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,  2002

     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  Identification  No.)
      incorporation or organization)

 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,
                                        fax number:  (818) 707-9354

           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
10,  2002  as  reported  on  the  NASDAQ  National  Market,  was  approximately
$9,273,699.  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 10, 2002, Registrant had outstanding 5,796,062 shares of Common
Stock.

                         DOCUMENTS  INCORPORATED  BY  REFERENCE
                                        None


<PAGE>
<TABLE>
<CAPTION>
                         ELECTRONIC CLEARING HOUSE, INC.
                          2002 FORM 10-K ANNUAL REPORT
                          ----------------------------


                                TABLE OF CONTENTS
                                -----------------


PART I.                                                                 Page
-------                                                                 ----
<S>                                                                     <C>
Item 1.     Business . . . . . . . . . . . . . . . . . . . . . . . . .     3
Item 2.     Properties . . . . . . . . . . . . . . . . . . . . . . . .    11
Item 3.     Legal Proceedings. . . . . . . . . . . . . . . . . . . . .    12
Item 4.     Submission of Matters to a Vote of Security Holders. . . .    12


PART II
-------

Item 5.     Market for Registrant's Common Equity and Related
            Stockholder Security Matters . . . . . . . . . . . . . . .    13
Item 6.     Selected Consolidated Financial Data . . . . . . . . . . .    14
Item 7.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations. . . . . . . . . . . .    15
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk    24
Item 8.     Financial Statements and Supplemental Data . . . . . . . .    24
Item 9.     Changes in and Disagreements with Accountants on
            Accounting and Financial Disclosures . . . . . . . . . . .    24

PART III
--------

Item 10.    Directors and Executive Officers of the Registrant . . . .    25
Item 11.    Executive Compensation . . . . . . . . . . . . . . . . . .    28
Item 12.    Security Ownership of Certain Beneficial Owners
            and Management . . . . . . . . . . . . . . . . . . . . . .    31
Item 13.    Certain Relationships and Related Transactions . . . . . .    32
Item 14.    Controls and Procedures. . . . . . . . . . . . . . . . . .    32

PART IV
-------

Item 15.    Exhibits, Financial Statement Schedules, and
            Reports on Form 8-K. . . . . . . . . . . . . . . . . . . .    33
</TABLE>


                                        2
<PAGE>
                                     PART 1

ITEM  1.     BUSINESS

GENERAL  DESCRIPTION  OF  BUSINESS
Electronic  Clearing  House,  Inc. ("ECHO" or the "Company") provides a complete
solution  to  the  payment  processing  needs of merchants, banks and collection
agencies. The Company's services include debit and credit card processing, check
guarantee,  check  verification,  check  conversion, check re-presentment, check
collection  and  inventory  tracking.  ECHO  is  one  of  the  few full service,
comprehensive  providers that offers credit card, check, and collection services
all  centrally  reported  and  managed.

The  Company  derives  revenues  from  two  main business segments, bankcard and
transaction  processing  services  and  check  services,  and operates under the
following  brands:

     -    MerchantAmerica, ECHO's retail provider of processing services to both
          the  merchant  and  bank  markets;
     -    National  Check  Network  ("NCN") for wholesale of check verification,
          check  authorization  and  capture,  and  for membership to collection
          agencies;
     -    XPRESSCHEX,  Inc.  for  retail  check  verification, check conversion,
          Automated  Clearing House ("ACH") services, check collection and check
          guarantee  services;  and
     -    U-Haul  Services,  which  provides  credit  card  authorization, check
          verification and check guarantee to U-Haul dealers, manages all dealer
          rental  and  contract  activity,  and  tracks  both  compensation  and
          available  dealer  inventory.

ECHO's  merchant  and  check  services  offer  the  following  benefits:

<TABLE>
<CAPTION>
CREDIT AND DEBIT CARD          CHECKS              INTERNET PAYMENT         INTERNET AND WEB SITE
                                                       SERVICES                   SERVICES
----------------------  ---------------------  -------------------------  -------------------------
<S>                     <C>                    <C>                        <C>
Connectivity options:   --Check verification   Credit cards via:          MerchantAmerica suite of:
--POS Terminals           services powered
                          by NCN               --Card swipe or            --Web site hosting and
--Touch tone phone                               manual entry               development
                        --Electronic Check       using browser based
--Personal computer       Conversion (ECC)       "Virtual Terminal"       --On-line payment
  software                                                                  reporting/transaction
                        --ECC powered by       Check Services of:           history
--Fax machine             VISA
                                               --Verification and         --E-mail services
Cards include:          --Check Guarantee        funds settlement
VISA, MC, AMEX,                                  via browser based        --On-line advertising
DISC, Diner's, JCB,     --Check Collections      "Virtual Terminal"
STAR, NYCE, PULSE,                                                        --National Merchant
Interlink, Maestro      --Electronic Check     --FREE Secure                Directory
                          Re-presentment         Gateway
                                                                          --On-line banking access
                        --Consolidated         --FREE Online Store
                          Returns                                         --Merchant business
                                               --FREE Shopping              services resource
                                                 Cart                       portal
</TABLE>

The  Company's  primary  revenue  generator  is  its  bankcard  and  transaction
processing  services  whereby  ECHO  receives  a  fee  based  on  the  number of
transactions  processed  and  the  number  of  accounts  serviced.  This  has
historically  been a profitable business segment for the Company, although price
competition is intense. The Company is enhancing its back-end technology and has
identified  new  revenue  opportunities  to  improve  profitability.

For  the  past two years, ECHO has invested significant resources and management
focus  in  its  check  services  business. Revenues are based on a fixed fee per
transaction  and/or  a  fee  based  on the face amount of the check. ECHO is the


                                        3
<PAGE>
sixth largest check verification processor in the United States according to the
June  2002  issue  of  The Nilson Report, a monthly financial subscription-based
newsletter.  The Company is one of the few check processors with a full suite of
merchant  front-end  connectivity capabilities; a negative check writer database
(NCN),  an  Automated Clearing House ("ACH") engine (which provides the tools to
electronically  authorize,  represent  and  settle  funds  between banks), and a
national  collection  service.  Having  this  unique set and breadth of services
allows  the  Company  to  offer a total check management system that the Company
believes  few  competitors  can  offer.

The  NCN database contains over 81 million check account records and the Company
has  developed  business  relationships  with  over 260 collection agencies that
constantly  keep  the database updated. Through its network of NCN members, ECHO
can offer regional collection services and distribute collection items to one or
more  of  NCN's  260  member  agencies  to maximize local collection capability.

In  addition  to  operating  NCN,  one  of  ECHO's  goals is to provide a common
platform  wherein  a  business  can  also  access  each of the other major check
databases  that  are  currently available in the nation and thereby increase its
inherent  value  to  it  customers.

ECHO  is  working  with Visa U.S.A. as both an Acquiring Party and a Third-Party
Processor  in  Visa's  Point-of-Sale (POS) Check Program ("Visa Program"), which
began  pilot  testing in July 2001. The Visa Program allows banks to offer their
merchants  a service that will 1) program their POS systems to receive immediate
online  authorization  for paper checks, 2) allow the merchant to set thresholds
for  specific services, such as check guarantee and check verification, 3) allow
the  merchants  to convert a check into an electronic transaction and return the
check to the check writer at the point of sale, and 4) process the settlement of
funds  into  the  merchant's  bank.  The  Company  provides  critical  back-end
infrastructure  for  the  overall  service,  including its NCN front-end capture
capabilities, access to and review of the NCN database for all non-participating
bank  activity,  and  use  of  the  Company's  ACH settlement and re-presentment
system.  ECHO  is  currently  working  with  six  of  the  eight major financial
institutions  that  have  chosen  to  participate  in the pilot program and ECHO
believes  that  it  is  currently  the preferred third-party provider for 14,000
banks  who  are  members of Visa if they wish to participate in the program. The
Visa  Program  has grown more rapidly in the most recent months; however, it has
not  yet  generated  significant  revenue  to  the  Company.

ECHO  has  historically  generated  a  small  percentage of its revenue from the
terminal  business. The biggest buyer of systems in the past five years has been
U-Haul  International  who has acquired in excess of 15,000 systems and deployed
them  to  their  dealers  across  the country. ECHO acts as the central clearing
agent  for  these systems and intends to continue to support the U-Haul deployed
base  of  terminals.  However, the Company is currently not pursuing the sale of
its  proprietary  terminal  system  but rather focusing on its core bankcard and
check  services  business  segments.

HISTORY  OF  THE  COMPANY
ECHO  has  been  offering  merchant  and  check  services for over 20 years. The
Company  was  incorporated  in  Nevada  in  1981  under  the  name  Bio Recovery
Technology,  Inc.  and  changed its name to Electronic Clearing House, Inc. with
the  acquisition  of  a  credit  card  processing  company, Electronic Financial
Systems, Inc. in January 1986. 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. This development made it possible
for  remote  banks  and  processors  to  provide  the  same  processing services
previously  available  only  through  the  merchant's  local  bank.

In  1985,  the  Company  purchased CBC, a company that had expertise in computer
control  systems.  CBC  subsequently  developed  a  series  of  high performance
terminals  and  secure printers that have been used primarily in the money order
dispensing market by American Express, Comdata, U-Haul, the United States Postal
Service  and innoVentry. As a corporate subsidiary, CBC was dissolved at the end
of  fiscal  year  2002.

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  credit  card  authorization  and  management  of rental equipment for
U-Haul  International.  The  number  of active dealers under the system has been
more  than  15,000  (see  "U-Haul  International").  With  regard to proprietary
issues,  three  patent applications related to the Company's printer methodology
have  been  granted  (see  "Patents").

In  early  1996, the Company purchased Xynet, a business with specialties in the
Internet,  Windows NT programming and worldwide communications networks. Through
this  acquisition,  the  Company  was  able  to  expand  its scope of acceptable
transaction  input  devices  beyond  the  traditional  POS  systems  to  include
transactions  submitted  over  the Internet and over a common telephone. 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.


                                        4
<PAGE>
In  1999,  ECHO  acquired  Magic  Software Development, Inc., a check processing
company  located  in  Albuquerque,  New  Mexico,  that  serviced  National Check
Network,  an  association  of  around  60 collection agencies across the nation.
Since  1986,  the  Company  provided  a check guarantee service that only served
California  merchants,  but,  with  the  addition  of  Magic's  check processing
capabilities,  the  check guarantee services are now being offered on a national
basis.  In fiscal 2000, Magic's corporate name was changed to XPRESSCHEX ("XCX")
and  all  XPRESSCHEX  activity was moved to the new XCX entity. XCX provides and
promotes  its  check  and  electronic  funds  transfer ("EFT") services to other
processors  and  sales  organizations  in  addition  to  ECHO.

In  November  1999,  the Company acquired Peak Collection Services, a collection
agency  in  Albuquerque,  New  Mexico,  and  incorporated Peak as the Collection
Division  into  the  XCX  operation  in  December  of  1999. Through filings and
individual  testing, the XCX Collection Division has completed registration as a
collection  agency  in  48  of  50  states  to  date. Having a fully integrated,
nationally  approved collection service adds considerable value to the XCX suite
of check services and allows XCX to operate as a central check clearing facility
for  NCN's  260 collection agencies without each agency having to authorize such
activity.

In  January  2000,  the  Company acquired Rocky Mountain Retail Systems ("RMRS")
located  in  Boulder,  Colorado,  which  provided  a national check verification
service  to  over  200  collection agencies across the nation. RMRS maintained a
national  check  database  of  negative  and  positive  check  writer  records.

In  December  2000,  the  Company  signed  an  agreement  with  Visa,  U.S.A. to
participate in a POS check processing pilot program as a "Third-Party, Acquiring
Processor". Under the pilot, any one of over 14,000 Visa member banks who choose
to participate ("Participating Member") can offer check conversion (converting a
paper check to an electronic transaction at the point of sale), check conversion
with  check  verification  and/or check conversion with check guarantee to their
merchants  and  utilize  Visa's  dedicated  communications  network  and banking
relationships  to  clear  check  activity  using  direct  debits  from the check
writer's  account.  In  July  2001,  several  major financial institutions began
participating in the pilot program for Visa's POS Check Service. As of September
2002, six of the eight financial institutions participating in the pilot program
are  using  ECHO's  services  as  a  third-party  processor.

In  May  2001, the Company acquired the assets of National Check Network ("NCN")
and combined the NCN negative check writer records with RMRS database, resulting
in  a  combined  database  of  over  81  million  check  writer  records.

Also  in  May  2001,  ECHO  launched  MerchantAmerica.com, a web-based source of
aggregated  financial  information  whereby  an  ECHO  merchant  can  access its
transactional history, bank information, significant business and office-related
services and even build an online store and accept payment in the form of credit
cards  or  checks.  The site also contains a national Merchant Directory of over
1.4  million  merchants  that  is  free  to  any merchant in the U.S.A.  It also
provides  any  merchant in the U.S.A. with the ability to edit and enhance their
directory  listing.  While  the  Company  believes that MerchantAmerica.com is a
valuable and cost-effective resource for merchants, it also provides the Company
with  a  low-cost method of keeping its merchants informed and involved with the
Company.

STRATEGY
ECHO's  strategy  is to provide merchants, banks and industry-specific resellers
with  electronic  connectivity  to  various payment services in the credit card,
debit  card  and  check-related markets. The Company's performance and technical
capabilities  have  enabled  it  to  develop  a  solid  foundation as a one-stop
provider  of  leading-edge  check  and  merchant services. With more than twenty
years  of  experience,  the  Company  has  a  history  of  providing  reliable,
customer-focused  service  to  national  merchants.  The  Company's  platform of
services  is  uniquely flexible, enabling merchant customization and scalability
to  meet  the requirements of high transaction volumes, as well as access to the
Visa  Program. ECHO's services enable merchants to maximize revenues by offering
a wide variety of payment options, reducing the costs associated with processing
and  handling  checks, improving collections and managing risk more effectively.
Additionally,  ECHO  is  committed  to  customer  service and a recent survey of
customer satisfaction rates showed an improvement to 4.43 out of a possible 5.0,
from  approximately  4.15  in  a  similar  survey  taken  three  years  prior.

The  Company has targeted several areas as significant opportunities for growth,
including  focusing  on  middle  market  retail  accounts for check services and
developing a scalable infrastructure to support widespread implementation of the
Visa  Program. The Company also seeks to increase profitability of core merchant
services  by enhancing the back-end technology and identifying and targeting new
low-cost,  incremental  revenue  opportunities.

CHECK  SERVICES  FOR  MIDDLE  MARKET  RETAIL  ACCOUNTS
While  ECHO  focuses its credit card services to the middle market of retail and
non-face-to-face  merchants,  the  Company's  Check  Services  business, through
effective  sales  channels,  is  targeting  the  full  scope of merchants in the
marketplace, from the small merchant who may only need check verification to the
national  retailers  who  have  need of check conversion and national collection
services.

With  approximately  four  million  merchants in the U.S. and over 95% currently
accepting  credit  cards  as payment, the potential market for check services is
significant.  ECHO  estimates  that  approximately  60%  of  merchants,  or


                                        5
<PAGE>
about  2.3  million  merchants,  who accept credit cards also accept checks as a
form  of  payment.  Furthermore,  of  the group that accepts checks as a form of
payment,  the  Company estimates that only 10% of them have an electronic method
to  accept  checks  and the other 90% accept a paper check and process it in the
traditional  manner  by  taking  the  check  to  the  bank.

ECHO's  estimated  market  potential  for  check  services:

-    Approximately  1.5  million merchants currently accepting credit cards, but
     who  do  not  currently  accept  checks  as  a  form  of  payment;
-    Approximately  1.9  million  merchants currently accepting paper checks and
     who  may  consider  an  electronic  form  of  payment;
-    Approximately  400,000  merchants  currently  converting  paper  checks  to
     electronic  at the POS and may consider changing to a better service and/or
     lower-cost  provider.

Efforts will be focused on working with the Company's sales channels to approach
mid-size  retail  chains  that can benefit most from automating check processing
and  verification.  These  mid-size accounts typically offer higher margins than
larger  accounts  and  provide a less competitive marketplace. ECHO has recently
signed  agreements with several new retailers, including Hastings Entertainment,
a  video  and  entertainment  business  with  130  locations.

VISA  POS  CHECK  PROGRAM
The  Company  has  essentially completed the development and beta-testing of the
Visa  Program  and is preparing to leverage ECHO's check services assets through
Visa member banks. Six of the eight financial institutions currently testing the
program  have  chosen  ECHO  as  their  company's  third-party processor and are
beginning to actively sell check services to their merchants. Visa has requested
ECHO's  assistance  in integrating several national merchants, including a major
global  specialty-clothing  retailer,  into  the Visa Program and the Company is
actively  working  to  assist these merchants with development that is partially
being  reimbursed  by  Visa.

Recently,  ECHO's  primary  credit  card  processing  bank, First Regional Bank,
decided  to participate in the Visa Program enabling ECHO to provide independent
sales  organizations  with  a  sponsoring  bank  to  offer  the  Visa Program to
merchants  in  the  marketplace.  This will enable the Company to use its direct
sales  channels  to  provide  the  Visa  Program to ECHO's current and potential
merchant  base.

The  Visa  infrastructure requires ECHO to coordinate and integrate its services
with  several  parties  and  systems.  Therefore,  the process of developing and
bringing  to  market  the Visa Program has been more time and resource intensive
than  originally  anticipated  due  to the unique requirements of each financial
institution  and  extensive  testing  periods.  As part of the Visa Program, the
Company  has  completed  the  following:

-    ECHO  wrote,  tested  and installed special merchant terminal software that
     specifically  meets  the  Visa  Program  requirements.
-    ECHO  certified  its  terminal and host response code with Vital Processing
     Services,  a  major  provider  of  terminal  services  to  major  banks.
-    ECHO  developed special add-on services and reporting for specific banks or
     select  merchants  who  desired  to  use  the  Visa  Program.

ECHO  has  used its relationships with the banks participating in the Visa pilot
program  to  gain  knowledge  in  order  to  facilitate  the  integration  and
implementation  of the Visa Program for new banks and to develop a standardized,
but  customizable platform of options. The Company's staff has been increased to
assist  current and future banks in making the fastest and easiest conversion to
the  Visa  Program.  However,  implementation of new banks, at least in the near
term,  will  rely  on  the  bank's  ability to coordinate the integration of its
internal  account  management  system  to  the  Visa Program and this process is
outside  of  ECHO's  realm  of  responsibilities.

While  ECHO  believes  that  the  Visa  Program  has  the  potential to generate
significant  revenues  in  the  future,  the market potential of this service is
still  unproven and its success is dependent on the continuing marketing support
of  Visa  and  its  member  banks.

TURNKEY  SOLUTION  FOR  REGIONAL  AND  COMMUNITY  BANKS
ECHO  has  identified  an  underserved,  niche  market  of  smaller regional and
community banks for credit card and check payment programs. ECHO has developed a
turnkey  solution  that  allows  smaller  banks  to  offer credit card and check
processing  services  on  a  private-label  basis  using  the Company's back-end
infrastructure. Much of the reporting to the merchant utilizes the Internet as a
delivery channel, an environment in which the Company has significant experience
and  knowledge.  The  Company  estimates that approximately 80% of merchants are
familiar with or connected to the Internet, many from their personal residences.
Due  to  the high costs and the perceived high risk, most small banks are either
unable  or  unwilling  to  compete  with  national  banks  in  providing  online
transaction  processing  and  Internet-based reporting tools to their merchants.
The  Company  has  designed  the program to be adopted by a bank at little or no
cost and yet it allows the bank to generate revenues and earnings in competition
to  those  earned  by much larger banks who have had to make major investment in
the  technology.


