,000 shares, presently held
by Employee since January 31, 1996, are presently freely tradable through a
brokered transaction and, after January 31, 1998, shall be tradable as free
trading shares under current security law.  Employee realizes that his
position defines him as a "control" person and, under such designation,
Employee shall be required to sell Employer's stock under Rule 144, which has
limitations as to the frequency and amount of shares Employee can sell at any
time while serving as President and Chief Operating Officer of Employer.

Annual Bonus Target Award/Performance Options/Cash Bonus/Signing Bonus

Section 3.03.  (a)  Annual Bonus Target Award.  On each anniversary date of
this Contract, Employee will be paid a bonus in cash that is a percentage of
his Base Compensation for the year in which the bonus is earned. The target
bonus shall be equal to twenty percent (20%) on the first anniversary, thirty
percent (30%) on the second anniversary, forty percent (40%) on the third
anniversary, and fifty percent (50%) on the fourth anniversary, provided
Employee meets the targeted performance as agreed upon and set each fiscal
year of Employer by and between  Employer's Chief Executive Officer and
Employee and approved by the Board of Directors.

               (b) Performance Options. Employee will be paid incentive options
for purchase of Employer's common stock, based on performance standards as
outlined below in the following table for Employer's fiscal year-end net
earnings and fiscal year-end earnings per share (EPS) of Employer's common
stock, as defined in Employee's annual 10K report filed with the Securities
and Exchange Commission (SEC) and determined by generally accepted accounting
principles:
               
YR. OPTIONS                           EARNINGS; OPTIONS           EPS
`98 75,000 options on net income of $1,000,000; 75,000 options on EPS of $0.07
`99 75,000 options on net income of $2,000,000; 75,000 options on EPS of $0.14
`00 75,000 options on net income of $3,000,000; 75,000 options on EPS of $0.21
`01 75,000 options on net income of $4,000,000; 75,000 options on EPS of $0.28


Any options granted to Employer's CEO with respect to fiscal years 1998-2001
shall be tied to the above net income performance goals. Due to Employer's
approximately $3 million loss carry-forwards, the above earnings goals shall
be for the first two years, fiscal 1998 and 1999,  will be based on pre-tax
earnings. The earnings goals for the last two years of this Contract, fiscal
2000 and 2001, will be based on after-tax earnings as reported in Employer's
Form 10-K report to the SEC.  Prior to any anniversary date under this
Contract, the performance goals as defined above, will be reviewed and, if
deemed appropriate, will be modified by Employer's Board of Directors based
upon priorities of business and reasonableness of achieving such stated
performance.

               (c)  A cash bonus of $75,000 will be paid to Employee if either
1) $10,000,000 in cumulative earnings is achieved, or 2) the Employer's common
stock EPS reaches $0.28 at any time during the term of this Contract. Only one
$75,000 award is possible under this provision. "Earnings" for this provisions
shall be defined as the net income pre-tax for the first two years and net
income post-tax for the last two years, based on audited annual financial
statements. "EPS" shall be calculated on the basis of outstanding shares of
common stock as of the end of any fiscal year or the most recent ending
quarter period (that is, outstanding options, warrants and other rights to
acquire shares of common stock will not be assumed to have been exercised.) 

               (d)  A signing bonus of $7,250 will be paid by Employer to
Employee on the signing date for signing this Contract. 

Vacation Pay

Section 3.04.  Employee shall be entitled to paid vacations for 3 weeks(s) per
year.  Although vacations will be granted at times requested by Employee,
Employer reserves the right to determine or approve the vacation time in order
to ensure the efficient and orderly operation of the business.  Employee is
expected to use all vacation time in the year such vacation time is earned,
and Employee shall not be able to accrue any vacation time beyond 120 hours (3
weeks).

Group Health Insurance

Section 3.05.  As further compensation, Employee is entitled to receive family
coverage group health insurance provided by Employer or, at Employee's
discretion, Employer agrees to pay for private coverage secured by Employee at
an expense each month that is equal to or less than the expense of coverage
the Employer would have paid had the coverage been secured by the Employer
under the Employer's insurance policy.   This Employee benefit includes family
health coverage paid monthly by Employer, as well as $9,000 paid toward past
health coverage expenses paid by Employee prior to the date of this Contract. 

Other Benefits

Section 3.06.  In addition to any other benefits or compensation set forth
above, Employer offers to Employee, and Employee is entitled to (a) the use of
a leased vehicle (with a total retail value of between $25,000 and $35,000) at
Employer's sole expense; (b) an Employer paid health club membership; (c) an
Employer paid cellular phone and use thereof, (d) participation in Employer's
401(K) plan; and (e) an Employer paid annual physical examination. Employer
agrees to pay up to $6,000 annually as an allowance to Employee for disability
insurance, financial planning, etc. for the benefit of Employee.