                                        6
<PAGE>
The  new  turnkey  initiative, which is packaged under the MerchantAmerica name,
incorporates  all  of ECHO's Internet features and the Company's full retail set
of services and payment options. ECHO believes that its fully integrated payment
and reporting system allows smaller banks to enjoy not just competitive equality
but,  in  many cases, competitive advantage. It enables banks to compete feature
by  feature  with  the  offering of the major banks with no set-up fee or annual
charge  to  participate.  The  Company,  in  turn,  benefits  from the increased
processing  and transaction revenues. Additional benefits of the MerchantAmerica
program  to  regional  and  community  banks  include  the:

-    Ability  for  banks  to  set  processing  fees  for  each  merchant;
-    Assurance  that  the  bank controls the merchant relationship and maintains
     any  financial  asset  value  related  to  ownership;  and
-    Reduction  of  fraud  risk.

In  addition  to  the  benefits  that the bank receives from the MerchantAmerica
program, the bank's merchants also receive numerous benefits, including a retail
merchant  account  for  credit cards, debit cards and checks; an online shopping
cart  and  check-out  payment  system;  sales  tracking  and  online transaction
history;  automatic  referral  to  collection  agencies;  and dedicated customer
service.

The  program was launched in August 2002 and, approximately two months later, at
the  end  of  fiscal 2002, ECHO had six participating banks in the program. ECHO
estimates  that there are 10,000 community banks in the U.S. and no one provider
of  services  has  over  10%  of  the market. Based on third-party research, the
Company  estimates that approximately 6,000 of these banks do not directly offer
bankcard services and the approximately 4,000 that are affiliated with a service
may be responsive to the MerchantAmerica value proposition. ECHO has experienced
positive  initial  reaction  to  recent  outreach  and  marketing  efforts.

BANKCARD  AND  TRANSACTION  PROCESSING  REVIEW
Bankcard  and  transaction processing volume rose 13% in fiscal 2002 and revenue
increased  approximately  8%.  While  this  has  historically  been a profitable
business,  price  competition  is  intense  and has been impacting margins. ECHO
receives  a  fee based on the number of transactions processed and the number of
accounts  serviced.  The  Company  is  enhancing its back-end technology and has
identified  new  revenue  opportunities  to  improve  profitability and margins.

ECHO  is  a  registered  Independent  Service  Organization and Merchant Service
Provider  with  Visa  and  MasterCard. In order to engage in Visa and MasterCard
processing, a cooperative relationship is required with a bank that sponsors the
Visa and MasterCard transactions. ECHO's primary processing bank relationship is
with  First  Regional  Bank  of  Los  Angeles,  California.

The  Company  currently  has  two  processing bank relationships: First Regional
Bank,  Los  Angeles,  California,  and  The  Berkshire Bank, New York, New York.

For  the  year  ended  September  30,  2002,  MerchantAmerica  accounted  for
approximately  82%  of  the  Company's revenues, compared to 83% in fiscal 2001.
MerchantAmerica  presently  provides  24-hour daily processing capability, "800"
number  access  to  customer  service  personnel  and,  as needed, various field
support  services.  Utilizing  one  of  the  numerous  methods  of access to the
Company,  the  merchants'  systems dial the Company's host computers and receive
credit  card  and/or  check  authorizations  for  accounts,  which  have  been
electronically  verified.  Electronic  files  are  then  transmitted  daily  by
MerchantAmerica  to  the  major  credit  card organizations or to the ACH, which
subsequently  transfer funds from the banks to MerchantAmerica's processing bank
and which are then deposited into the bank of the merchant's choice. On average,
ECHO  deposits  funds  to  over  600  banks  across  the nation on behalf of its
merchant  base  each  day.

The Company's software programs capture the transactions, retain data and enable
merchants  to  review, reconcile and edit transactions. MerchantAmerica has been
successful  in  its  customer  service  efforts, which include a terminal loaner
program  to  minimize  downtime,  frequent  sales  and  activity  reports  and
sophisticated security services utilizing the merchant's terminal, the Company's
host  computers  and  field  activity. MerchantAmerica 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.

ECHO's revenue for MerchantAmerica's credit card processing is derived primarily
from three sources: the merchant's discount rate, the merchant's transaction fee
and  set  monthly  fees.  The  discount rate is expressed as a percentage of the
amount  being  processed  and  is  deducted  from the amount of each transaction
submitted  by the merchant while the net amount is deposited into the merchant's
bank  account.


                                        7
<PAGE>
Discount  rates  range between 1.5% and 4.5%, and the Company's average discount
rate  is  2.1%,  which  is  consistent  with the prior year.  Depending upon the
discount  rate  and  the  cost  of clearing interchange, about 75% to 90% of the
discount  rate  revenue  is paid to card-issuing banks and organizations and the
sponsoring  bank.

A  transaction  fee is charged for each transaction processed and ECHO's average
transaction revenue in fiscal 2002 is $.18 per transaction, compared to $0.17 in
fiscal  2001.  The  Company  maintains  a  range  from  $0.15  up  to  $0.32 per
transaction,  depending  on the level of merchant and customer interface. Larger
customers  tend to pay lower transaction fees given the volume of business. Both
Visa  and  MasterCard  have  instituted  $0.05 to $0.10 transaction fees on each
transaction  processed.  However,  due  to  lower  costs  of  communications and
negotiated  contracts,  ECHO's  direct  costs  have  been  lowered to a range of
between  $0.03  and $0.05 per transaction, depending upon duration and method of
transmission.  However,  the  overall  increases of processing such as personnel
costs, infrastructure costs, and other expenses have all contributed to a higher
cost  of  sales  as  a  percentage of revenue in fiscal 2002. While bankcard and
transaction  processing revenue increased by 8.4% in fiscal 2002, as compared to
fiscal  2001,  cost  of sales such as personnel costs increased from $840,000 in
fiscal  2001  to  $1,251,000  in  fiscal  2002,  a  49% increase.  Additionally,
depreciation  and amortization expense related to computer software and hardware
increased  from  $598,000  in  fiscal  2001  to  $844,000  in fiscal 2002, a 41%
increase.

The  market  size  for  credit  card  processing  is  approximately 1.2 trillion
transactions  per  year,  and  this  number is growing annually. ECHO has a very
small  percentage  of  this  market  share, but the Company is one of the top 50
credit  card  processors  according  to  The  Nilson Report, a monthly financial
subscription-based  newsletter.  The  Company's  new  agent  bank  program  has
competitors that include First Data Corporation ("FDC"), the biggest credit card
processor  in  the  U.S.;  NPC;  Global  Payments;  and  Prism.

The  credit  card processing market has undergone rapid consolidation, which has
raised  unique  challenges,  including  supporting  and  integrating  numerous
processing  methodologies, initiating quality customer support and field support
services  and  maintaining merchant relationships. While merchant portfolios can
be  purchased by a processor or a credit card agent bank, merchants are under no
obligation  to  utilize the services of the new owner so many of the most active
consolidators  have  been experiencing difficulty in maintaining their number of
active  merchants.

The  Company's  data  center  is  reliable  and  the  costs  to  operate  the
MerchantAmerica  program  are currently reasonable, but no assurance can be made
that  such  favorable  conditions  will  continue. Both Visa and MasterCard have
historically  increased their interchange fees and transaction fees to the point
that  building  a  profitable transaction business solely based upon credit card
activity has become increasingly difficult.  The Company has a bankcard merchant
portfolio  that  is  profitable  and  the  Company  has  added  other  forms  of
transaction  processing,  such  as checks that are not affected by such changes.

CHECK-RELATED  PRODUCTS  REVIEW
In 1987, the Company initiated its check guarantee services to merchants located
in  California  so a merchant could accept a customer's check with confidence of
receiving  payment.  To  support  merchants  in  other  states,  the Company has
historically  supported alternative check verification and guarantee services to
operate  concurrently  with the Company's credit card software in the merchant's
terminal.  In  1999,  the  Company  acquired  Magic  Software  Development, Inc.
(renamed  "XPRESSCHEX")  that  provided  ACH settlement services and supported a
membership-based  national  verification  service  for  collection  agencies. In
November  1999,  the  Company  acquired  Peak  Collection Services, a collection
agency,  and  integrated  its  operation  into  the XPRESSCHEX group location in
Albuquerque,  New  Mexico.  In January 2000, the Company acquired Rocky Mountain
Retail  Systems,  Inc. ("RMRS"), another provider of national check verification
services. RMRS also originated and maintained National Check Information Service
("NCIS"),  a  database of negative-check writers that was available to merchants
and  collection  agencies  across  the  nation  on  a fee per transaction basis.

In  May 2001, the Company acquired the assets of National Check Network ("NCN").
In  September  2001,  the  Company  combined  its  check  services  all into one
corporate  entity  under the name of XPRESSCHEX, Inc., combined the negative and
positive  databases  of  NCN  and  NCIS,  and  decided  to  promote  its  check
verification  services using only the NCN name in the future. The combination of
the Company's check services, XPRESSCHEX's ACH services, XPRESSCHEX's collection
capabilities  and  the verification services through the NCN database formed the
foundation  for  ECHO's  fully  integrated  national  check  services.

ECHO  has  invested  significant  resources  and  management  focus in its check
services business and the Company's efforts are beginning to show results. Check
services  revenue  increased  approximately 34% in fiscal 2002 from fiscal 2001.
Revenues from all sectors of check services, including check verification, check
conversion,  check  re-presentment, are all increasing significantly. Also, Visa
remains  committed  to  its  POS  Check  pilot  program  and Visa is encouraging
participating  banks  to  move  to  a full implementation wherein they offer the
service  to  all  of  their  merchants.


                                        8
<PAGE>
ECHO's  revenue  in check services can come from several sources. Typically, the
merchant pays either a fixed fee for each transaction (verification, conversion,
re-presentment,  return  check  processing  ("RCK"), etc.) or a fee based on the
face  amount of the check (check guarantee). Transaction revenue is received for
check  verification, check conversion, check re-presentment and RCK services. In
the  Visa  model,  ECHO can receive transaction fees for providing "third-party"
services  to  Visa  banks,  which  assists  them  in  processing  checks  from
non-participating  banks.  In  addition,  ECHO  may serve a Visa bank by being a
collector of the transaction data for the merchant and submitting it to VisaNet,
a  process  referred  to  as  an  "acquiring processor".  Finally, ECHO can also
participate  in  the  mark-up  that is charged on the sales price to a merchant,
although  this  is only earned by ECHO if its primary sales channels secured the
relationship.  Additional  revenue  is  earned  if  the merchant utilizes ECHO's
collection  services  and  it  is  primarily  derived  from  the  collection fee
associated  with  successful  collection of an item. If ECHO refers a collection
item  to  an NCN member, a small participation in the collection fee is returned
to  ECHO  through  agreement  with the NCN member. Finally, when ECHO provides a
guarantee  service  to  a  merchant  or a bank, it earns a certain percentage of
every  check  processed  from  the  merchant or bank and ECHO's earnings related
thereto  are  directly tied to its success in collection and its risk management
capability.

The  following  check  services  are  being  offered  by  the  Company:

Check  Verification
For  a  fee,  the  Company  will  search  NCN,  its  proprietary  database  of
negative-check  writers,  attempting  to  match a specific piece of information,
such as a driver's license number or Magnetic Ink Character Recognition ("MICR")
number,  provided by the merchant. A match identifies the check writer as having
current,  delinquent check-related debts. Upon notification of this match (via a
coded  response  from  the  provider), the merchant decides whether to accept or
decline  the  check.  Verification  reduces  the  risk of accepting a bad check;
however,  ECHO  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
Under  check  guarantee, ECHO will apply several risk management approaches, one
of  which  is to search NCN's database against the data provided by the merchant
and  essentially  "score"  each  transaction. If ECHO's scoring system concludes
there  is  too  much  risk,  the Company issues a coded response instructing the
merchant  to  refuse  to accept the check. If ECHO's scoring system results in a
positive  result,  a  coded  response  advises the merchant that the Company has
guaranteed  payment  on  that item.  If that check is subsequently dishonored by
the  check  writer's  bank, the merchant is reimbursed by the Company. Given the
risks  associated  with  check guarantee, especially for large volume merchants,
ECHO  exercises strict risk parameters on the merchants to which this service is
offered.

Electronic  Check  Conversion  ("ECC")
ECC  is  a  relatively  new  system  of  check settlement that is slowly gaining
merchant  acceptance.  Under  the program, the merchant slips a customer's check
either  through  a check reader that reads the MICR line on the check or a check
imager  that  records  the total image of the face of the check and the merchant
enters  the  amount  of the check into the system. The merchant then returns the
check  to  the customer and the electronic image, captured by the reader, allows
the  Company to settle the check transaction electronically. Customers like this
new  system  because  they get their check back immediately and still have their
hard  copy of the transaction. Banks like ECC because no paper has to be handled
by  the bank to settle the transaction. However, merchants will adopt the system
only  if  their  check  volume  justifies  the  capital investment in equipment,
ranging  from  $150  to  $600.

Check  Re-Presentment  ("RCK")
XPRESSCHEX  allows a merchant to advise its bank that a returned check should be
sent to the XPRESSCHEX data processing center in Albuquerque, New Mexico, rather
than  return  it to the merchant. Upon receipt, XPRESSCHEX converts the check to
an  electronic  ACH  transaction  for  resubmission  through the ACH network and
images  the  check for possible collection activity, should it become necessary.
Timing  of  re-presentment  is made so as to coincide with payday and better the
odds of collection. The full face value of the check is returned to the merchant
upon collection and a collection fee charged to the check writer, usually in the
range  of $15 to $25, is retained by XPRESSCHEX as payment for its RCK services.

XPRESSCHEXONLINE(sm)  and  XPRESSCHEXPLUS(sm)
A  check  can  be  presented  as  a  form  of  payment  over  the  Internet  and
ECHO  supports  the multiple types of ACH entry classes. XPRESSCHEXONLINE allows
any  e-commerce site to accept a check as payment. XPRESSCHEXPLUS allows a batch
of  check  data  to be sent to XPRESSCHEX for processing and is commonly used by
mail  order  or  phone  order  businesses.

Visa  POS  Check  Service  ("Visa  Program")
The  Visa  Program represents a major new initiative by Visa to enable merchants
to  receive  direct  online  authorization  for  checks written against consumer
demand  deposit  accounts, similar to the authorizations provided for credit and
debit  card  transactions.  A  merchant  will  be  able to have the option of 1)
converting  the  check to an electronic image only and the funds being deposited
electronically,  or  2)  converting  the check to an electronic image, the funds


                                        9
<PAGE>
being  deposited  and verifying either the availability of funds or the presence
of  the  check  writer  in  a negative database at the POS, or 3) converting the
check  to  an  electronic  image,  having  the  funds  deposited  and  having it
guaranteed  by  a  third  party.

Once  authorization  is  obtained,  the  customer is required to sign a separate
sales  receipt  authorizing  the  conversion  of  the  check  transaction  to an
electronic  transaction.  The merchant then voids the paper check and returns it
to  the  customer  along  with  a  signed  sales  receipt.

Visa's  processing system, VisaNet, currently processes transactions for about 5
million  U.S.  merchants and has access to 90% of the demand deposit accounts in
the  country.  In  the  case  of  checks  written  on  an account at a financial
institution  participating  in  the  Visa  Program, the check will be authorized
directly by that bank.  However, for financial institutions that have chosen the
Company  as  their  third-party  processor  and where the check is written on an
account  at  a  non-participating  bank,  the  check will be verified against 81
million  known  checking  accounts  stored  in  ECHO's  NCN  database.

ECHO  is  strategically  positioned to capitalize on the potential growth of the
Visa  Program,  which  has  the  potential  to  provide  merchants  with  a more
cost-effective  means  of  check  verification,  conversion and guarantee, while
leveraging  the  strong  marketing channel and brand recognition of Visa and its
member  banks.  The  Company  is  currently  working with six of the eight major
financial institutions that have chosen to participate in the pilot program. For
check  verification,  conversion  and  guarantee, ECHO has provided solutions to
Visa  member  banks  as  part of the Visa Program. The Company believes that its
relationship  with the Visa Program gives ECHO the potential to become a leading
check  services  processor  over  the  coming  years.

U-HAUL  RELATIONSHIP
ECHO's  relationship with U-Haul International represents a mature business with
a  solid  revenue stream. The Company has been working with U-Haul International
since  1995,  when  ECHO  developed  and  deployed  a  comprehensive  system for
real-time  credit  card  authorization,  capture and compilation of compensation
data, and active management of rental equipment information. The software, which
operates  on  ECHO's  proprietary  EB920  terminal, prepares the rental contract
between  the  dealer and the customer and reports the activity electronically to
the  corporate  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, where it 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.

ECHO's  revenues  are derived from equipment sales to U-Haul, custom development
work,  and  income resulting from daily transaction processing services provided
to  dealers  and U-Haul Corporate. While the Company has experienced a declining
trend  in transaction volume, due in part to U-Haul's development of a web-based
processing  service,  it has been able to cross-sell its check services into the
terminal  base  of more than 15,000 dealers. In fiscal 2001, the Company entered
into  a  revised  three-year  contract  with  U-Haul International, which covers
processing  services,  software  development,  data  distribution,  equipment
purchases/warranty,  customer  support  and  consulting, and which resulted in a
reduction  in  transaction  fees.

SALES  AND  MARKETING
ECHO  sells  its Merchant and Check Services through several marketing channels,
including  independent sales organizations ("ISO"), its own internal sales force
and  direct  merchant  referrals  by existing merchants. The Company also offers
Merchant  Services  through  a  direct  online  sales  channel, MerchantAmerica.
Approximately 20% of the Company's new accounts have historically been generated
through  the  ISOs.  ECHO  recently  restructured its sales force by hiring more
sales  people  for its Check Services National Sales Group focused on selling to
major  accounts  and mid-sized retail chains and implementing an incentive-based
commission structure with the goal of targeting specific accounts and shortening
the  sales  cycle.

ECHO  offers  its  payment  services  through several sales channels, including:

-    MerchantAmerica  -  Payment  services  offered directly to merchants and to
     regional  and  community  banks  to  offer  to  their  local  merchants.
     MerchantAmerica  combines  the ECHO credit card services with a full set of
     check  and  collection  services.
-    Primary  Sales Channels - These channels, which include First Regional Bank
     sponsored  Visa  POS  Check  direct merchant sales, Check Services National
     Sales  Group  sales  and MerchantAmerica direct merchant sales, provide the
     highest  margin  opportunities.
-    Secondary Sales Channels - Banks in the Visa POS Check pilot program, ISOs,
     NCN  Collection  Agency Members and MerchantAmerica Agent Banks are part of
     the  secondary sales channel. These channels offer lower margins due to the
     added participation in the overall revenue such channels require. Currently
     ECHO  has  138  ISOs registered to sell ECHO's check products. NCN has over
     260  member  collection  agencies that serve over 85,000 merchants and many
     agencies  are  acting  as  sales  agents  for  ECHO's  check  services.


                                       10
<PAGE>
Management  believes that the Company is unique in the number of payment methods
that  it  allows, the combination of transaction types that it manages directly,
its  ability  to  integrate  additional services and its ability to support each
merchant  through  one  vertically  integrated  source.

The  Company's  marketing strategy is to maximize cross-selling opportunities to
its  existing  base of retail merchants; sell integrated suites of check, credit
and  debit  card  processing  services through small banks and industry-specific
resellers; enhance and market MerchantAmerica.com; and develop the private label
check  service  program  that  allows  appropriate  identification  between  the
customer  and  the  vendor.  ECHO  intends  to:

-    Market the MerchantAmerica service to regional and community banks, through
     direct  sales  to  merchants  and  to  Not-For-Profit  organizations.
-    Promote  the  Visa POS Check Program by working with Visa-referred banks to
     assist  them  in  initiating the service and also, selling the Visa service
     directly to merchants through the sponsorship of ECHO's primary bank, First
     Regional  Bank.
-    Educate  national  merchants,  processors,  banks  and  industry-specific
     resellers  on  the  benefits  associated  with  the Company's NCN services,
     including  check conversion, verification, ACH payments, collection and its
     positive  and  negative  database  capability and enlist their active sales
     thereof.

COMPETITION
Merchant  and  check  services  are  highly  competitive  industries  and  are
characterized  by  consolidation,  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.
Credit  card  and  debit card processors have similar direct costs and therefore
their  products  are  becoming somewhat of a commodity product wherein a natural
advantage  accrues  to  the  highest volume processors. To offset this fact, the
Company  has  focused  on marketing to niche markets wherein it can maintain the
margins  it  deems necessary to operate profitably but no assurance can be given
that  this  strategy  will  be  successful  in  the  future.

There are a number of competitors in the check services industry, the largest of
which  are  TeleCheck (the leading provider of conversion and guarantee services
and  a  subsidiary  of  First  Data  Corporation),  SCAN/eFunds  (the  largest
verification  provider  in  the  nation),  Certegy  (a spin-off of Equifax), and
Global  Payments.  While all four have major national accounts, the last two are
now  actively  moving into the smaller merchant and middle market where ECHO has
historically  positioned  itself.  ECHO  believes  that  it  has  competitive
advantages,  including its front-end connectivity capabilities, its ownership of
the  NCN  database,  its integrated set of check and collection services and the
technological  advantage of having certified as both a Third-Party and Acquiring
Party  Processor  with the Visa Program. The Company believes its flexibility in
offering  a  variety  of check and collection services that enable its merchants
and  resellers  to  select the most cost-effective means of check acceptance and
collection  effort  for  them  is  a  distinctive  advantage.

ECHO  is not currently a major player in the industries in which it competes and
many of the Company's competitors have greater financial and marketing resources
than  the Company.  As a result, they may be better able to respond more quickly
to  new  or  emerging  technologies  and  changes  in  customer  requirements.
Competitors  also  enjoy  per  transaction  cost  advantages  due  to their high
processing  volumes that may make it difficult for ECHO to compete. In addition,
major  players  in the check services industry have developed sophisticated risk
assessment  technology  that  may  provide  a competitive advantage in providing
check guarantee services. 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.

REPORTABLE  SEGMENTS
Refer to Note 12 "Reportable Segments" in the accompanying Notes to Consolidated
Financial  Statements  for  reportable  segment  information  and  financial
information  about  geographic  areas.

ITEM  2.      PROPERTIES

In  October  1994,  the  Company  purchased  the three-story, 13,500 square foot
building  in  Agoura  Hills, California it currently occupies for $880,000.  The
Company  currently  has  two notes collateralized by this building.  The current
monthly  debt  service  for  these  two  notes  is  approximately $19,000.  This
building  houses  the  Company's  headquarters  and  computer  facilities.

The  Company  leases  real  property  in  Agoura  Hills  and  Westlake  Village,
California;  Albuquerque, New Mexico; Boulder, Colorado; and Kansas City, Kansas
for  sales,  data  center  and other operations, under various agreements, which
expire  at  various times over the next two years.  The total lease payments are
approximately  $18,000  per  month.


                                       11
<PAGE>
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  sold the 498 acres in San Bernardino County,
California  in  October  2002.

ITEM  3.     LEGAL  PROCEEDINGS

The  Company  is  involved in various lawsuits arising in the ordinary course of
business.

On  December 27, 2001, the Company settled its collections lawsuit against First
Preferred  Bank (successor-in-interest to First Charter Bank) by filing a Mutual
Release  and  Settlement  Agreement  with the Los Angeles Superior Court that i)
settles  the  counter  lawsuit  filed  by  First  Charter  against ECHO, and ii)
releases  ECHO  and  First Preferred Bank from any other liability in connection
with  the  Merchant  Marketing  and  Processing Agreement (the "Agreement") with
First  Charter Bank entered into on June 25, 1994 and subsequently terminated on
October  11,  2000  by  ECHO  before  filing  suit.

On March 6, 2002, by resolution of the Board of Directors upon advise of counsel
subsequent  to  closing  arguments  at  trial and a March 1, 2002 Mediation, the
Company  settled  all  claims  without  admission  of  liability  arising  from
litigation  known  as  Premiere  Lifestyles  International  Corporation,  Inc.
("Premiere")  v.  Electronic  Clearing  House,  Inc.  in  the Los Angeles County
Superior  Court.  The  Company  made  a  one-time  cash payment of $1,200,000 to
Premiere  and  executed  a  long-term  promissory  note  collateralized  by  the
Company's  office  building in Agoura Hills, California in favor of Premiere for
an  additional  $1,300,000,  payable  over 15 years with an interest rate of 8%.

ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

No  matters were submitted to a vote of ECHO's shareholders in the quarter ended
September  30,  2002.

EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

The  executive  officers  of  the  Company  are  as  follows:

                          Name                        Position
               -------------------------   -----------------------------------

               Joel  M.  Barry            Chairman  of  the  Board,
                                          Chief  Executive  Officer

               Alice  L.  Cheung          Chief  Financial  Officer,
                                          Treasurer

               Alex  Seltzer              Chief  Operating  Officer/Chief
                                          Information  Officer

               Patricia  M.  Williams     Vice  President,  Check  Services

               Jack  Wilson               Vice  President,  Merchant  Services

               Jesse  Fong                Vice  President,
                                          Information  Systems

               David  Griffin             Vice  President,  Check  Guarantee

               Rick  Slater               Vice  President,  Chief
                                          Technology  Officer

               Donna  L.  Rehman          Corporate  Secretary

               R.  Marshall  Frost        Counsel


                                       12
<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"  on the Nasdaq SmallCap Market.  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
                      SEPTEMBER 30     High    Low
                    -----------------  -----  -----
<S>                                    <C>    <C>
                          2002
                    -----------------
                    First Quarter      $2.92  $1.88
                    Second Quarter     $2.44  $2.00
                    Third Quarter      $2.10  $1.16
                    Fourth Quarter     $1.58  $1.08

                          2001
                    -----------------
                    First Quarter      $6.25  $2.00
                    Second Quarter     $5.25  $2.19
                    Third Quarter      $4.12  $2.28
                    Fourth Quarter     $3.64  $1.24
</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 149,341 shares for the
period  from  October 2001 to September 2002.  On December 10, 2002, the closing
representative  price  per  share  of  the  Company's  common stock, as reported
through  Nasdaq  SmallCap  Market,  was  $1.60.

HOLDERS  OF  COMMON  STOCK

As  of  November 12, 2002, there were approximately 857 record holders and 4,233
beneficial  holders  of  the  Company's  common  stock,  with  5,796,062  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 to
pay  any dividends.  The Company intends to devote all funds to the operation of
its  businesses.


                                       13
<PAGE>
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, 2002 and 2001 and the related consolidated statement of operations
and  of  cash  flows  for  the  three  years ended September 30, 2002, and notes
thereto  appearing  elsewhere  herein.

<TABLE>
<CAPTION>
                                                         Year  Ended  September  30
                                              -----------------------------------------------
                                                2002      2001      2000     1999      1998
                                              --------  --------  --------  -------  --------
                                            ( ---- AMOUNTS IN THOUSANDS, EXCEPT PER SHARE ---- )
<S>                                           <C>       <C>       <C>       <C>      <C>
STATEMENT OF OPERATIONS DATA:
-----------------------------
Revenues . . . . . . . . . . . . . . . . . .  $33,291   $29,943   $28,340   $23,828  $21,063
Costs and expenses . . . . . . . . . . . . .   36,960    29,380    28,324    22,636   19,852
                                              --------  --------  --------  -------  --------
(Loss) income from operations. . . . . . . .   (3,669)      563        16     1,192    1,211
Interest income (expense), net . . . . . . .      (74)      106       196        95       14
Other income (expense), net. . . . . . . . .      -0-       350       312       -0-      (35)
                                              --------  --------  --------  -------  --------
(Loss) income before income tax
 benefit (provision) . . . . . . . . . . . .   (3,743)    1,019       524     1,287    1,190
Benefit (provision) for income taxes . . . .    1,367      (585)     (233)    1,331      (36)
                                              --------  --------  --------  -------  --------

Net (loss) income. . . . . . . . . . . . . .  $(2,376)  $   434   $   291   $ 2,618  $ 1,154
                                              ========  ========  ========  =======  ========


(Loss) earnings per share-basic. . . . . . .  $ (0.41)  $  0.07   $  0.06   $  0.58  $  0.31
(Loss) earnings per share-diluted. . . . . .  $ (0.41)  $  0.07   $  0.05   $  0.45  $  0.21

Weighted average number of common
 shares and equivalents outstanding-basic. .    5,788     5,797     5,257     4,536    3,744

Weighted average number of common
 shares and equivalents outstanding-diluted.    5,788     5,964     5,825     5,825    5,459

BALANCE SHEET DATA:
-------------------
Working capital. . . . . . . . . . . . . . .  $ 3,234   $ 5,821   $ 6,029   $ 5,010  $ 3,611
Current assets . . . . . . . . . . . . . . .    5,728     8,259     7,595     6,159    5,154
Total assets . . . . . . . . . . . . . . . .   18,191    18,921    17,013    12,932    8,025
Current liabilities. . . . . . . . . . . . .    2,494     2,438     1,566     1,149    1,543
Long-term debt, and payable to
 stockholders and related parties,
 less current portion. . . . . . . . . . . .    2,159       744       767       599      639
Total stockholders' equity . . . . . . . . .  $13,538   $15,739   $14,680   $11,184  $ 5,843
</TABLE>


                                       14
<PAGE>
ITEM  7.     MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS  OF  OPERATIONS


FORWARD-LOOKING  STATEMENTS
The following discussion of the financial condition and results of operations of
Electronic  Clearing  House,  Inc.  ("ECHO"  or the "Company") should be read in
conjunction  with  the  consolidated  financial  statements  and  notes  thereto
included  elsewhere herein. This discussion contains forward-looking statements,
including statements regarding the Company's strategy, financial performance and
revenue  sources,  which  involve  risks and uncertainties. The Company's actual
results  may  differ  materially from those anticipated in these forward-looking
statements  as a result of certain factors, including, but not limited to, those
set  forth  elsewhere  herein.

OVERVIEW
ECHO  provides a complete solution to the payment processing needs of merchants,
banks  and  collection agencies. The Company's services include debit and credit
card  processing,  check  guarantee, check verification, check conversion, check
re-presentment,  check  collection  and  inventory  tracking.

The  Company  derives  revenues  from  two  main business segments, bankcard and
transaction  processing  services  and  check  services,  and operates under the
following brands: MerchantAmerica, ECHO's retail provider of processing services
to  both  the  merchant  and  bank  markets;  National Check Network ("NCN") for
transaction verification; XPRESSCHEX, Inc. for processing check guarantee, check
conversion,  check collection and check verification; and U-Haul Services, which
provides  credit  card  authorization,  rental  activity  and  tracks  available
inventory.

CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES
Management's  discussion  and  analysis  of  financial  condition and results of
operations  is based upon the Company's consolidated financial statements, which
have  been  prepared in accordance with accounting principles generally accepted
in  the  United  States.  The preparation of these financial statements requires
management  to  make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets  and  liabilities.  On  an  on-going  basis,  management  evaluates  its
estimates,  including  those  related  to  revenue  recognition, deferred taxes,
reserve for doubtful accounts, goodwill amortization, capitalization of software
costs,  contingencies  and  litigation.  Management  bases  its  estimates  on
historical  experience  and on various other assumptions that are believed to be
reasonable  under  the  circumstances,  the  results of which form the basis for
making  judgments  about  the carrying values of assets and liabilities that are
not  readily  apparent  from other sources. Actual results may differ from these
estimates.

Management applies the following critical accounting policies in the preparation
of  our  consolidated  financial  statements:

-  Revenue  Recognition  Policy.  All  processing  and  transaction revenues are
recognized  at  the  time  the  transactions  are  processed  by  the  customer.
Processing  and  transaction  revenues  are  principally  based on the number of
transactions  processed  and  a  percentage of dollar volume processed. Terminal
sales  are  recorded  when  product  is  shipped  and  title  transferred to the
customer.

- Reserve for Doubtful Accounts.  The Company established a reserve for doubtful
accounts  equal  to the estimated uncollectible amounts.  The Company's estimate
is  based on historical collection experience and a review of the current status
of account receivable.  It is reasonably possible that the Company's estimate of
the  reserve  for  doubtful  accounts  will  change  from  time  to  time.

- Deferred Taxes. Deferred taxes are determined based on the differences between
the  financial  statement and tax basis of assets and liabilities, using enacted
tax  rates  in  effect  for  the  year  in which the differences are expected to
reverse.  Valuation allowances are established when necessary to reduce deferred
tax  assets  to the amounts expected to be realized. In assessing the need for a
valuation allowance, management considers estimates of future taxable income and
ongoing  prudent  and  feasible  tax  planning  strategies.

-  Research  and  Development  Expense.  Expenditures  for  research  activities
relating  to  product  development  and  improvement  are  charged to expense as
incurred.  Such  expenditures  amounted  to  $1,719,000  in fiscal year 2002 and
$1,070,000  in  fiscal  year  2001.

-  Goodwill  Amortization. Goodwill represents the excess of purchase price over
tangible  and  other intangible assets acquired less liabilities assumed arising
from  business combinations and is being amortized on a straight-line basis over
estimated  useful lives ranging from 10 to 15 years. SFAS No. 142, "Goodwill and
Other  Intangible  Assets"  ("SFAS  142"),  issued in June 2001, requires, among
other  things,  the  discontinuance  of  goodwill amortization. In addition, the
standard  includes  provisions  for  the  reclassification  of  certain existing
recognized intangibles as goodwill, reassessment of the useful lives of existing
recognized  intangibles,  reclassification  of  certain  intangibles  out  of


                                       15
<PAGE>
previously  reported  goodwill  and  the  identification  of  reporting unit for
purposes  of  assessing  potential future impairments of goodwill. SFAS 142 also
requires  companies  to  complete  a  transitional  goodwill impairment test six
months  from  the  date  of  adoption.  The  Company  is required to adopt these
statements effective the first quarter of fiscal 2003. The Company has completed
the  Step  1  -  goodwill  impairment test, as prescribed by SFAS 142, utilizing
discounted  cash  flow  analysis  for the check services reporting unit that has
goodwill.  The  results  of this analysis indicate potential goodwill impairment
for  this  reporting  unit.  The  Company has begun, but not completed, Step 2 -
measurement  of  the  impairment loss, by evaluating the fair value of the check
services  business  segment  through  discounted  cash  flow  models  and  other
analytical  means.  The  Company  expects  to  record  any  impairment loss as a
cumulative  effect  of  a change in accounting principle in the first quarter of
2003.

-  Capitalization  of  Software  Costs.  The  costs  of purchased and internally
developed  software  used  to  provide  services  to  customers  or  internal
administrative  expenses  are capitalized and amortized on a straight-line basis
over the lesser of three years or estimated useful life. Under the provisions of
Statement  of  Position  98-1,  "Accounting  for  the Costs of Computer Software
Developed  or Obtained for Internal Use," the Company capitalizes software costs
when  both  the  preliminary  project  stage  is  completed  and  management has
authorized  further  funding  for  the  completion  of  the  project.

In  June  2002,  the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities", which is effective for exit or disposal activities
initiated  after  December  31,  2002.  SFAS 146 requires that a liability for a
cost  associated  with  an  exit or disposal activity be recognized and measured
initially  at  fair  value only when the liability is incurred. The Company does
not expect the adoption of SFAS 146 will have a material impact on its financial
statements  and  the  results  of  its  operations.

RESULTS  OF  OPERATIONS

FISCAL  YEARS  2002  AND  2001
------------------------------

Financial highlights for fiscal 2002 as compared to fiscal 2001 were as follows:

--Total  revenue  increased  11.2%  to  $33.3  million

--Gross  margin  from  processing and transaction revenue declined to 30.8% from
  33.9%

--Operating income moved into negative territory to $(3.7) million from $563,000

--Diluted loss per share of $(0.41) as compared to diluted earnings per share of
  $0.07

--Fiscal  2002  results  reflect  one-time  legal  settlement  of  $2.5  million

--Bankcard  and  transaction  processing  revenue  rose  8.4%  to  $27.3 million

--Check-related  revenue  increased  by  34.2%  to  $5.8  million


REVENUE.  Total revenue increased 11.2% to $33,291,000 for the fiscal 2002, from
$29,943,000  for fiscal 2001. The increase can be primarily attributed to growth
in  the  processing  and  transaction business. Total processing and transaction
revenue  for  fiscal  2002  increased  13.0%, from $29,096,000 in fiscal 2001 to
$32,889,000  in  fiscal  2002.

COST  OF SALES. Bankcard processing expenses are largely a reflection of changes
in  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 and
transaction  and  check  processing  expense, increased 18.2% for the year, from
$19,239,000  in fiscal 2001 to $22,747,000 in fiscal 2002. The increase reflects
a 13.0% increase in processing and transaction revenues for the year, as well as
the  higher  costs  of  processing. Gross margin from processing and transaction
services  decreased  from  33.9%  in  fiscal  2001 to 30.8% in fiscal 2002. This
decrease  in  gross  margin  was  due to a combination of factors such as higher
personnel  and  infrastructure  costs,  increased  costs  paid  to a third-party
service provider, the departure of several higher volume/high margin credit card
merchants,  and  a  lower  rate  charged  to  U-Haul  as  a result of a contract
negotiation.

While  bankcard  and  transaction processing revenue increased by 8.4% in fiscal
2002,  as  compared  to  fiscal  2001,  cost  of  sales  such as personnel costs
increased  from  $840,000  in  fiscal  2001  to $1,251,000 in fiscal 2002, a 49%
increase.  Additionally,  depreciation  and  amortization  expense  related  to
computer  software  and  hardware  increased  from  $598,000  in  fiscal 2001 to
$844,000  in  fiscal  2002,  a  41%  increase.


                                       16
<PAGE>
Cost of terminals sold was $588,000 for the year, as compared to $419,000 in the
fiscal  2001.  The cost of terminals continued to exceed the terminal sales as a
result  of  a  $300,000  inventory  allowance  provision  for  fiscal 2002. This
allowance  was related to the write-down of certain obsolete customized printers
and  other  slow-moving  inventory.

EXPENSE.  Other  operating  costs  such  as  personnel  costs,  telephones  and
depreciation  expenses  decreased  1.8%,  from  $2,468,000  in  fiscal  2001  to
$2,424,000  in  fiscal  2002  due  to  stringent  cost  controls.  Research  and
development  expenses  increased  60.7%  from  $1,070,000  in  fiscal  2001  to
$1,719,000  in  fiscal 2002. The Company is continuing to invest in research and
development  related to the various check service products at the current level.
Even  though  most of the check services program development is near completion,
the  Company  anticipates  that  it  will  continue  to  invest  in research and
development  expenses  in  order  to  remain  competitive  in  the market place.
Additionally,  the  Company  incurred  operational  expenses  related  to  the
management of the Visa POS Check Services pilot program ("Visa Program") without
any  offsetting  revenue  during  this  period.

Selling,  general and administrative expenses increased 12.7% from $5,760,000 in
fiscal  2001  to  $6,493,000 in fiscal 2002. This increase was mainly due to the
hiring  of  additional  sales  personnel  in  support of both merchant and check
services  and  additional  administrative  staff  to  support  the growth of the
Company.  In  fiscal  2002,  the Company hired a new COO/CIO. As a percentage of
total  revenue,  selling, general and administrative expenses increased slightly
from  19.2%  in  the  fiscal  2001  to  19.5%  in  fiscal  2002.

Amortization  of goodwill expense remained relatively constant, from $424,000 in
fiscal  2001 to $489,000 in fiscal 2002. However, periodic goodwill amortization
expense will be eliminated upon the adoption of SFAS 142 in the first quarter of
fiscal  2003.

INTEREST  EXPENSE.  Interest expense increased to $129,000 for fiscal 2002, from
$81,000  last  year.  The  increase  is  due  to the $1.3 million long-term note
portion  of  the  legal settlement expense for Premiere Lifestyles International
Corporation,  which  carries  an 8% interest rate. Interest income declined from
$187,000  in  fiscal 2001 to $55,000 in fiscal 2002 due to a decline in interest
rates  and  lower  average  cash  balances.