Dissolution, Liquidation or Sale of Employer

Section 3.07.  If Employer is dissolved, liquidated or sold, then Employee
will receive (a) Base Compensation Employee is earning at the time for one
full year; (b) all options granted to Employee shall become fully vested; and
(c) Employee's health insurance will be paid for three (3) months following
said dissolution, liquidation, or sale.  The definition of a "sale" shall
include a merger where Employer is not the surviving entity, acquisition by
any party or parties acting in concert of more than 50% of Employer's stock,
or acquisition of substantially all of the assets of Employer. 

Effect of Termination on Compensation

Section 3.08.  Termination Without Cause.  (a) In the event of termination of
Employee's employment by Employer without cause, Employee shall receive
Employee's (i) then current annual Base Compensation if terminated within one
year from the date of signing this Contract; (ii) three-quarters (3/4) of
Employee's then current Base Compensation if terminated within two years from
the date of signing this Contract, and (iii) one-half (1/2) of Employee's then
current Base Compensation if terminated within three years from the date of
the signing of this Contract.  Employee shall also be entitled to Employee's
then current Base Compensation that has accrued and been earned prior to the
date of termination; (b) Employer shall pay Employee health insurance for
three (3) months following the termination date; and (c) any bonuses or
performance options that would earn additional options or bonuses shall be
pro-rated using the most current quarterly data prepared according to
generally accepted accounting principles and as filed in the Employee's 10Q
reports to the SEC, to allow such award as of the date of termination and
shall be fully vested and earned.  Other than as may be provided herein to the
contrary, Employee shall be entitled to no further compensation following such
date of termination.

Section 3.09.  Termination With Cause.  Employer may terminate this Contract
and Employee's employment for cause.  Notwithstanding any other provision of
this Contract, in the event of termination for cause Employer shall have no
obligation to pay or grant any bonus or performance options with respect to
the period following the effective date of termination, and all unexercised
options (both vested and unvested) as of that date shall be canceled.  Subject
to the foregoing, all bonuses earned by Employee prior to the date of
termination shall be paid to Employee, provided that any claims by Employer
against Employee shall be deducted from any bonuses payable.

"Cause" shall mean: (1) criminal or other unlawful activity, including without
limitation any embezzlement, misappropriation, fraud or other theft; (2)
dishonesty; (3) neglect of duties; (4) gross carelessness; (5) any statement,
act or failure to act that results in the Company incurring criminal or civil
liability or that has a direct, substantial, adverse effect on the Company's
reputation; or (6) material breach of this Contract.

"Claim" shall mean: (1) any amount advanced in respect to expenses to the
extent that the expenses are not authorized or documented in accordance with
Company policies; (2) any other amount advanced or loaned to Employee along
with accrued and unpaid interest at 10 percent per annum and any collection
costs; and (3) any expense, loss, damage or liability arising from any "cause"
as defined herein.

Section 3.10.  Termination By Employee.  Should Employee terminate this
Contract at any time during the term of this Contract, Employee shall not
receive any severance pay, but will receive all bonuses and performance
options as accrued on the date of termination.

Section 3.11.   Vesting of Options at End of Term.  After the four year term
of this Contract has expired, if Employee is not terminated for cause and
either Employer or Employee decides not to continue the working relationship,
all options granted or having been earned but not formally granted at the time
shall be removed from the Officers Stock Option Incentive Plan but shall be
made available to Employee at the same timing as would have occurred under the
Plan.  Employer does not guarantee that any tax benefits that may have been
available under the Plan shall be available to Employee under such
circumstances and Employer is under no obligation to Employee beyond making
options available to Employee at the agreed price and timing as defined at the
time of original award of options to Employee.



ARTICLE 4:  EMPLOYER'S RECORDS/TRADE SECRETS

Ownership of Employer's Records

Section 4.01.  (a)  All records of the accounts of Employer, of any nature,
whether existing at the time of Employee's employment, procured through the
efforts of Employee, or obtained by Employee from any other source, and
whether prepared by Employee or otherwise, shall be the exclusive property of
Employer regardless of who actually purchases the original book, record or
magnetic storage unit on which such information is recorded.

               (b)  All such books and records shall be immediately returned to
Employer by Employee on any termination of employment, whether or not any
dispute exists between Employer and Employee at, regarding, and/or following
the termination of employment.


Restrictions on Use of Trade Secrets and Records

Section 4.02.  (a)  During the term of employment under this Contract,
Employee will have access to and become acquainted with various trade secrets,
consisting of formulas, programs, patterns, devices, inventions, processes,
compilations of data and information, sources of data and information,
records, and specifications, all of which are owned by Employer and regularly
used in the operation of Employer's business.