EFFECTIVE  TAX  RATE.  Benefit for income taxes of $1,367,000 in fiscal 2002 was
due  to  the  operating loss incurred of $3,743,000. The Company's effective tax
benefit  rate  was  36.5%  for fiscal 2002 and a tax provision rate of 57.4% for
fiscal  2001.  See Notes to Consolidated Financial Statements included elsewhere
herein for further explanation of the income tax expense and a reconciliation of
reported  income  taxes  to  the  amount  utilizing  the  statutory  rate.

NET  INCOME  (LOSS). Net loss for fiscal 2002 was $2,376,000, as compared to net
income  of $434,000 last year. The decline was primarily due to the $2.5 million
legal  settlement  on a pre-tax basis with Premiere. The Company made a one-time
cash  payment of $1,200,000 to Premiere and executed a long-term promissory note
collateralized  by  the  Company's  Agoura  Hills, California office building in
favor  of  Premiere for an additional $1,300,000, payable over 15 years, with an
interest  rate  of  8%.  In  addition,  operating  income  fell  in  fiscal 2002
primarily  due  to  a  $649,000  increase in research and development expense, a
$300,000  increase  in provision for inventory allowance and a $250,000 decrease
in  other  revenue.

SEGMENT  RESULTS
Bankcard and Transaction Processing. Bankcard processing and transaction revenue
increased  8.4%, from $25,220,000 in fiscal 2001 to $27,339,000 for fiscal 2002.
This  increase  was  mainly  attributable  to an approximately 13.2% increase in
bankcard  processing  volume  as compared to last year and was the result of the
Company's  successful  marketing  programs,  including  the  MerchantAmerica web
offerings  and other sales programs. The increase in bankcard processing revenue
was  partially  offset  by a decrease in revenue as a result of a rate reduction
offered  to  U-Haul,  a  major  transaction processing customer, and the loss of
several  high  volume,  high  margin  merchants.

In  fiscal  2002,  the  bankcard  and  transaction  processing segment generated
operating  income  of $1,996,000, or 7.3% of associated revenues, as compared to
$3,183,000,  or  12.6%  of  revenues,  in  fiscal  2001.  The  59.5% decrease in
operating  income  is  attributable  to  a  $303,000  increase  in  research and
development  expense,  a $300,000 increase in inventory allowance and a $168,000
decrease  in  other  revenue.  Additionally,  gross  margin decreased due to the
departure  of  several  high  margin  merchants  combined  with  higher  overall
operating  costs.

The  Company  implemented  a  rate  increase  in October 2002 to its credit card
processing merchants, which is expected to offset the higher operating costs and
to  improve  the  gross  margin from credit card processing activities in fiscal
2003.


                                       17
<PAGE>
The  Company anticipates significant service enhancements and cost savings as it
integrates  with  the  Oasis Payment Processing System being acquired from Oasis
Technologies  for approximately $1.3 million of which $553,000 progress payments
were  made through September 30, 2002.  This project is expected to be completed
by  the  last  quarter  of  2003.  This  system  will process card payments more
efficiently  and  with more features and flexibility, thus free up the Company's
technical  staff  to  speed  up  the  development  of  new  services and further
integrate  the  multiple  merchant-related  services. With its direct settlement
framework, Oasis will offer pricing advantages by eliminating a key component of
the  Company's  cost structure by eliminating a third-party processor, a savings
of  approximately  ten  basis points for every credit card dollar processed. The
implementation  of  this  system  will give the Company a greater flexibility to
price  its  credit card processing services, allowing the Company to attract and
retain  larger merchants as well as the small and mid-market merchants that have
been  its  target  market.

Check  Related  Products.  Check-related  revenues increased from $4,323,000 for
fiscal  2001  to  $5,802,000,  an  increase of 34.2%. This was attributable to a
11.1%  increase in check verification revenue and a 72.7% increase in electronic
check  presentment  revenue.

Check  services  revenue  made  up 17.6% of the total processing and transaction
revenues  for  fiscal 2002 as compared to 14.9% in the prior year. Check-related
operating  loss  was  $872,000  for  the  year, as compared to operating loss of
$234,000  in  fiscal 2001. The increase was due to the costs associated with the
development of the Visa Program and the Company's other new products, as well as
an  increase  in  staffing to support current and anticipated processing volume.

The Visa Program is continuing as planned. The Company is currently working with
six  Visa  member  banks  that  have  chosen  to  participate in this Visa pilot
program.  During  the  pilot phase, small numbers of merchants have been testing
the  Visa  Program  in  conjunction  with  the  banks.  The  Company will not be
generating  significant  revenue  from  this Visa Program until the member banks
have completed the pilot phase and begin to offer this program to their merchant
base.  Development  and  testing  of  the  Visa  POS Check Services platform was
largely  completed  by  the  end  of fiscal 2002, and some member banks have now
begun to actively market the service to their merchant base. Management believes
that  the  Visa  POS  Check  Services  Program  will  provide  the  Company with
significant  opportunities  to  develop  strategic relationships with some major
banks,  which  could  result in an increase in our check services revenue in the
coming  years.

Other.  Other  revenue  decreased  from  $400,000  in fiscal 2001 to $150,000 in
fiscal  2002  due  to  a decrease in the amount of customer software development
work  completed  during  the  year.

FISCAL  YEARS  2001  AND  2000
------------------------------

Financial highlights for fiscal 2001 as compared to fiscal 2000 were as follows:

--Total  revenue  increased  5.7%  to  $29.9  million

--Gross  margin  from  processing and transaction revenue improved from 29.4% to
  33.9%

--Income  from  operations  rose  to  $563,000  from  $16,000

--Check-related  revenues  increased  124.5%  to  $4,323,000

--Check  services  revenue  grew  to  14.9%  of total processing and transaction
  revenues

--After-tax  net  income  increased  49.1%  to  $434,000

--Basic  and  diluted  earnings per share of $0.07 in fiscal 2001 as compared to
  $0.06  per  basic  share  and  $0.05  per  diluted  share

REVENUE.  Total  revenues  for fiscal year 2001 were $29,943,000, an increase of
5.7%  over  revenues  of  $28,340,000  for  fiscal  year  2000.  Overall,  total
processing and transaction revenue increased from $25,677,000 for fiscal 2000 to
$29,096,000  for  fiscal  2001,  an  increase  of  13.3%.

COST  OF  SALES. Bankcard processing expenses should largely reflect the changes
in processing revenue.  A majority of the Company's bankcard processing expenses
are  fixed  as a percentage of each transaction amount, with the remaining costs
based  on a fixed rate applied to the transactions processed. Processing-related
expenses,  consisting  of  bankcard  processing expense and transaction expense,
increased  from  $18,128,000 for fiscal year 2000 to $19,239,000 in Fiscal 2001,
an  increase  of  6.1%.  This  reflected  the  13.3%  increase in processing and
transaction  revenues  for  Fiscal  2001.  Gross  margin  from  processing  and
transaction  revenue  improved from 29.4% to 33.9%. The increase in gross margin
was  attributable  to  the  increase  in  check services revenue, which normally
yields  a  higher  gross margin. Additionally, the Company was able to lower its
communications  costs  and  chargeback  losses  during  fiscal  year  2001.


                                       18
<PAGE>
Cost  of terminals sold and leased decreased from $1,790,000 in fiscal year 2000
to  $419,000  in fiscal year 2001, a decrease of 76.6%.  This is attributable to
the  81.8%  decrease  in terminal sales revenue for the year. However, the gross
margin  decreased from 27.2% in fiscal 2000 to 6.3% in fiscal 2001. This was due
to  the  Company's  decision to lower small quantity equipment pricing in fiscal
2001.

EXPENSE. Other  operating costs  increased from  $2,161,000 in  fiscal year 2000
to  $2,468,000  in  fiscal  year  2001,  an  increase  of  14.2%.  This increase
was  reflective  of the 13.3% increase in processing and transaction revenue and
the  significant  operating  expenses  attributable  to  the  development of the
various  check  services  programs  as  discussed  herein.

Selling  and  general  and  administrative expenses increased from $4,816,000 in
fiscal  year  2000  to  $5,760,000  in  fiscal  year 2001, an increase of 19.6%.
Approximately  $600,000  of  this  increase  was  attributable  to the legal and
consulting  fees related to the ongoing litigation, which is continuing into the
first  fiscal  quarter of 2002. Additionally, the Company continues to invest in
higher  personnel  costs  required  to  support the growth and management of the
various  check  services  and  the  rollout  of MerchantAmerica.com, an Internet
website  designed  to  promote  the  products and services of the Company and to
enhance merchant reporting functions. As a percentage of total revenue, selling,
general  and  administrative  expenses  increased from 17.0% of total revenue in
fiscal  year  2000  to  19.2%  of  total  revenue  in  fiscal  year  2001.

OPERATING  INCOME.  Income  from  operations  for  fiscal  2001 was $563,000, as
compared  to  $16,000 in fiscal 2000. The increase was primarily attributable to
higher  transaction  revenue  and  improved  gross  margin  for  processing  and
transaction  revenue.

INTEREST  EXPENSE.  Interest  expense  decreased to $81,000 for fiscal 2001 from
$88,000  in  fiscal  2002. This was offset by interest income, which declined to
$187,000 in fiscal 2001 from $284,000 in fiscal 2000. Also, the Company posted a
gain  on the sale of an asset. In June 2001, the Company sold a merchant list to
a  financial  institution  for  cash  proceeds  of  $350,000.

EFFECTIVE  TAX  RATE.  Income  tax expense was $585,000 for fiscal year 2001 and
$233,000  for  fiscal year 2000.  The Company's effective tax rate was 57.4% for
fiscal  2001  and  44.5%  for  fiscal 2000.  See Notes to Consolidated Financial
Statements  included  elsewhere herein for further explanation of the income tax
expense  and  a  reconciliation of reported income taxes to the amount utilizing
the  statutory  rate.

SEGMENT  RESULTS
Bankcard  and  Transaction  Processing.  Revenues  derived  from  the electronic
processing  of  transactions  are  recognized  at  the time the transactions are
processed by the merchant. Bankcard and transaction processing revenue decreased
3.8%,  from $26,210,000 in fiscal year 2000 to $25,220,000 for fiscal year 2001.
Increases  in  bankcard  processing volume year-over-year and U-Haul transaction
processing  revenue  were offset by the reduction in processing revenue from the
innoVentry  bankcard processing joint venture, which was terminated in September
2000.

The  bankcard  and  transaction processing segment generated operating income of
$3,183,000, or 12.6% of revenues, for fiscal 2001, as compared to $2,668,000, or
10.2% of revenue, in fiscal 2000. The 19.3% increase in operating income was due
to  an  increase  in  transaction  and  processing  volume.

The  Company  entered into an amended contract with U-Haul in September 2001 and
thereby extended the contract for another three-year term. The Company currently
serves  approximately  15,000  U-Haul  dealers  nationwide.

Check-Related  Products.  Check-related  revenues  increased from $1,926,000 for
fiscal  year  2000  to  $4,323,000  in  fiscal 2001, a 124.5% increase. This was
attributable  to the additional check services being offered to the merchants in
the  current  fiscal  year  and  the  continued higher growth experienced in the
check-related  business  segment.  Check services revenue made up 14.4% of total
processing  and  transaction  revenues in fiscal 2001 as compared to 6.8% in the
prior  year.  Check-related  operating  loss  was  $234,000  in  fiscal 2001, as
compared  to  a  loss  of  $883,000 in fiscal 2000. Management believes that the
growth  in  check-related  activities will continue to outpace the growth in the
bankcard  processing  activities.

During  fiscal  2001,  the  Company fully integrated its check services, such as
check  verification,  check  conversion,  check guarantee, check re-presentment,
along  with  debit  and  credit  card  transactions  through a VeriFone terminal
platform. This is one of the first terminal applications available in the market
today  that  includes check conversion and captures check images with a scanner.

Other.  Other revenue increased from $204,000 in fiscal year 2000 to $400,000 in
fiscal  2001,  an  increase  of  96.1% due to more billable software development
work.


                                       19
<PAGE>
LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  September  30,  2002,  the  Company  had  available  cash of $2,409,000,
restricted  cash  of  $906,000  in reserve with its primary processing banks and
working  capital  of  $3,234,000.

Accounts  receivable,  net  of  allowance  for  doubtful  accounts, decreased to
$1,744,000  at  September  30,  2002  from $1,864,000 at the end of fiscal 2001.
Allowance  for  doubtful  accounts, which reflects chargeback losses and dues to
Visa  and  MasterCard  increased  to $431,000 at the end of the fiscal 2002 from
$313,000  at  September  30,  2001. This increase was attributable to the higher
processing  volume  in  fiscal  2002.

Net  cash provided by operating activities for the year ended September 30, 2002
was  $62,000  as  compared  to  net  cash  provided  by  operating activities of
$2,349,000 for fiscal 2001.  The reduction in cash from operations was primarily
attributable  to  the  net  loss, including the $1,200,000 cash portion of legal
settlement  expenses  incurred  during  the  quarter  ended  March  31,  2002.

During  fiscal  2002,  the Company used $1,754,000 for the purchase of equipment
and  capitalized  software costs.  As of November 2002, the Company negotiated a
$500,000  lease  line  with a leasing company for the purpose of future computer
equipment  purchases.  The  Company  is also finalizing a $700,000 loan with its
primary  sponsoring  bank  to fund the remaining scheduled payments of the Oasis
software  in  fiscal year 2003.  Total net cash used in investing activities was
$1,835,000 for the current fiscal year as compared to $1,681,000 for fiscal year
2001.

In  April  2002,  the  Company  received  $390,000 in proceeds from the sale and
leaseback of certain computer software and hardware purchased.  The Company used
$215,000 for the repayment of capitalized leases in fiscal year 2002 as compared
to  $47,000  in  fiscal  year 2001.  This increase was due to the additional new
capitalized  leases  completed  in  the  current  fiscal  year.  Total  net cash
provided  by  financing  activities  was  $35,000 for the current fiscal year as
compared  to  net  cash used by financing activities of $462,000 for fiscal year
2001.

At  September,  2002,  the  Company  had  the  following  cash  commitments:

<TABLE>
<CAPTION>
                                         Payment Due By Period
                     --------------------------------------------------------

Contractual                      Less than                         After
Obligations             Total    1 year     2-3 years   4-5 years  5 years
-------------------  ----------  ---------  ----------  ---------  ----------
<S>                  <C>         <C>        <C>         <C>        <C>
Long-term debt
 including interest  $2,859,000  $ 315,000  $  565,000  $ 455,000  $1,524,000
Capital lease
 obligations            914,000    377,000     537,000        -0-         -0-
Operating leases        261,000    123,000     138,000        -0-         -0-
                     ----------  ---------  ----------  ---------  ----------

Total contractual
 cash obligations    $4,034,000  $ 815,000  $1,240,000  $ 455,000  $1,524,000
                     ==========  =========  ==========  =========  ==========
</TABLE>


The  Company's primary source of liquidity is expected to be cash flow generated
from  operations  and  cash  and  cash equivalents currently on hand. Management
believes  that  its cash flow from operations together with cash on hand will be
sufficient  to  meet  its  working  capital  and  other  commitments.

RISK  FACTORS

The  Company  is  subject  to  a  number  of risks, which could affect operating
results  and  liquidity,  including,  among  others,  the  following:

DEPENDENCY  ON  BANK  RELATIONSHIPS.

The  Company currently relies on cooperative relationships with, and sponsorship
by,  banks  in  order  to  process  its  Visa,  MasterCard  and  other  bankcard
transactions.  The  Company's  banking  relationships are currently with smaller
banks  (with  assets of less than $500,000,000).  Even though smaller banks tend
to be more susceptible to mergers or acquisitions and are therefore less stable,
these  banks  find the programs more attractive and the Company believes that it
cannot  obtain  similar  relationships  with larger banks at this time.   A bank
could  at  any  time  curtail or place restrictions on the processing volume.  A
bank  might  do  this  because of its internal business policies or due to other
adverse  circumstances.  If  a  volume  restriction is placed on the Company, it
could  materially  adversely  affect  the business operations by restricting the
Company's  ability  to  process credit card transactions and receive the related


                                       20
<PAGE>
revenue.  The  Company's  relationships  with  its customers and merchants would
also  be  adversely affected by its inability to process these transactions.  To
limit  this  problem,  the  Company  currently  maintains relationships with two
banks.  However,  the  Company  cannot assure that these banks will not restrict
its  processing  volume  or that the Company will always be able to maintain its
present  banking  relationships or establish new banking relationships.  Even if
new  banking relationships are available, they may not be on terms acceptable to
the  Company.  The Company's failure to maintain these banking relationships and
sponsorships would have a material adverse effect on the business and results of
operations.

BUSINESS  RELATIONSHIP  WITH  U-HAUL  INTERNATIONAL.

The business relationship with U-Haul is important to the Company but due to the
growing  merchant  and  check  business  and  the  full deployment to all U-Haul
dealers, U-Haul has gradually become a less significant customer over the years.
U-Haul  accounted  for  approximately 6% of ECHO's revenue in 2002 and 8% of the
revenue  in  2001.  The  Company believes it has a good relationship with U-Haul
and  that  its  services  are  highly valued by U-Haul and its dealers, however,
there can be no assurance that the Company will be able to maintain the business
relationship  with  U-Haul,  or  that  sales to U-Haul will continue at the same
levels  as  previous  years.  Losing  U-Haul  as  a  customer still could have a
significant  impact  to  the  Company.

BANKCARD  FRAUD.

The Company significantly relies on the processing of bankcard transactions.  If
any  merchants  were  to  submit  or process unauthorized or fraudulent bankcard
transactions,  depending  on  the  dollar  amount,  ECHO could incur significant
losses which could have a material adverse effect on the business and results of
operations.  These  types  of  losses  are  handled  by  the sponsoring banks as
follows:

     -    First  Regional  Bank  -  ECHO  assumes  and  compensates the bank for
          bearing  the  risk  of  these  types  of  losses.
     -    The Berkshire Bank - ECHO assumes and compensates the bank for bearing
          the  risk  of  these  types  of  losses.

The Company has implemented systems and software for the electronic surveillance
and  monitoring  of  fraudulent  bankcard  use.  The  Company  also  maintains a
dedicated  reserve  of  $533,000  at its primary bank specifically earmarked for
such activity.  Despite a long history of managing such risk, the Company cannot
guarantee  that  these  systems  will prevent fraudulent transactions from being
submitted  and  processed  or  that the funds set aside to address such activity
will  be  adequate  to  cover  all  potential  situations that might occur.  The
Company does not have insurance to protect it from these losses, but the Company
does  allocate ten basis points (.001) of daily processing activity as a reserve
against  these types of losses.  There is no assurance that this reserve will be
adequate to offset against any unauthorized or fraudulent processing losses that
the  Company  may  incur.  Depending  on  the  size of such losses the Company's
results  of  operations  could be immediately and materially adversely affected.

DEPENDENCE  ON  KEY  EMPLOYEES.

The Company's success has been and will continue to be dependent on the services
of key technical and managerial personnel such as Joel M. Barry, our chairman of
the  board  and  chief  executive  officer.  The  loss of Mr. Barry could have a
materially adverse impact on the Company's business.   The Company believes that
its  success  also  depends  on  its  ability to continue to be able to attract,
retain  and  motivate  highly  skilled  technical  and  management employees and
consultants who are in great demand.  There can be no assurance that the Company
will be able to attract and retain such employees and its failure to do so could
adversely  affect  its  business.

RISK  OF  NOT  REMAINING  LISTED  ON  NASDAQ.

The  Company  is  currently  listed  on  the Nasdaq SmallCap market. There is no
assurance  that  the  listing of the Company's common stock will, in the future,
always  continue to satisfy the Nasdaq listing requirements.  If the Company was
delisted from Nasdaq, this would have a material adverse effect on the price and
the  liquidity  of  the  Company's  common  stock.

COMPETITION.

The  Company  is  in  the  business of processing transactions and designing and
implementing  integrated  systems  for its customers so that they can better use
ECHO's  services.  This  business  is highly competitive and is characterized by
rapid technological change, rapid rates of product obsolescence, and rapid rates


                                       21
<PAGE>
of new products introduction.  The Company's market share is relatively small as
compared  to  most  of  its  competitors  and  most  of  these  competitors have
substantially  more  financial  and marketing resources to run their businesses.
This  enables  the  Company's competitors to quickly respond to new and emerging
technologies,  changes  in  customers  needs,  and  to  devote more resources to
product  and services development and marketing.  The Company may face increased
competition  in  the  future  and  there  is  no  assurance  that current or new
competition  will allow the Company to keep its customers.  If the Company loses
customers,  its  business operations may be materially adversely affected, which
could  cause  it  to cease its business or curtail its business to a point where
the  Company  is  no  longer  able  to  generate  sufficient  revenues  to  fund
operations.  There  is  no  assurance  that  the  Company's current products and
services  will  stay competitive with those of the Company's competitors or that
the  Company  will  be  able  to  introduce new products and services to compete
successfully  in  the  future.

RAPID  TECHNOLOGY  CHANGES.

The Company's business industry involves rapidly changing technology.  Recently,
the  Company has observed rapid changes in technology as evident by the Internet
and  Internet-related  services  and  applications, new and better software, and
faster computers and modems.  As technology changes, ECHO's customers desire and
expect  better  products  and  services.  The  Company's  success depends on its
ability  to improve its existing products and services and to develop and market
new  products  and  services.  The  costs  and  expenses associated with such an
effort  could  be  significant  to  the Company.  There is no assurance that the
Company  will be able to find the funds necessary to keep up with new technology
or  that  if  such funds are available that the Company can successfully improve
its  existing  products  and  services  or successfully develop new products and
services.  The  Company's  failure  to provide improved products and services to
its  customers  or any delay in providing such products and services could cause
it  to  lose  customers  to  its  competitors.  Loss  of  customers could have a
material  adverse  effect  on  ECHO.

DEPENDENCE  ON  TECHNOLOGY  AND  RELATED  PATENTS.

The  Company  currently  owns three patents that relate to unique aspects of its
products  or  services.  Even though the Company has these patents, there can be
no  assurance  the  Company's  competitors  will not be able to develop a better
product  or  a  better way of providing the Company's services to its current or
potential  new  customers.  The  Company's  patents  have not been tested in the
courts  so  the  Company is unable to determine if they will be sustained in the
Company's  favor.  If  ECHO's  patents  are  not  sustained  in  its  favor, the
Company's  competitors could determine its business methods and then develop and
market competing products and services.  Such an outcome could cause the Company
to  lose  customers,  which  could  materially  adversely  affect its results of
operations.  The  Company  has  expended  considerable  time  and  money  in the
development  of  ideas  and  seeking patent protection for them.  If the Company
seeks  additional  patents  in  the  future,  or  if  the Company is required to
prosecute  or  defend  its  patents,  the  expenses  associated  with  such
patent-related activities could be substantial and could have a material adverse
effect  on  the  results  of  operations.

CERTAIN  OF  THE  COMPANY'S  INTELLECTUAL  PROPERTY  IS  NOT  PROTECTED.

The  Company  has  expended  a  considerable amount of time and money to develop
information  systems  for  its  merchants.  The  Company  has  not  obtained any
intellectual  property  protection  or  other  protection  on  these information
systems.  The  Company  also  believes  that  these  information  systems do not
infringe  upon  the  rights of any third parties, however, there is no assurance
that  third parties will not bring infringement claims against the Company.  The
Company  also  has the right to use certain technology of others through various
license  agreements.  If  a  third  party claimed these licenses were infringing
their  technology,  the  Company  could  face additional infringement claims and
potential  negative  results.  If  an  infringement claim is brought against the
Company  and  the Company loses, it could be required to stop using that type of
product,  system  or  service  as  well as pay monetary damages to the person or
entity  making the claim.  This result could materially adversely affect results
of operations and manner in which the Company could do business.  If the Company
was  not  able  to  implement  another  method  its business could fail.  If the
Company  is  required  to continuously defend infringement claims, the costs and
expenses  associated  with such a defense could be very expensive to the Company
and  could  materially  adversely  affect  the  results  of  operations.

INVESTMENT  IN  RESEARCH  AND  DEVELOPMENT.

The  Company continues to enter into projects, which it believes will assist the
Company  in its efforts to stay competitive.  Although the Company believes that
its  investment in these projects will ultimately increase earnings, there is no
assurance  as  to  when  or  if  these  new  products  will  show profitability.


                                       22
<PAGE>
NEED  FOR  ADDITIONAL  FUNDS.

The Company uses funds generated from operations to finance its operations.  The
Company  currently  believes that the cash flow from operations is sufficient to
support  its  business activities, including research, development and marketing
costs.  Future  growth  will depend on the Company's ability to raise additional
funds, either through operations, bank borrowings, or equity or debt financings.
There is no assurance that the Company will be able to raise the funds necessary
to  finance  growth  or  continue  to  generate  the  funds necessary to finance
operations,  and  even  if  such  funds  are  available,  that the terms will be
acceptable.  The  inability  to  generate the necessary funds from operations or
from  third  parties  could  force  the  Company  to  cut back its operations by
limiting  research,  development  and  growth  opportunities, which could have a
material  adverse  effect  on  ECHO.

UNDERWRITER/MARKET  MAKER.

Trading  markets  for  ECHO's  common  stock  is maintained on Nasdaq by various
broker/dealers  who  are  members  of  the  National  Association  of Securities
Dealers.  None of the market makers are under any legal obligation to maintain a
market  in the Company's common stock and may discontinue such activities at any
time.  If  these  market makers choose not to maintain a market in the Company's
common  stock, such a discontinuance could have a material adverse effect on the
price  and  liquidity  of  the  Company's  common  stock.

LACK  OF  INSURANCE  PROTECTION  FOR  THE  COMPANY'S  PRODUCTS  AND  SERVICES.

The  Company  does  not  have  insurance  protection  against claims for product
liability  or  errors  and  omissions  for the products and services sold by the
Company.  If  claims  are  brought  by  the  Company's  customers or other third
parties,  the  Company  could  be  required  to  pay  the required claim or make
significant  expenditures to defend against such claims.   There is no assurance
that  the  Company will have the money to pay such claims if they arise.  If the
Company  does  have  the  money  to  pay the claims, such a payment could have a
material  adverse  effect  upon  on  the  Company.

COST  OF  DEFENDING  LAWSUITS.

The  Company  is  involved in various lawsuits arising in the ordinary course of
business.  Although  the  Company  believes  that  the  claims  asserted in such
lawsuits are without merit, the cost to the Company for the fees and expenses to
defend  such  lawsuits  could  have  a  material adverse effect on the Company's
financial condition, results of operations or cash flow.  In addition, there can
be  no assurance that the Company will not at some time in the future experience
significant  liability  in  connection  with  such  claims.

U-HAUL  RELATIONSHIP.

The  Company  provides  processing services to U-Haul International by acting as
the central processor of U-Haul dealer rental activity and reservations.  During
2002,  U-Haul's  ability  to  reach  financing arrangements with its lenders was
delayed  and presents a potential risk to ECHO should U-Haul be unable to secure
adequate financing agreements in the future.  The primary risk to the Company in
the  event  of a U-Haul bankruptcy announcement is believed to be timely payment
of  its  outstanding  invoices at the time of declaration.  The Company believes
any on-going payment under a bankruptcy action would be reasonable to expect due
to  the critical nature of the Company's service to U-Haul and its dealers.  The
Company  is  working  closely  with U-Haul to keep its current invoices paid and
does  not  expect  any  significant issue to arise but no assurance can be given
that  a U-Haul declaration of bankruptcy would not have a material effect on the
Company.

HANDLING  SIGNIFICANTLY  INCREASED  VOLUME.

The  Company  has  built  transaction processing systems for check verification,
check  conversion,  ACH  processing,  and  bankcard  processing  activity. While
current  estimates  regarding  increased  volume  are  within  the  throughput
capabilities  of  each  system,  it  is  possible that a significant increase in
volume  in  one of the markets would exceed a specific system's capabilities. To
minimize  this  risk,  ECHO  is  in the process of redesigning and upgrading its
check  related  processing  systems  and  ECHO  has purchased a state-of-the-art
system  to  process  bank card activity that should be operational by the end of
2003. No assurance can be given that the current systems would be able to handle
a  significant  increase  in  volume  or  that  the operational enhancements and
improvements  will  be  completed  in  such  time  to  avoid  such  a situation.


                                       23
<PAGE>
RECOVERING  FROM  NATURAL  DISASTER.

The  Company  maintains  three  data  center  operations,  one  in Agoura Hills,
California,  one in Albuquerque, New Mexico and one in Boulder, Colorado. Should
a natural disaster occur in one of the locations, it is possible that ECHO would
not  be  able  to  fully  recover  full  functionality at one of its data center
locations.  To  minimize  this  risk,  ECHO  is  moving  its  data  processing
functionality  from Boulder to Albuquerque in 2003 and will be making its Agoura
Hills  and  Albuquerque  operations  fully redundant to each other by the end of
2003.  Prior  to  that  time,  it  is possible a natural disaster could limit or
completely terminate a specific service offered by ECHO until such time that the
specific  location  could  resume  its  functionality.

FINANCIAL  RISK  FROM  CHECK  GUARANTEE.

The  check  guarantee  business  is  essentially a risk management business. Any
limitation  of  a  risk  management system could result in financial obligations
being  incurred by ECHO relative to its check guarantee activity. While ECHO has
provided  check  guarantee services for several years, there can be no assurance
that  its  current  risk  management  systems are adequate to assure against any
financial  loss  relating to check guarantee. ECHO is enhancing its current risk
management  systems  and  it is being conservative with reference to the type of
merchants  it offers guarantee services to in order to minimize this risk but no
assurance  can  be  given  that  such  measures  will  be  adequate.

SECURITY  BREACH.

The  Company  processes confidential financial information and maintains several
levels  of  security to protect this data. Security includes hand and card-based
identification  systems at its data center locations that restrict access to the
specific  facilities,  various  employee  monitoring  and  access  restriction
policies,  and  various  firewall  and  network  management  methodologies  that
restrict  unauthorized  access  through  the  Internet. While these systems have
worked  effectively  in  the  past,  there  can  be  no assurance that they will
continue  to operate without a security breach in the future. Depending upon the
nature  of the breach, the consequences of certain breaches could be significant
and  dramatic  to ECHO's continued operations. ECHO has undertaken a SAS70 audit
to continue to identify security issues and enhance their detection and defenses
therefrom, however, no assurance can be given that ECHO's efforts in this regard
will  always  prove  to  be  adequate  or  successful.

COST  OF  TECHNICAL  COMPLIANCE.

The  services  which  ECHO offers require significant technical compliance. This
includes  compliance  to  both  Visa  and MasterCard regulations and association
rules, NACHA guidelines and regulations with regard to the ACH and check related
issues,  and  various  banking  requirements and regulations. ECHO has personnel
dedicated  to  monitoring the Company's compliance to the specific industries we
serve and, when possible, ECHO is moving the technical compliance responsibility
to  other  parties,  as  is  the  case  with  the  recent  purchase of the Oasis
Technologies  bankcard  processing  system  wherein  Oasis  assumes  much of the
compliance  obligation relative to Visa and MasterCard issues. As the compliance
issues  become  more  defined  in each industry, the cost associated thereto may
present a risk to ECHO. These costs could be in the form of additional hardware,
software  or  technical  expertise that ECHO must acquire and/or maintain. While
ECHO  currently  has  these  costs  under  control, it has no control over those
entities  that set the compliance requirements so no assurance can be given that
ECHO  will always be able to underwrite the costs of compliance in each industry
wherein  it  competes.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company  is currently not exposed to any significant financial market risks
from changes in foreign currency exchange rates or changes in interest rates and
does  not  use  derivative financial instruments. All of our revenue and capital
spending is transacted in U.S. dollars.  However, in the future, the Company may
enter  into  transactions  in  other  currencies.  An adverse change in exchange
rates  would  result  in  a  decline  in income before taxes, assuming that each
exchange  rate  would  change in the same direction relative to the U.S. dollar.
In  addition  to  the  direct effects of changes in exchange rates, such changes
typically  affect  the  volume  of  sales  or  foreign  currency  sales price as
competitors'  products  become  more  or  less  attractive.

ITEM  8.    FINANCIAL  STATEMENTS  AND  SUPPLEMENTAL  DATA

The  Financial  Statements  and  Supplementary  Data  are listed under "Item 15.
Exhibits,  Financial  Statement  Schedules  and  Reports  on  Form  8K".

ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURES

None


                                       24
<PAGE>
                                    PART III


ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

The  officers  and  directors  of  the  Company  are:

                                                              Date first became
Name                                      Position           Officer or Director
--------------------------------  -------------------------  -------------------

Joel M. Barry [2]                 Chairman of the Board,            1986
                                  Chief Executive Officer,

Alice L. Cheung                   Chief Financial Officer,          1996
                                  Treasurer

Jesse Fong                        Vice President,                   1994
                                  Information Systems

David Griffin                     Vice President,                   1990
                                  Check Guarantee

Alex Seltzer                      Chief Operating Officer/          2002
                                  Chief Information Officer

Rick Slater                       Vice President, Chief             1998
                                  Technology Officer

Patricia M. Williams              Vice President,                   1997
                                  Check Services

Jack Wilson                       Vice President,                   1994
                                  Merchant Services

Donna L. Rehman                   Corporate Secretary               1990

R. Marshall Frost                 Counsel                           1994

Aristides W. Georgantas[1][2][3]  Director                          1999

Carl R. Terzian[1][2][3]          Director                          2002

Herbert L. Lucas [1][2][3]        Director                          1991
---------------------------------------------------------
     [1]  Member,  Audit  Committee
     [2]  Member,  Nominating  Committee
     [3]  Member,  Executive  Compensation  Committee


                                       25
<PAGE>
JOEL  M.  BARRY, age 52, has been a Director of the Company since July 1986, and
Chairman  of the Board since December 1986.  Mr. Barry served as Chief Financial
Officer  from  May  1987 to June 1990, and Executive Vice President from October
1987  to  June  1990,  when  he  was  designated  Chief Executive Officer of the
Company.  Mr.  Barry  is  also  a  Director  and  Chief Executive Officer of the
MerchantAmerica  and  XPRESSCHEX,  Inc.  wholly-owned subsidiaries.  From August
1981 to June 1991, Mr. Barry was a lecturer and investment counselor for Dynamic
Seminars,  a  firm  he  founded  in  1981,  and  Basics  Financial  Planning and
Investments,  a firm he founded in 1983.  From 1972 to 1974, Mr. Barry owned and
operated a recording business and from 1975 to 1981 was employed as the Director
of  Marketing  and  Sales  with  Financial  Dynamics,  a financial planning firm
located  in  Covina,  California.  Mr.  Barry attended Oklahoma State University
from  1969  to 1970, majoring in Accounting and Ozark Bible College from 1970 to
1972,  majoring  in  music.

ALICE  L.  CHEUNG,  age  45, 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 and Financial Executive Institute.

JESSE  FONG,  age  51, has served as Vice President of Information Systems 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  54,  has served as Vice President of Check Guarantee since
October 2001. Previous to this capacity, he was Vice President of Check Services
for  the Company from June 1990 to October 2001 and Vice President of Operations
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 and TeleCheck, San Diego, 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.

ALEX  SELTZER,  age  50,  joined  the  Company in August 2002 as Chief Operating
Officer  and  Chief  Information  Officer.  Prior  to  joining  the Company, Mr.
Seltzer  was  the  CIO  and  co-founder  of  Online  Resources  Corporation,  an
e-financial  services  outsourcer  providing  home  banking,  bill  payment, and
integrated  third-party financial services to small and medium-sized U.S. banks.
In  addition  to  his  extensive experience in designing and implementing online
financial  and  payment services, Mr. Seltzer excels at motivating and directing
teams,  clients and organizations. Mr. Seltzer holds a BS degree in Applied Math
and  Computer  Science  from  MIT  in  Cambridge,  Massachusetts and an MBA from
Stanford  Graduate  School  of  Business  in  Stanford,  California.

RICK  SLATER,  age  42,  joined  the  Company  in  May 1995 as Vice President of
Computer  Based Controls, Inc. (CBC).  Mr. Slater was appointed President of CBC
in  December  1995, Vice President of ECHO in November 1998 and Chief Technology
Officer in October 1999.  Prior to joining the Company, Mr. Slater was President
of  Slater  Research,  which  provided  contract engineering services to various
institutions.  During  this  time,  Mr. Slater directly participated in the U.S.
Coast  Guard  COMSTA  upgrade project including site surveys, systems design and
system  upgrade  integration in a number of sites within the U.S.  While a group
leader  at  Aiken  Advanced Systems, Mr. Slater held a TS/SCI security clearance
and  developed  numerous military signal collection systems installed throughout
the  world.  Mr.  Slater  holds a BS degree in electrical engineering technology
from  Old  Dominion  University,  Norfolk,  Virginia.

PATRICIA  M.  WILLIAMS, age 37, joined the Company in September 1996, serving as
Director  of  Program  Management.  Ms. Williams was appointed Vice President of
Corporate  Program  Management  in  October  1997  and  Vice  President of Check
Services in October 2001.  Prior to joining ECHO, Ms. Williams was an Operations
Manager  for  Bank of America Systems Engineering in San Francisco. Ms. Williams
has  also  served  as  a  Senior  Program  manager for the Los Angeles office of
LANSystems,  Inc.,  a  nationwide systems integrator as well as a Senior Project
Manager  and  Systems  Engineer  for  Bank of America Systems Engineering in Los
Angeles.  Ms. Williams holds a B.A. degree in communications from the University
of  California,  Los  Angeles.


                                       26
<PAGE>
JACK  WILSON,  age  58,  has served as Vice President of Merchant Services since
June  1994  and  was Director of Bankcard 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.

DONNA  L. REHMAN, age 53, joined the Company in 1988 and has served as Corporate
Secretary  since  1990.  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 55, 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 and a certified
broker  with  the  California  Department  of  Real  Estate.

ARISTIDES  W.  GEORGANTAS, age 58, has served as a Director since February 1999.
Mr.  Georgantas, prior to his retirement, was Executive Vice President and Chief
Operating  Officer  at  Chase  Manhattan  Bank's Global Asset Management/Private
Banking  Division.  He serves as a director of Horizon Blue Cross Blue Shield of
New  Jersey,  the Glenmede Trust Company, the Foundation for Public Broadcasting
in  New  Jersey,  and  Mathematica  Policy  Research,  Inc.  Mr. Georgantas is a
graduate of the University of Massachusetts and the Columbia University Graduate
School  of  Business.

HERBERT  L. LUCAS, age 76, 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 as
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
Trust  Company,  Arctic  Alaska  Fisheries,  Inc.,  Nutraceutix,  and  Sunworld
International  Airways,  Inc.  Mr.  Lucas has served 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 was formerly a member
of  the  Board  of  Trustees  of  Princeton  University.

CARL  R.  TERZIAN,  age  67, has served as a Director since December, 2002.  Mr.
Terzian  graduated magna cum laude from the University of Southern California in
1957.  Following  his USC education, Mr. Terzian served as an international good
will  ambassador  for  President  Eisenhower  and Secretary of State John Foster
Dulles;  director  of  public  and  church  relations  for the Lutheran Hospital
Society  of  Southern  California;  civic  affairs  consultant to the California
savings  and  loan  industry; and dean and professor of government and speech at
Woodbury  University. In 1965, Mr. Terzian joined Charles Luckman Associates, an
architectural  firm, to handle its public relations throughout the United States
and  worldwide and began his own public relations firm, Carl Terzian Associates,
in 1969. Mr. Terzian currently serves as a director on the board of Transamerica
Investors,  Inc.  and  Mercantile  National  Bank  along with various non-profit
boards,  commissions,  advisory  groups,  and  task  forces.

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 2, 2001,
and  the  election  of  directors  was  held  at  that  time.

SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE
Section  16(a)  of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and executive officers and the holders of 10% or more of the
Company's  Common  Stock  to  file  with  the Securities and Exchange Commission
initial  reports  of  ownership  and  reports  of changes in ownership of equity
securities of the Company.  To the Company's knowledge, based upon the fact that
there  have been no 13D's or 13G's filed, no individual has beneficial ownership
or  control  over  5%  or more of the Company's outstanding Common Stock.  Based
upon  a  review of Forms 3 and 4, the Company believes that all reports required
pursuant  to  Section  16(a)  with  respect  to the 2002 fiscal year were timely
filed.


                                       27
<PAGE>
ITEM  11.     EXECUTIVE  COMPENSATION

The  following  table  sets  forth the total compensation paid and stock options
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,
2002,  2001  and  2000.


SUMMARY  COMPENSATION  TABLE

<TABLE>
<CAPTION>
                                                     Annual          Long Term
                                                  Compensation      Compensation
                                               -------------------  ------------
                                                                    Securities
                       Capacities  in                               Underlying
Name                    Which Served     Year  Salary[1]    Bonus   Options[2]   Other[3]
--------------------  -----------------  ----  ----------  -------  -----------  --------
<S>                   <C>                <C>   <C>         <C>      <C>          <C>

Joel M. Barry         Chairman/Chief     2002  $  209,000  $   -0-    50,000          -0-
                      Executive Officer  2001     203,000   25,000    12,500          -0-
                                         2000     190,000   50,000    12,500          -0-

Alice L. Cheung       Chief Financial    2002  $  110,500  $11,500     5,000        3,450
                      Officer/Treasurer  2001     104,750   10,000     5,000        2,600
                                         2000      99,500   14,250     2,500        2,450

Rick Slater           Vice President,    2002  $  119,000  $ 5,000     5,000        1,450
                      Chief Technology   2001     117,850    7,000     2,500          600
                      Officer            2000     113,300   13,200     5,000          550

Jack Wilson           Vice President,    2002  $  103,750  $16,500     5,000        2,250
                      Merchant Services  2001      91,250   10,000     7,500        2,600
                                         2000      83,750    9,600     5,000        2,650

Patricia M. Williams  Vice President,    2002  $  103,750  $16,500    10,000        3,000
                      Check Services     2001      96,500   10,000    10,000        2,400
                                         2000      84,500   12,000     5,000        2,100
<FN>
------------------------------
[1]  The Company provides Mr. Barry and Mr. Wilson with an automobile. There has
     been  no  compensation  paid  other than that indicated in the above table.
[2]  None  of  these  options  have  been  exercised  (see  "Stock  Option  Plan").
[3]  Represents  the  Company's  match  of contributions to the Company's 401(k)
     plan.  The  Company  contributes 25% of each employee's contribution to the
     401(k)  plan.
</TABLE>


                                       28
<PAGE>
FISCAL  2002  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 2002.
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[1]    Fiscal Year    per share     Date          5%         10%
--------------------  ----------  ---------------  ---------  -----------  ---------  ----------
<S>                   <C>         <C>              <C>        <C>          <C>        <C>

Joel M. Barry             50,000           37.88%  $    2.15     12/27/11  $  29,500  $   65,500
Alice L. Cheung            5,000            3.79%  $    2.15     12/27/11  $   2,950  $    6,550
Rick Slater                5,000            3.79%  $    2.15     12/27/11  $   2,950  $    6,550
Jack Wilson                5,000            3.79%  $    2.15     12/27/11  $   2,950  $    6,550
Patricia M. Williams      10,000            7.58%  $    2.15     12/27/11  $   5,900  $   13,100
<FN>
------------------------------
[1]   All  options  vest in five equal annual installments beginning 12 months following the
      date  of  the  grant.
</TABLE>

AGGREGATED  OPTION/SAR  EXERCISES  AND  FISCAL-YEAR  OPTION/SAR  VALUE  TABLE

The  following  table  sets  forth  information concerning the exercise of stock
options during the fiscal year ended September 30, 2002 by each of the Company's
Named Executive Officers and the number and value of unexercised options held by
each  of  the  Company's  Named  Executive  Officers as of the fiscal year ended
September  30,  2002.

<TABLE>
<CAPTION>
                                                             Value  of
                                               Number of    unexercised
                        Shares                unexercised   in-the-money
                      acquired on   Value     options/SARS  Options/SARS
Name                   exercise    realized    at FY-end    at FY-end[1]
--------------------  -----------  ---------  ------------  ------------
<S>                   <C>          <C>        <C>           <C>
Joel M. Barry                 -0-  $     -0-       215,000   $       -0-
Alice L. Cheung               -0-  $     -0-        50,000   $       -0-
Rick Slater                5,500   $    660         57,500   $       -0-
Jack Wilson                   -0-  $     -0-        37,500   $       -0-
Patricia M. Williams          -0-  $     -0-        45,000   $       -0-
<FN>
---------------------
[1]  Based  on the closing sales price of the Common Stock on September 30, 2002
     of  $1.20  per  share,  less  the  option  exercise  price.
</TABLE>


                                       29
<PAGE>
EQUITY  COMPENSATION  PLAN  INFORMATION

The  following  table  sets forth information concerning the equity compensation
plans  of  the  Company  as  of  September  30,  2002.

<TABLE>
<CAPTION>
                       (a) Number of                              (c) Number of securities
                       securities to be                           remaining available for
                       issued upon          (b) Weighted-average  future issuance under
                       exercise of          exercise price of     equity compensation
                       outstanding options  outstanding options   (excluding securities
Plan Category          warrants and rights  warrants and rights   reflected in column (a))
---------------------  -------------------  --------------------  ------------------------
<S>                    <C>                  <C>                   <C>
Equity compensation
plans approved by
security holders[1]                636,750  $               3.80                       -0-

Equity compensation
plans not approved by
security holders[2]                 25,834  $                2.00                      -0-

Total                              662,584  $                3.73                      -0-
<FN>

----------------------------------
[1]  Plan  represents the 1992 Incentive Stock Option Plan, which expired in May
     2002,  and  no  further  awards  will  be  made  under  the  plan.
[2]  Shares  issuable  upon  exercise  of an option issued to a former executive
     officer  pursuant  to  an  employment  agreement  approved  by the Board of
     Directors  on  September 13, 1994. The option has a term of five years from
     the  date  of  the  grant.
</TABLE>

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

No  interlocking relationship exists between the Company's Board of Directors or
Executive  Officers  Compensation  Committee  and  the  board  of  directors  or
compensation  committee  of  any  other  company.

DIRECTOR  COMPENSATION

Each  outside  director  received  $15,000  and  6,912 shares of Common Stock in
fiscal  2002;  $15,000  and  3,750  shares  of  Common Stock in fiscal 2001; and
$15,000  and  1,465  shares  of  Common  Stock  in  fiscal  2000.  Directors are
compensated  for  all  reasonable  expenses  and are not compensated for special
meetings  other  than  regular  meetings.

EMPLOYMENT  AGREEMENTS

None.

BONUS,  PROFIT-SHARING  AND  OTHER REMUNERATION PLANS AND PENSION AND RETIREMENT
PLANS

The  Company has established a bonus program to reward extraordinary performance
that exceeds pre-set goals established for executive officers and key personnel.
The  Company believes that such a bonus program provides the incentive to exceed
such  goals,  thereby  building  shareholder  value.

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


                                       30
<PAGE>
STOCK  OPTION  PLAN

On  May  13,  1992,  the  Company's Board of Directors authorized adoption of an
Officers and Key Employees Incentive 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 81,250 stock options, each to purchase one share of the
Common  Stock  for  $3.40 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 843,750 options and was ratified by the shareholders at the Annual
Meeting  held  in  February  1997.

On  February 4, 1999, the Company's Board of Directors authorized an increase in
the Plan to 1,343,750 options and was ratified by the shareholders at the Annual
Meeting  held  in  February  1999.

On  May  13,  2002,  the  1992  Incentive  Stock  Option Plan expired.  The 2003
Incentive  Stock  Option Plan has been approved by the Board of Directors of the
Company  and has been offered to the shareholders of the Company for approval at
the  Annual  Meeting  of  Shareholders  on  February  3,  2003.

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  November  15,  2002, there were 5,796,062 shares of the Company's Common
Stock  outstanding.  To  the Company's knowledge, based upon the fact that there
have  been  no  13D's  or 13G's filed, no 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 executive officers and directors as of November
15,  2002.  Such  figures  are  based  upon information furnished by the persons
named.

<TABLE>
<CAPTION>
                                    Amount and           Percentage of
                               Nature of Beneficial  Outstanding Stock[1]
   Name and Address                 Ownership             At 11/15/02
  ---------------------------  --------------------  ---------------------
<S>                            <C>                   <C>
  Joel M. Barry                          259,612[2]                  4.30%
  28001 Dorothy Drive
  Agoura Hills, CA  91301

  Alice L. Cheung                         54,500[2]                  0.93%
  28001 Dorothy Drive
  Agoura Hills, CA  91301

  Rick Slater                             58,000[2]                  0.98%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Patricia M. Williams                    45,675[2]                  0.78%
  28001 Dorothy Drive
  Agoura Hills, CA 91301

  Jack Wilson                          42,075[2][4]                  0.72%
  28001 Dorothy Drive
  Agoura Hills, CA 91301


                                       31
<PAGE>
  Aristides W. Georgantas                    13,490                  0.23%
  180 Springdale Road
  Princeton, NJ  08540

  Herbert L. Lucas, Jr.                  54,849 [3]                  0.94%
  12011 San Vicente Blvd.
  Los Angeles, CA 90049

  Carl R. Terzian                               -0-                  0.00%
  12400 Wilshire Blvd.
  Los Angeles, CA 90025

  All officers and directors
  as a group (13 persons)                   595,915                  9.45%

<FN>

------------------------------

[1]  Outstanding  Common  Shares  with  effect given to individual shareholder's
     exercise  of  stock  options  described  in  footnotes  2  through  4.
[2]  Includes  stock  options according to the terms of the 1992 Incentive Stock
     Option  Plan,  which  for  the following number of shares for the following
     individuals  could be acquired within 60 days through the exercise of stock
     options:  Joel  M. Barry, 135,000 shares; Alice Cheung, 40,000 shares; Rick
     Slater,  48,000  shares; Patricia Williams, 21,000 shares; and Jack Wilson,
     25,000  shares.  See  "Item  11.  Executive  Compensation".
[3]  Includes  17,972  shares  indirectly owned by Mr. Lucas through a trust for
     his  wife.
[4]  Includes  530  shares  indirectly  owned  by  Mr.  Wilson through his wife.
</TABLE>


ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

There  were  no  related-party  transactions.

ITEM  14.     CONTROLS  AND  PROCEDURES.

Within  the  90 days prior to the date of this report, under the supervision and
with  the participation of management, including our Chief Executive Officer and
our  Chief  Financial Officer, we have evaluated the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Exchange Act
Rule  13a-14.  Based  upon  that evaluation, our Chief Executive Officer and our
Chief  Financial  Officer  have  concluded  that  our  disclosure  controls  and
procedures  are  effective  in  timely  alerting  them  to  material information
relating to us (including our consolidated subsidiaries) required to be included
in  our  periodic  SEC  filings.  There  have been no significant changes in our
internal  controls  or in other factors that could significantly affect internal
controls  subsequent  to  the  date  of  their  evaluation.


                                       32
<PAGE>

                                     PART IV


ITEM  15.  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, 2002 and 2001. . . . .  F-2

        Consolidated Statement of Operations for each of the three years
        in the period ended September 30, 2002 . . . . . . . . . . . . . .  F-3

        Consolidated Statement of Changes in Stockholders' Equity
        for each of the three years in the period ended September 30, 2002  F-4

        Consolidated Statement of Cash Flows for each of the three years
        in the period ended September 30, 2002 . . . . . . . . . . . . . .  F-5

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

    (2) Financial Statement Schedule:

        Schedule II - 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,  2002:

        None

(c)  Exhibits:

 Exhibit
 Number     Description  of  Document
-------     -------------------------

2.1            Copy  of  Merger  Agreement  and  Plan  of Reorganization between
               Electronic  Clearing  House,  Inc., ECHO Acquisition Corporation,
               and  Magic  Software  Development, Inc., dated April 20, 1999.[5]
2.2            Copy  of  Merger  Agreement  and  Plan  of Reorganization between
               Electronic  Clearing  House,  Inc., ECHO Acquisition Corporation,
               and  Rocky  Mountain  Retail  Systems,  Inc.,  dated  January  4,
               2000.[6]
3.1            Articles of Incorporation of Bio Recovery Technology, Inc., filed
               with  the  Nevada  Secretary  of  State on December 11, 1981. [1]
3.4            By-Laws  of  Bio  Recovery  Technology,  Inc.  [1]
4.2            Specimen  Common  Stock  Certificate.  [3]
10.35          Copy  of  Merchant  Marketing  and  Processing Services Agreement
               between  Electronic Clearing House, Inc. and First Regional Bank,
               dated  June  24,  1997.  [4]
10.36          Copy  of  Merchant  Marketing  and  Processing Services Agreement
               between  Electronic  Clearing House, Inc. and The Berkshire Bank,
               dated  July  31,  1997.  [4]
10.41          Copy  of  Processing  and  Software  Development  and  License
               Agreement  between  Electronic  Clearing House, Inc. and National
               Bank  Drafting  Systems,  Inc.,  dated  October  22,  1999.[6]
10.42          Copy  of Addendum to Agreement between Electronic Clearing House,
               Inc.  and  U-Haul  International,  dated  January  1,  2000.[6]


                                       33
<PAGE>
10.44          Copy  of  Electronic  Check Services Agreement between Electronic
               Clearing  House,  Inc.  and National Bank Drafting Systems, Inc.,
               dated  May  17,  2000.[6]
10.46          Copy  of  Amended  and Restated Merchant Marketing and Processing
               Services  Agreement  between  Electronic Clearing House, Inc. and
               First  Regional  Bank,  dated  August  1,  2000.[6]
10.47          Copy  of  Addendum to Amended and Restated Merchant Marketing and
               Processing  Services Agreement between Electronic Clearing House,
               Inc.  and  First  Regional  Bank,  dated  August  1,  2000.[6]
10.48          Copy  of  POS Check  Third  Party Servicer Agreement between Visa
               U.S.A.,  Inc. and Electronic Clearing House, Inc., dated December
               12,  2000.[7]
10.49          Copy  of Asset Purchase Agreement between National Check Network,
               Inc.  and  Electronic  Clearing  House,  Inc.,  dated  April  19,
               2001.[7]
10.50          Copy  of  Addendum  to Agreement between U-Haul International and
               Electronic  Clearing  House,  Inc.,  dated  October  1,  2001.[7]
10.51          Copy  of  First  Amendment  to the POS Check Third Party Servicer
               Agreement  between  Visa  U.S.A.,  Inc.  and  Electronic Clearing
               House,  Inc.  dated  December  12,  2000.
10.52          Copy  of Second  Amendment  to the POS Check Third Party Servicer
               Agreement  between  Visa  U.S.A.,  and Electronic Clearing House,
               Inc.  dated  December  12,  2000.
10.53          Copy  of  Third  Amendment  to the POS Check Third Party Servicer
               Agreement  between  Visa  U.S.A.,  and Electronic Clearing House,
               Inc.  dated  December  12,  2000.
21.0           Subsidiaries  of  Registrant.  [2]
99.1           Certification  of  Joel  M.  Barry  pursuant to 18 U.S.C. Section
               1350,  as  adopted  pursuant to section 906 of the Sarbanes-Oxley
               Act  of  2002.
99.2           Certification of Alice Cheung pursuant to 18 U.S.C. Section 1350,
               as  adopted  pursuant to section 906 of the Sarbanes-Oxley Act of
               2002.
_________________________________

[1]            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.

[2]            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.

[3]            Filed  as  an  Exhibit to Registrant's Form S-1, Amendment No. 3,
               effective November 13, 1990 and incorporated herein by reference.

[4]            Filed  as  an  Exhibit to Registrant's Annual Report on Form 10-K
               for  fiscal year ended September 30, 1997 and incorporated herein
               by  reference.

[5]            Filed  as  an  Exhibit to Registrant's Annual Report on Form 10-K
               for  fiscal year ended September 30, 1999 and incorporated herein
               by  reference.

[6]            Filed  as  an  Exhibit to Registrant's Annual Report on Form 10-K
               for  fiscal year ended September 30, 2000 and incorporated herein
               by  reference.

[7]            Filed  as  an  Exhibit to Registrant's Annual Report on Form 10-K
               for  fiscal year ended September 30, 2001 and incorporated herein
               by  reference.


                                       34
<PAGE>
                                   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:  \s\ Joel  M.  Barry
               -----------------------------------
                Joel  M.  Barry,  Chief  Executive
                Officer  and  Chairman


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
            ---------                  -----                         ----

\s\ Joel  M.  Barry           Chairman of the Board        )   December 23, 2002
---------------------------   and Chief Executive Officer  )
    Joel  M.  Barry                                        )
                                                           )
                                                           )
\s\ Aristides W. Georgantas   Director                     )
---------------------------                                )
    Aristides W. Georgantas                                )
                                                           )
                                                           )
                                                           )
\s\ Herbert L. Lucas, Jr.     Director                     )
---------------------------                                )
    Herbert L. Lucas, Jr.                                  )
                                                           )
                                                           )
                                                           )
\s\ Alice  L.  Cheung         Chief  Financial  Officer    )
---------------------------   and  Treasurer               )
    Alice  L.  Cheung                                      )
                                                           )
                                                           )
                                                           )
\s\ Marjan  Hewson            Controller                   )
---------------------------                                )
    Marjan  Hewson                                         )


                                       35
<PAGE>
                       Form of Certification for Form 10-K


I,  Joel  M.  Barry,  certify  that:

1.     I  have  reviewed  this annual report on Form 10-K of Electronic Clearing
House,  Inc.;

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.     The  registrant's  other  certifying  officers  and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:

     a)     designed  such  disclosure  controls  and  procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

     b)     evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");  and

     c)     presented  in  this  annual  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

5.     The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):

     a)     all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b)     any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and

6.     The  registrant's  other certifying officers and I have indicated in this
annual  report whether there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  December  23,  2002
                                         \s\  Joel  M.  Barry
                                         ------------------------------------
                                         Chairman,  Chief  Executive  Officer


<PAGE>
                       Form of Certification for Form 10-K

I,  Alice  L.  Cheung,  certify  that:

1.     I  have  reviewed  this annual report on Form 10-K of Electronic Clearing
House,  Inc.;

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods  presented  in  this annual report;

4.     The  registrant's  other  certifying  officers  and I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  registrant  and  have:

     a)     designed  such  disclosure  controls  and  procedures to ensure that
material  information  relating  to  the  registrant, including its consolidated
subsidiaries,  is made known to us by others within those entities, particularly
during  the  period  in  which  this  annual  report  is  being  prepared;

     b)     evaluated  the effectiveness of the registrant's disclosure controls
and  procedures  as  of  a  date within 90 days prior to the filing date of this
annual  report  (the  "Evaluation  Date");  and

     c)     presented  in  this  annual  report  our  conclusions  about  the
effectiveness  of the disclosure controls and procedures based on our evaluation
as  of  the  Evaluation  Date;

5.     The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of  registrant's  board  of  directors  (or  persons  performing  the equivalent
functions):

     a)     all  significant deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
registrant's  auditors  any  material  weaknesses  in  internal  controls;  and

     b)     any  fraud,  whether  or  not  material, that involves management or
other  employees  who  have  a  significant  role  in  the registrant's internal
controls;  and

6.     The  registrant's  other certifying officers and I have indicated in this
annual  report whether there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  December  23,  2002
                                         \s\  Alice  L.  Cheung
                                         ----------------------------
                                         Chief  Financial  Officer


<PAGE>
                        REPORT OF INDEPENDENT ACCOUNTANTS




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


In  our  opinion,  the  consolidated  financial  statements  listed in the index
appearing  under  Item  15(a)(1)  on  page  33  present  fairly, in all material
respects,  the  financial  position  of  Electronic Clearing House, Inc. and its
subsidiaries at September 30, 2002 and 2001, and the results of their operations
and  their  cash flows for each of the three years in the period ended September
30,  2002  in  conformity  with  accounting principles generally accepted in the
United  States of America.  In addition, in our opinion, the financial statement
schedules  listed  in the index appearing under Item 15(a)(2) on page 33 present
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.  These financial
statements  and  financial  statement  schedule  are  the  responsibility of the
Company's  management;  our  responsibility  is  to  express an opinion on these
financial  statements  and financial statement schedule based on our audits.  We
conducted  our  audits of these statements in accordance with auditing standards
generally  accepted  in the United States of America, 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  our opinion.