               (b)  All files, records, documents, drawings, specifications,
programs, equipment and similar items relating to the business of Employer,
whether they are prepared by Employer or by Employee, or come into Employee's
possession in any other way and whether or not they contain or constitute
trade secrets owned by Employer, are and shall remain the exclusive property
of Employer.  Trade secrets shall be defined as:  (i) unpublished financial
information, (ii) customer lists, (iii) marketing plans, (iv) financing plans,
(v) staffing plans, (vi) expansion plans, (vii) technical plans and  (viii)
acquisition plans, as well as other proprietary confidential information
designated by the Board of Directors from time to time.

               (c)  Employee promises and agrees that Employee shall not
misuse, misappropriate, give, sell, furnish, nor disclose, whether for
consideration or for no consideration, and whether or not during or following
Employee's employment with Employer, or at any other time thereafter, any
trade secrets described herein, directly or indirectly, or use them in any way
or manner, for Employee's own benefit or the benefit of others, except as
required in the course and scope of Employee's employment with Employer. 
Employee agrees and promises not to make known to other persons, firms, or
corporations the names, addresses or any other information of any of
Employer's customers or vendors, or call on, solicit, or take away any of the
customers of Employer on whom Employee called on or with whom Employee became
acquainted with during Employee's employment herein.

               (d)  Employee agrees that the use or dissemination of any trade
secrets as described above, whether by Employee or by any other person or
entity, constitutes unfair trade practice.  Employee agrees to not employ
unfair trade practices whether during the time of this employ or at any time
thereafter.

               (e)  Employee agrees to honor confidentiality commitments
regarding trade secrets of other parties that he becomes aware of while under
the employment of Employer.  Employer may make such treatment of trade secrets
known to such parties, as it deems appropriate.

               (f)  Employee acknowledges Employer's right to seek and secure
injunctive relief against any breach of the trade secret provisions contained
herein.

               (g)  All sections under Article 4 of Contract shall survive
termination of Contract for a period of two (2) years.

               (h)  Any information about Employer known to the public, through
no fault of Employee, any information independently developed by Employee
without the use of Employer's trade secrets and any information known by or
available to Employee prior to Employee's employment with Employer shall not
be deemed to be trade secrets of Employer.

 
ARTICLE 5:  GENERAL PROVISIONS


Notices

Sections 5.01.  Any notices to be given by either party to the other may be
effected either by personal delivery in writing or by mail, registered and
certified, postage prepaid with return receipt requested.  Mailed notices
shall be addressed to the parties at their last known address as appearing on
the books of Employer.


Entire Agreement

Section 5.02.  Except for salary and bonuses yet to be paid upon the signing
of this Contract, this Contract supersedes any and all other agreements,
either oral or written, between the parties with respect to the employment of
Employee by Employer for the purposes set forth in Article 2.1, and contains
all of the covenants and agreements between the parties with respect to such
employment whatsoever.  Each party to this Contract acknowledges that no
representations, inducements, promises or agreements, orally or otherwise,
have been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or promise
not contained in this agreement shall be valid or binding.  Any modification
of this Contract will be effective only if it is in writing and signed by both
parties.


Partial Invalidity

Section 5.03.  If any provision of this agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions shall  continue in full force and effect without being impaired or
invalidated in any manner.


Law Governing Agreement

Section 5.04.  This agreement shall be governed by and construed in accordance
with the laws of the State of California.


Attorney's Fees and Costs

Section 5.05.  If any legal action is necessary or brought in any court or
arbitration proceeding, to enforce or interpret the terms of this agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs,
and necessary expenses, in addition to any other relief to which such party
may be entitled.  This provision shall be construed as applicable to the
entire Contract.


                                 Indemnification

Section 5.06.  Employer indemnifies Employee in his capacity of Director,
President and Chief Operating Officer of Employer and its subsidiaries against
any losses, costs, claims, demands, judgments, and the like which are asserted
against Employee or suffered by Employee as a result of his performance of his
duties under the Contract.  This Section 5.06 shall not apply: (1) to the
extent that any such loss, cost, claim, demand, judgment or the like results
from any act or failure to act by Employee that constitutes "cause" as defined
in Section 3.09: (2) if Employee is terminated for cause : or (3) if
indemnification is not permitted by law.

This Contract is entered into on October 16, 1997, in the City of Agoura
Hills, County of Los Angeles, State of California.

Employer:                           Employee:

\s\ Joel M. Barry                   \s\ Larry J. Thomas
                                    
By: Joel M. Barry                   By:Larry J. Thomas 
ECHO Chief Executive Officer,       
Chairman of the Board               

   Approved By:       \s\ Fariborz Hamzei
                      Fariborz Hamzei
                      ECHO Director; Chairman, 
                      Executive Compensation Committee