\S\  PRICEWATERHOUSECOOPERS  LLP


Los  Angeles
December  2,  2002


                                       F1
<PAGE>
<TABLE>
<CAPTION>
                                    ELECTRONIC CLEARING HOUSE, INC.
                                      CONSOLIDATED BALANCE SHEETS
                                      ---------------------------
                                                                                 September  30,
                                                                            --------------------------
                                                                                2002          2001
                                                                            ------------  ------------
<S>                                                                         <C>           <C>
                                                ASSETS
                                                ------
Current assets:
  Cash and cash equivalents                                                 $ 2,409,000   $ 4,147,000
  Restricted cash                                                               906,000     1,410,000
  Accounts receivable less allowance of $431,000 and $313,000                 1,744,000     1,864,000
  Inventory                                                                     234,000       573,000
  Prepaid expenses and other assets                                             169,000       137,000
  Deferred tax asset                                                            266,000       128,000
                                                                            ------------  ------------

Total current assets                                                          5,728,000     8,259,000

Noncurrent assets:
  Property and equipment, net                                                 5,101,000     3,754,000
  Deferred tax asset                                                          2,018,000       650,000
  Other assets less accumulated amortization of $259,000 and $212,000           637,000     1,073,000
  Goodwill, net                                                               4,707,000     5,185,000
                                                                            ------------  ------------

    Total assets                                                            $18,191,000   $18,921,000
                                                                            ============  ============

                                   LIABILITIES AND STOCKHOLDERS' EQUITY
                                   ------------------------------------

Current liabilities:
  Short-term borrowings and current portion of
  long-term debt                                                            $   515,000   $   240,000
  Accounts payable                                                              201,000       135,000
  Settlement payable to merchants                                               729,000       618,000
  Accrued expenses                                                              987,000     1,395,000
  Deferred income                                                                62,000        50,000
                                                                            ------------  ------------

    Total current liabilities                                                 2,494,000     2,438,000

Long-term debt                                                                2,159,000       744,000
                                                                            ------------  ------------

    Total liabilities                                                         4,653,000     3,182,000
                                                                            ------------  ------------

Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock, $.01 par value, 5,000,000 shares authorized
    Series "K", -0- and 25,000 shares issued and outstanding,                       -0-           -0-
  Common stock, $.01 par value, 36,000,000 shares authorized;
    5,835,331 and 5,809,121 shares issued; 5,796,062 and 5,769,873
    shares outstanding                                                           58,000        58,000
Additional paid-in capital                                                   21,435,000    21,260,000
Accumulated deficit                                                          (7,486,000)   (5,110,000)
Less treasury stock at cost, 39,269 and 39,269 common shares                   (469,000)     (469,000)
                                                                            ------------  ------------

    Total stockholders' equity                                               13,538,000    15,739,000
                                                                            ------------  ------------
    Total liabilities and stockholders' equity                              $18,191,000   $18,921,000
                                                                            ============  ============
<FN>
                   See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>


                                       F2
<PAGE>
<TABLE>
<CAPTION>
                                   ELECTRONIC CLEARING HOUSE, INC.

                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                -------------------------------------

                                                                   Year  ended  September  30,
                                                             ----------------------------------------
                                                                 2002          2001          2000
                                                             ------------  ------------  ------------
<S>                                                          <C>           <C>           <C>
REVENUES:
  Processing revenue                                         $16,363,000   $14,719,000   $14,917,000
  Transaction revenue                                         16,526,000    14,377,000    10,760,000
  Terminal sales                                                 252,000       447,000     2,459,000
  Other revenue                                                  150,000       400,000       204,000
                                                             ------------  ------------  ------------
                                                              33,291,000    29,943,000    28,340,000
                                                             ------------  ------------  ------------

COSTS AND EXPENSES:
  Processing and transaction expense                          22,747,000    19,239,000    18,128,000
  Cost of terminals sold                                         588,000       419,000     1,790,000
  Other operating costs                                        2,424,000     2,468,000     2,161,000
  Research and development expense                             1,719,000     1,070,000     1,070,000
  Selling, general and administrative expenses                 6,493,000     5,760,000     4,816,000
  Amortization expense - goodwill                                489,000       424,000       359,000
  Legal settlement                                             2,500,000           -0-           -0-
                                                             ------------  ------------  ------------

                                                              36,960,000    29,380,000    28,324,000
                                                             ------------  ------------  ------------

(Loss) income from operations                                 (3,669,000)      563,000        16,000

Interest income                                                   55,000       187,000       284,000
Interest expense                                                (129,000)      (81,000)      (88,000)
Gain on sale of asset                                                -0-       350,000       312,000
                                                             ------------  ------------  ------------

  (Loss) income before benefit (provision) for income taxes   (3,743,000)    1,019,000       524,000

Benefit (provision) for income taxes                           1,367,000      (585,000)     (233,000)
                                                             ------------  ------------  ------------

Net (loss) income                                            $(2,376,000)  $   434,000   $   291,000
                                                             ============  ============  ============

  (Loss) earnings per share - Basic                          $     (0.41)  $      0.07   $      0.06
                                                             ============  ============  ============

  (Loss) earnings per share - Diluted                        $     (0.41)  $      0.07   $      0.05
                                                             ============  ============  ============


  Shares used in computing basic
  (loss) earnings per share                                    5,788,071     5,797,120     5,257,393
                                                             ============  ============  ============

  Shares used in computing diluted
  (loss) earnings per share                                    5,788,071     5,963,808     5,825,097
                                                             ============  ============  ============
<FN>

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


                                       F3
<PAGE>
<TABLE>
<CAPTION>
                                                 ELECTRONIC CLEARING HOUSE, INC.


                                 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 ----------------------------------------------------------



                                                         Stock                              Additional
                                            ---------------------------------                Paid-in     Treasury    Accumulated
                                            Treasury     Common    Preferred     Amount      Capital       Stock       Deficit
                                            ---------  ----------  ----------  ----------  ------------  ----------  ------------
<S>                                         <C>        <C>         <C>         <C>         <C>           <C>         <C>


Balance at September 30, 1999                 21,478   4,968,532      65,000   $  50,000   $17,107,000   $(138,000)  $(5,835,000)

Exercise of warrants                                      87,500                   1,000       139,000
Exercise of stock options                                116,583                   1,000       248,000
Conversion of preferred to common                         40,000     (40,000)
Issuance of common stock to
  outside directors                                        4,394                                45,000
Issuance of common stock - acquisition                   255,000                   3,000     3,099,000
Purchase of treasury stock                    17,797                                                      (331,000)
Net income                                                                                                               291,000
                                            ---------  ----------  ----------  ----------  ------------  ----------  ------------

Balance at September 30, 2000                 39,275   5,472,009      25,000      55,000    20,638,000    (469,000)   (5,544,000)

Exercise of stock options                                 15,000                                47,000
Issuance of common stock to
 outside directors                                        11,250                                45,000
Issuance of common stock - acquisition                    21,166                                85,000
Issuance of performance stock                            375,000                   4,000       776,000
Issuance of treasury stock                        (6)
Exchange of stock for note receivable                    (85,304)                 (1,000)     (331,000)
Net income                                                                                                               434,000
                                            ---------  ----------  ----------  ----------  ------------  ----------  ------------

Balance at September 30, 2001                 39,269   5,809,121      25,000      58,000    21,260,000    (469,000)   (5,110,000)

Exercise of stock options                                  5,500                                11,000
Issuance of common stock to
  outside directors                                       20,736                                45,000
Conversion of preferred to common                         25,000     (25,000)
Exchange of stock for note receivable                    (25,000)                              (54,000)
Tax benefit from exercise of stock options                                                     173,000
Net loss                                                                                                              (2,376,000)
                                            ---------  ----------  ----------  ----------  ------------  ----------  ------------

Balance at September 30, 2002                 39,269   5,835,357         -0-   $  58,000   $21,435,000   $(469,000)  $(7,486,000)
                                            =========  ==========  ==========  ==========  ============  ==========  ============



                                               Total
                                            ------------
<S>                                         <C>


Balance at September 30, 1999               $11,184,000

Exercise of warrants                            140,000
Exercise of stock options                       249,000
Conversion of preferred to common                   -0-
Issuance of common stock to
  outside directors                              45,000
Issuance of common stock - acquisition        3,102,000
Purchase of treasury stock                     (331,000)
Net income                                      291,000
                                            ------------

Balance at September 30, 2000                14,680,000

Exercise of stock options                        47,000
Issuance of common stock to
 outside directors                               45,000
Issuance of common stock - acquisition           85,000
Issuance of performance stock                   780,000
Issuance of treasury stock                            0
Exchange of stock for note receivable          (332,000)
Net income                                      434,000
                                            ------------

Balance at September 30, 2001                15,739,000

Exercise of stock options                        11,000
Issuance of common stock to
  outside directors                              45,000
Conversion of preferred to common
Exchange of stock for note receivable           (54,000)
Tax benefit from exercise of stock options      173,000
Net loss                                     (2,376,000)
                                            ------------

Balance at September 30, 2002               $13,538,000
                                            ============

<FN>


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


                                       F4
<PAGE>
<TABLE>
<CAPTION>
                                       ELECTRONIC CLEARING HOUSE, INC.
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    -------------------------------------

                                                                           Year ended September 30,
                                                                    ----------------------------------------
                                                                       2002          2001          2000
                                                                    ------------  ------------  ------------
<S>                                                                 <C>           <C>           <C>

Cash flows from operating activities:
  Net (loss) income                                                 $(2,376,000)      434,000       291,000
  Adjustments to reconcile net (loss) income to net cash
    provided by operating activities:
Depreciation                                                            640,000       488,000       325,000
Amortization of software                                                537,000       433,000       233,000
  Amortization of goodwill                                              489,000       414,000       352,000
  Provisions for losses on accounts and notes receivable                302,000       326,000       586,000
Provision for obsolete inventory                                        300,000           -0-           -0-
Write-down of real estate                                               100,000           -0-           -0-
  Fair value of stock issued in connection
   with director's compensation                                          45,000        45,000        45,000
  Deferred income taxes                                              (1,375,000)      436,000       178,000
  Legal settlement                                                    1,300,000           -0-           -0-
  Gain on sale of asset                                                     -0-      (350,000)     (312,000)
Changes in assets and liabilities, net of effects of acquisitions:
  Restricted cash                                                       504,000      (393,000)     (281,000)
  Accounts receivable                                                  (268,000)     (307,000)     (824,000)
  Inventory                                                              39,000        21,000       (14,000)
  Accounts payable                                                       66,000        15,000       (53,000)
  Settlement payable to merchants                                       111,000       448,000       170,000
  Accrued expenses                                                     (376,000)      349,000       128,000
  Other receivable                                                       24,000       (10,000)      (36,000)
                                                                    ------------  ------------  ------------
  Net cash provided by operating activities                              62,000     2,349,000       788,000
                                                                    ------------  ------------  ------------
Cash flows from investing activities:
  Other assets                                                          (81,000)     (458,000)     (139,000)
  Purchase of equipment and software                                 (1,754,000)   (1,404,000)   (1,246,000)
  Increase in notes receivable                                              -0-           -0-    (1,027,000)
  Repayment of notes receivable                                             -0-           -0-     1,000,000
  Proceeds from sale of asset                                               -0-       350,000     1,000,000
  Cash (used) acquired in acquisition                                       -0-      (169,000)       80,000
                                                                    ------------  ------------  ------------

  Net cash used in investing activities                              (1,835,000)   (1,681,000)     (332,000)
                                                                    ------------  ------------  ------------

Cash flows from financing activities:
  Proceeds from issuance of notes payable                                   -0-           -0-       400,000
  Repayment of notes payable                                           (151,000)     (130,000)     (156,000)
  Repayment of capitalized leases                                      (215,000)      (47,000)      (48,000)
  Proceeds from sales and leaseback of equipment                        390,000           -0-           -0-
  Proceeds from common stock warrants exercised                             -0-           -0-       140,000
  Proceeds from exercise of stock options                                11,000        47,000       249,000
  Repurchase of stock                                                       -0-      (332,000)          -0-
                                                                    ------------  ------------  ------------

  Net cash provided by (used in) financing activities                    35,000      (462,000)      585,000
                                                                    ------------  ------------  ------------

Net (decrease) increase in cash                                      (1,738,000)      206,000     1,041,000
Cash and cash equivalents at beginning of period                      4,147,000     3,941,000     2,900,000
                                                                    ------------  ------------  ------------

Cash and cash equivalents at end of period                          $ 2,409,000   $ 4,147,000   $ 3,941,000
                                                                    ============  ============  ============
<FN>


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


                                       F5
<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



NOTE  1  -  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------------------------------------------

Electronic  Clearing  House, Inc. (ECHO or the Company) is a Nevada corporation.
The  Company  provides  bank  card  authorizations, electronic deposit services,
check  guarantee,  check  verification,  check  conversion,  check  collection,
inventory  tracking  services  and  various  Internet  services  to  retail  and
wholesale  merchants,  and  U-Haul  dealers  across the nation. In addition, the
Company sells electronic terminals for use by its customers and other processing
companies.

The  following  comments  describe  the  more  significant  accounting policies.

Principles  of  Consolidation
-----------------------------

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

Cash  and  Cash  Equivalents
----------------------------

Cash  and  cash  equivalents consist of unrestricted balances only.  The Company
considers all highly liquid investments with original maturities of three months
or  less  to  be  cash  equivalents.

Restricted  Cash
----------------

Under  the  terms  of  the  processing  agreements  with  the  Company's primary
processing  banks,  the  Company  maintains  several  cash accounts as a reserve
against  chargeback  losses.  As  processing fees are received by the processing
banks,  they are allocated per the processing agreement to the reserve accounts.

Accounts  Receivable  Chargeback
--------------------------------

Accounts receivable 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
estimated  based  upon a historically-determined percentage of gross credit card
processing  volume  and  actual  losses  experienced.

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:


                                       F6
<PAGE>
Note 1:   (Continued)
-------

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


Other  Assets
-------------

Other  Assets  consist  primarily  of  patents,  trademarks and deposits.  Costs
related  to  obtaining a patent and trademark are capitalized and amortized over
the  estimated  life  of  the  patent  and  trademark.

Software  Development  Costs
----------------------------

Under the provisions of Statement of Position 98-1, "Accounting for the Costs of
Computer  Software  Developed  or  Obtained  for  Internal  Use,"  the  Company
capitalizes  costs associated with software developed for internal use when both
the preliminary project stage is completed and management has authorized further
funding  for  the  completion of the project. Capitalized costs include only (1)
external  direct  costs  of  materials  and  services  consumed in developing or
obtaining  internal-use  software,  (2)  payroll  and  payroll-related costs for
employees  who  are  directly  associated  with  the  software  project, and (3)
interest  costs incurred, when material, while developing internal-use software.
Capitalization of such costs ceases no later than the point at which the project
is  substantially  complete  and  ready  for  its intended purpose.  Capitalized
software development costs are amortized using the straight-line method over the
lesser  of  three  years  or  estimated  useful  life.

Costs  incurred to establish the technological feasibility of software and other
computer  software  maintenance  costs  are recorded as research and development
costs  and  are  charged  to  expense  when  incurred.

Goodwill
--------

Goodwill represents the excess of purchase price over net assets acquired in the
acquisition  of  XPRESSCHEX  and  Rocky  Mountain  Retail  Systems  and is being
amortized  on  a straight-line basis over estimated useful lives of 10 years and
15  years,  respectively. In July 2001, the Financial Accounting Standards Board
("FASB")  issued  SFAS No. 142, "Goodwill and Other Intangible Assets", which is
effective  for  fiscal  years  beginning  after  December  15,  2001.  SFAS  142
requires,  among  other things, the discontinuance of goodwill amortization.  In
addition,  the  standard includes provisions for the reclassification of certain
existing recognized intangibles as goodwill, reassessment of the useful lives of
existing  recognized intangibles, reclassification of certain intangibles out of
previously  reported  goodwill  and  the  identification  of reporting units for
purposes  of  assessing potential future impairments of goodwill.  SFAS 142 also
requires  companies  to  complete  a  transitional  goodwill impairment test six
months  from  the  date of adoption.  The Company plans to adopt SFAS 142 by the
first quarter of fiscal 2003.  The Company is required to adopt these statements
effective  the first quarter of fiscal 2003.  The Company has completed the Step
1  -  goodwill  impairment test, as prescribed by SFAS 142, utilizing discounted
cash flow analysis for the check services reporting unit that has goodwill.  The
results  of  this  analysis  indicate  potential  goodwill  impairment  for this
reporting  unit.  The Company has begun, but not completed, Step 2 - measurement
of  the  impairment  loss,  by  evaluating  the fair value of the check services
business segment through discounted cash flow models and other analytical means.
The  Company  expects  to record any impairment loss as a cumulative effect of a
change  in  accounting  principle  in  the  first  quarter  of  2003.

Long-Lived  Assets
------------------

When  circumstance  indicates,  the  Company  reviews  its long-lived assets for
impairment  using  estimated undiscounted future cash flows associated with such
assets.  An  impairment  loss  would be determined as the difference between the
fair values and the carrying amounts of the assets.  Management believes no such
impairment  has  occurred  as  of  September  30,  2002  and  2001.

Revenues  and  Expenses
-----------------------

All  processing  and  transaction  revenues  are  recognized  at  the  time  the
transactions  are  processed by the merchant. Processing costs paid to banks are
included  in  costs and expenses when incurred. Terminal sales are recorded when
product  is  shipped  and  title transferred to the customer. Other revenues are
recognized  when services are considered complete and no further obligations are
required.


                                       F7
<PAGE>
Note 1:  (Continued)
-------

The  Company  expensed  $261,000,  $272,000,  and  $528,000  for the years ended
September  30,  2002,  2001  and  2000,  respectively  for  bankcard  processing
chargeback  losses.  The  Company  provided  for  other uncollectible leases and
notes  receivable  balances  of  $13,000, $7,700 and $35,000 for the years ended
September  30,  2002,  2001  and  2000,  respectively.

The  Company  has  one  customer  that  accounted  for approximately $1,942,000,
$2,493,000,  and $4,082,000 of revenues for the years ended 2002, 2001 and 2000,
respectively.  The  revenues  for  this  customer  are  recorded  as part of the
transaction  processing  segment.

Income  Taxes
-------------

The  Company accounts for income taxes in accordance with Statement of Financial
Accounting  Standards No. 109, "Accounting for Income Taxes" (FAS 109).  FAS 109
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.  A  valuation  allowance  is
established,  when  necessary,  to  reduce  deferred  tax  assets  to the amount
expected  to  be  realized.

Earnings  (loss)  Per  Share
----------------------------

Earnings  (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 diluted net
income  per  share  except  where  it would be anti-dilutive.  For the basic net
income per common share, the convertible preferred stock is not considered to be
equivalent  to  common  stock.

Stock-Based  Compensation
-------------------------

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.  The pro forma disclosure required by FAS 123 is included in Note 9.

Compensation  expense  is  recognized  in association with the issuance of stock
options  for  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.  Significant estimates
include  allowance for chargeback losses and deferred tax assets. Actual results
could  differ  from  those  estimates.

Fair  Value  of  Financial  Instruments
---------------------------------------

The  amount  recorded  for  financial  instruments in the Company's consolidated
financial  statements  approximates  fair  value  as  defined  in  SFAS No. 107,
"Disclosures  about  Fair  Value  of  Financial  Instruments".


NOTE 2  -  STATEMENT OF CASH FLOWS:
-----------------------------------

                                  September 30
                           --------------------------
                             2002     2001     2000
                           --------  -------  -------
Cash paid for:
  Interest                 $129,000  $81,000  $88,000
  Income taxes              137,000   72,000   40,000


                                       F8
<PAGE>
Note 2:   (Continued)
-------

Significant  non-cash  transactions  for  fiscal  2002  are  as  follows:

     -    A  refund  and  tax credit totaling $173,000 will be recognized due to
          the  filing  of  amended tax returns for cashless options exercised in
          fiscal  years  1999  and  2000.

     -    A $1.3 million 15-year long-term promissory note was issued as part of
          the  Premiere  Lifestyles  International  Corporation  vs.  ECHO legal
          settlement.

     -    Capital  equipment  of  $663,000  was  acquired  under capital leases.

     -    A software license scheduled payment of $93,000 was paid directly by a
          leasing  company.

     -    The  Company  acquired 25,000 shares of ECHO's common stock, valued at
          $54,000  for  satisfaction  of  a  chargeback  receivable  owed to the
          Company.

Significant  non-cash  transactions  for  fiscal  2001  are  as  follows:

     -    21,116  shares  of  common stock valued at $85,000 were issued for the
          purchase  of  certain  National  Check  Network,  Inc.  assets.

     -    In  September  2001,  the  Company's  Board  of  Directors  approved a
          one-for-four  (1:4)  reverse  stock split. As stipulated in the Merger
          Agreement,  this event triggered the issuance of the remaining 375,000
          performance  shares  to the RMRS selling shareholders. The performance
          shares  were valued at $780,000, based on the market price on the date
          of  stock  issuance,  and  recorded  on  the  books  as goodwill to be
          amortized  over  fifteen  years.

     -    Capital  equipment  of  $216,000  was  acquired  under capital leases.

Significant  non-cash  transactions  for  fiscal  2000  are  as  follows:

     -    In  connection with two business acquisition transactions, the Company
          issued  255,000  shares  of  common  stock  with  a  market  value  of
          $3,102,000.

     -    The  Company  acquired  17,797  shares  of  its common stock valued at
          $331,000  for  repayment  of  a  note  receivable.

NOTE 3  -  INVENTORY
--------------------

The  components  of  inventory  are  as  follows:

                                               September 30
                                            ------------------
                                              2002      2001
                                            --------  --------
Raw materials                               $ 61,000  $ 62,000

Finished goods                               473,000   529,000
                                            --------  --------

                                             534,000   591,000

Less: Allowance for obsolescence             300,000    18,000
                                            --------  --------

                                            $234,000  $573,000
                                            ========  ========


                                       F9
<PAGE>
NOTE  4  -  PROPERTY  AND  EQUIPMENT:
------------------------------------

Property  and  equipment  are  comprised  of  the  following:


                                                          September 30
                                                  ----------------------------
                                                       2002           2001
                                                  --------------  ------------
Land and building                                 $     880,000   $   880,000
Computer equipment and software                       7,904,000     5,541,000
Furniture, fixtures and equipment                       995,000       977,000
Building improvements                                   281,000       281,000
Tooling equipment                                       285,000       285,000
Auto                                                     16,000        16,000
                                                  --------------  ------------
Cost                                                 10,361,000     7,980,000
Less:  accumulated depreciation and amortization    ( 5,260,000)   (4,226,000)
                                                  --------------  ------------

Net book value                                    $   5,101,000   $ 3,754,000
                                                  ==============  ============

Included  in property and equipment are assets under capital lease of $1,072,000
and  $425,000  at  September  30,  2002  and  2001,  with  related  accumulated
depreciation  of  $224,000  and $165,000, respectively, and capitalized software
development  costs  of  $3,129,000  and  $2,037,000,  with  related  accumulated
amortization  of  $1,373,000  and  $873,000,  respectively.


NOTE 5 - INCOME TAXES
---------------------

The  benefit  (provision) for income taxes consists of the following components:


<TABLE>
<CAPTION>
                                                          September 30
                                              -----------------------------------
                                                 2002         2001        2000
                                              -----------  ----------  ----------
<S>                                           <C>          <C>         <C>

Current federal taxes                         $      -0-   $ (29,000)  $  (4,000)
Current state taxes                               (5,000)   (120,000)    (51,000)
Deferred taxes                                 1,372,000    (436,000)   (178,000)
                                              -----------  ----------  ----------

  Total benefit (provision) for income taxes  $1,367,000   $(585,000)  $(233,000)
                                              ===========  ==========  ==========
</TABLE>


                                              September 30
                                       -------------------------
                                         2002     2001    2000
                                       --------  ------  -------

U.S. Federal statutory tax rate        (34.00)%  34.00%  34.00%
Add (deduct):
Non-deductible goodwill                    4.3%   14.3%   22.8 %
State and local taxes                    (6.9)%    8.3%    7.1 %
Valuation allowance                         0 %      0%  (19.3)%
All other                                  .1 %    0.8%   (0.1)%
                                       --------  ------  -------

Effective tax rate                     (36.50)%  57.40%  44.50 %
                                       ========  ======  =======


                                      F10
<PAGE>
Note 5:   (Continued)
-------

During  the year ended September 30, 2000, the Company recognized the income tax
benefit  of a reserve established against the value of certain real estate owned
by  it.

Components  of  the  deferred  tax  asset  include:

                                        September 30
                                   ----------------------
                                      2002        2001
                                   ----------  ----------
Deferred tax assets:
  Reserve for bad debts            $   34,000  $   25,000
  Inventory reserve                   120,000       8,000
  Reserve on real estate              160,000     109,000
  Inventory cost capitalized           52,000      54,000
  State tax expense                    40,000      41,000
  Installment note expense            543,000         -0-
  Net operating loss carryforward   1,179,000     390,000
  Business tax credit                 113,000     113,000
  AMT credit                           45,000      38,000
                                   ----------  ----------
Total deferred tax assets          $2,284,000  $  778,000
                                   ==========  ==========


The  Company  has a federal net operating loss carryforward of $3,248,000, which
expires  in  2007  through  2016.

NOTE 6  -  SHORT-TERM BORROWINGS AND LONG-TERM DEBT:
----------------------------------------------------

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

<TABLE>
<CAPTION>
                                                                          September 30
                                                                     ----------------------
                                                                        2002        2001
                                                                     ----------  ----------
<S>                                                                  <C>         <C>

Long-term promissory note collateralized by corporate headquarters
 building, due March 25, 2017, bearing interest at 8% per annum      $1,277,000  $     -0-

Term loan collateralized by corporate headquarters building,
 due February 15, 2009, bearing interest at 7.87% per annum             392,000    438,000

Term loan, collateralized by equipment, due 2005, bearing
 interest at prime rate, 4.75% at September 30, 2002                    187,000    266,000

Capital leases                                                          818,000    277,000

Notes payable, bearing interest at 9.5%                                     -0-      3,000
                                                                     ----------  ----------

                                                                      2,674,000    984,000
Less:  current portion                                                 (515,000)  (240,000)
                                                                     ----------  ----------

                                                                     $2,159,000  $ 744,000
                                                                     ==========  ==========
</TABLE>

The weighted average interest rate on the prime rate term loan for the period it
was  outstanding  during  the  year  ended  September  30,  2002  was  4.94%

One  of  the  term  loans contains restrictive debt covenants consisting of debt
service  coverage  ratio  and  tangible  net  worth  requirements.


                                      F11
<PAGE>
Note 6:   (Continued)
-------

Future maturities of debt are as follows:

     Fiscal year ended September 30
     ------------------------------

                2003                 $   515,000
                2004                     502,000
                2005                     307,000
                2006                     124,000
                2007                     135,000
                thereafter             1,091,000
                                     -----------
                                     $ 2,674,000
                                     ===========

NOTE 7  -  ACCRUED EXPENSES:
----------------------------

<TABLE>
<CAPTION>
                                                                September 30
                                                        --------------------------
Accrued expenses are comprised of the following:             2002          2001
                                                        --------------  ----------
<S>                                                     <C>             <C>
Accrued bankcard fees                                   $      200,000  $  136,000
Accrued compensation and payroll taxes                         281,000     240,000
Accrued communication costs                                    234,000     289,000
Accrued professional fees                                      115,000     362,000
Accrued commission                                             111,000     147,000
Other                                                           46,000     221,000
                                                        --------------  ----------
                                                        $      987,000  $1,395,000
                                                        ==============  ==========
</TABLE>

NOTE 8  -  STOCKHOLDERS' EQUITY:
--------------------------------

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.  Each share of Class
K  Stock has a stated value of $2.00 per share and is convertible into one share
of  common stock after adjustment for the one-for-four (1:4) reverse stock split
in September 2001.  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.  Between  fiscal  1997 through 1999, a total of 400,000 shares of Class K
Stock  were  converted  into 400,000 shares of the Company's common stock. As of
September  30,  2002,  all  25,000 shares of Class K Stock outstanding have been
converted  into  common  stock.

Stockholders' Rights Plan
-------------------------

The Company has a Stockholders' Rights Plan. All stockholders have one preferred
share purchase right ("Right") for each outstanding share of common stock of the
Company.  Each Right entitles the registered holder to purchase from the Company
one-hundredth  of  a  share of series A Junior Participating Preferred Stock, no
par  value  ("Preferred  Stock")  of  the  Company  at  a price of $2.00 per one
one-hundredth of a share of Preferred Stock ("Purchase Price"), after adjustment
for  the  one-for-four  (1:4)  reverse  stock  split  in  September  2001.  The
description and terms of the Rights are set forth in a Rights Agreement dated as
of  September  30,  1996  ("Rights  Agreement").

The  Rights  will  separate  from  the Common Stock and a Distribution Date will
occur  upon  the  earlier  of  (i) 10 days following a public announcement that,
without  consent  of  the Board of Directors, a person or group of affiliated or
associated  persons  ("Acquired  Person")  have acquired beneficial ownership of
twenty-percent  (20%)  or  more  of  the  outstanding  Common  Stock, or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquired Person) following
the  commencement  of, or announcement of an intention to make a tender offer or
exchange  offer  the  consummation  of  which  would  result  in  the beneficial
ownership  by a person or group of twenty-percent (20%) of more such outstanding
Common  Stock.


                                      F12
<PAGE>
Note 8:   (Continued)
-------

In  the  event  that  any  person becomes the beneficial owner of twenty-percent
(20%)  or  more  of  the  Common  Stock of the Company, ten (10) days thereafter
("Flip-In  Event")  each  holder  of  a  Right will thereafter have the right to
receive,  upon exercise thereof at the then current Purchase Price of the Right,
Common  Stock  which  has  a  value of two times the Purchase Price of the Right
(such  right  being  called  the  "Flip-In Right").  In the event the Company is
acquired in a merger or other business combination transaction where the Company
is  not the surviving corporation or in the event that 50% or more of its assets
or  earning power is sold, proper provision shall be made so that each holder of
a  Right will thereafter have the right to receive, upon the exercise thereof at
the  then  current  Purchase  Price  of the Right, common stock of the acquiring
entity which has a value of two times the Purchase Price of the Right.  Upon the
occurrence  of  the Flip-In Event, any Rights that are or were at any time owned
by  an Acquiring Person shall become null and void insofar as they relate to the
Flip-In  Right.

The  Rights  are  not  exercisable until the Distribution Date.  The Rights will
expire  on  September  30, 2006 ("Final Expiration Date"), unless the Rights are
earlier  redeemed  or  exchanged by the Company, in each case, as description in
the  Rights  Agreement.

(Loss)  Earnings  Per  Share
----------------------------

The  following  table  sets  forth  the  computation of basic and diluted (loss)
earnings  per  share:

<TABLE>
<CAPTION>
                                                         September 30
                                             ------------------------------------
                                                 2002         2001        2000
                                             ------------  ----------  ----------
<S>                                          <C>           <C>         <C>

Net (loss) income:                           $(2,376,000)  $  434,000  $  291,000

Shares:
  Denominator for basic (loss) earnings per
   share - weighted-average shares
   outstanding                                 5,788,071    5,797,120   5,257,393

Effect of dilutive securities:
  Employee stock options                             -0-      141,688     514,304
  Warrants                                           -0-          -0-      14,848
  Series K Convertible Preferred Stock               -0-      25,000       25,000
  Series L Convertible Preferred Stock               -0-          -0-      13,552
                                             ------------  ----------  ----------

Dilutive potential common shares                     -0-      166,688     567,704
                                             ------------  ----------  ----------


Denominator for diluted (loss) earnings per
  share - adjusted weighted-average
  shares and assumed conversions               5,788,071    5,963,808   5,825,097
                                             ============  ==========  ==========

Basic (loss) earnings per share                   ($0.41)  $     0.07  $     0.06
                                             ============  ==========  ==========

Diluted (loss) earnings per share                 ($0.41)  $     0.07  $     0.05
                                             ============  ==========  ==========
</TABLE>


NOTE 9  -  COMMON STOCK OPTIONS:
----------------------------------

The  Company  had  a  1992  Incentive Stock Option Plan (the "1992 Plan"), which
provided for the issuance of up to 1,343,750 stock options, each to purchase one
share  of  the common stock at a price not less than 100% of the market price at
the date of grant. In May 2002, the 1992 Plan expired.  The 2003 Incentive Stock
Option  Plan has been approved by the Board of Directors of the Company and will
be  offered  to  the  shareholders  of  the  Company  for approval at the Annual
Shareholders' Meeting in February 2003. The 2003 Incentive Stock Option Plan has
similar  provisions  as  the  1992  Plan.


                                      F13
<PAGE>
Note 9:  (Continued)
-------

Stock option activity during 2002, 2001, and 2000 was as follows:

<TABLE>
<CAPTION>

Stock  option  activity  during  2002,  2001,  and  2000  was  as  follows:


                                                   Exercise
                                    Options         Price
                                   ---------  -----------------
<S>                                <C>        <C>        <C>

Outstanding September 30, 1999      829,583   $ 1.60  -  $ 8.00

  Granted                           106,250     7.00  -   16.48
  Forfeited                         (32,917)    5.76  -   10.24
  Exercised                        (116,583)    1.60  -    4.48
                                   ---------
Outstanding September 30, 2000      786,333   $ 1.60  -  $16.48
                                   =========

  Granted                            88,750     2.84  -    3.24
  Forfeited                        (165,416)    1.60  -    8.48
  Exercised                         (15,000)    2.00  -    3.40
                                   ---------
Outstanding September 30, 2001      694,667   $ 1.60  -  $16.48
                                   =========



  Granted                           197,000      1.29 -    2.17
  Forfeited                        (173,583)     1.60 -   10.24
  Exercised                          (5,500)     2.00
                                   ---------
Outstanding September 30, 2002      712,584
                                   =========


Exercisable at September 30, 2000   527,500   $ 1.84  -  $10.04
                                   =========
Exercisable at September 30, 2001   437,000   $ 1.60  -  $16.48
                                   =========
Exercisable at September 30, 2002   318,000   $ 1.29  -  $16.48
                                   =========
Options available for grant
  at September 30, 2001             461,500
                                   =========
Options available for grant
at September 30, 2002               374,750
                                   =========
</TABLE>


All  officer  and key employee options are granted under the 1992 Plan, with the
exception  of  25,834  shares  of options granted to a former executive officer,
vesting  over  a  period  of 3 years and 50,000 shares of stock options, vesting
over a period of 5 years which was issued to an executive officer under the 2003
Incentive  Stock Option Plan, pending shareholders' approval. The exercise price
of  both the incentive stock options and directors' options shall be 100% of the
fair market value on the date the option is granted.  Options granted to outside
directors  are  normally  vested  immediately.  Options  granted to officers and
employees  are normally vested over a five-year period.  Options are exercisable
for  a  period  of  five  years  from  date  of  vest.

The  following  table  summarizes information about stock options outstanding at
September  30,  2002:

<TABLE>
<CAPTION>
                              Options Outstanding                      Options Exercisable
                  -------------------------------------------   -------------------------------
                                     Weighted
                                     Average        Weighted                        Weighted
                      Number        Remaining       Average         Number           Average
  Range of        Outstanding at   Contractual      Exercise    Exercisable at      Exercise
Exercise Prices   Sept. 30, 2002       Life          Price      Sept. 30, 2002        Price
----------------  --------------  --------------  ------------  ---------------  ---------------
<S>               <C>             <C>             <C>           <C>              <C>
1.29 - $2.00            226,000             4.7  $       1.79          171,000  $          1.85
2.18 - $3.36            223,000             8.4  $       2.49           34,000  $          3.16
4.00 - $5.88            174,000             5.7  $       4.39           90,000  $          4.56
7.00 - $16.48            90,000             7.3  $       9.10           23,000  $          9.00
                  --------------                                ---------------
                        713,000            6.4   $       3.56          318,000
                  ==============                                ===============
</TABLE>


                                      F14
<PAGE>
Note 9:  (Continued)
-------

The  weighted average fair value of the options granted under the plan in effect
at  September  30,  2002, during the fiscal years ended September 30, 2002, 2001
and  2000 were $1.52, $1.89, and $3.20, respectively.  Fair value was determined
using  the  Black Scholes options pricing formula. For options granted in fiscal
2002,  the  risk  free interest rate was appropriately 4%, the expected life was
3-5  years,  the  expected  volatility was appropriately 90.6%, and the expected
dividend  yield  was 0%, all calculated on a weighted average basis. For options
granted  in  fiscal  2001, the risk free interest rate was approximately 5%, the
expected life was 3-5 years, the expected volatility was approximately 80.0% and
the  expected dividend yield was 0%, all calculated on a weighted average basis.
For  options  granted  in  fiscal  2000,  the  risk-free  interest  rate  was
approximately  6%,  the expected life was 3-5 years, the expected volatility was
approximately  90.1% 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 $358,000 and $0.06 for the year ended September
30, 2002, respectively; net income and net income per share would have decreased
by  $321,000  and $0.06 for the year ended September 30, 2001, respectively; and
net  income  and net income per share would have decreased by $245,000 and $0.05
for  the  year  ended  September  30,  2000,  respectively.

NOTE 10  -  COMMITMENTS AND CONTINGENCIES:
------------------------------------------

Lease Commitments
-----------------

The Company leases real property under agreements, which expire at various times
over  the  next  three  years.  The Company's future minimum rental payments for
capital  and  operating  leases  at  September  30,  2002  are  as  follows:


Fiscal Year                     Capital Leases   Operating Leases
------------------------------  ---------------  -----------------

2003                            $       377,000  $         123,000
2004                                    352,000            138,000
2005                                    185,000                -0-
                                ---------------  -----------------

Total minimum lease payments    $       914,000  $         261,000
                                                 =================



Less: imputed interest of 8.7%           96,000
                                ---------------
Present value of net
  minimum lease payment         $       818,000
                                ===============


Rent  expense  for  the  years  ended September 30, 2002, 2001, and 2000 totaled
$212,000,  $193,000,  and  $155,000, respectively. Certain operating leases have
renewal options at the end of the lease term solely at the Company's discretion.

NOTE 11  -  LITIGATION
----------------------

The Company is involved in various legal cases arising in the ordinary course of
business.  Based  upon  current information, management, after consultation with
legal  counsel,  believes the ultimate disposition thereof will have no material
effect  upon  either  the  Company's  results  of  operations  or  its financial
position.

On March 6, 2002, by resolution by the Board of Directors upon advise of counsel
subsequent  to  closing  arguments  at  trial and a March 1, 2002 Mediation, the
Company  settled  all  claims  without  admission  of  liability  arising  from
litigation  known  as  Premiere  Lifestyles  International  Corporation,  Inc.
("Premiere")  v.  Electronic  Clearing  House,  Inc.  in  the Los Angeles County
Superior  Court.  The  Company  made  a  one-time  cash payment of $1,200,000 to
Premiere  and  executed  a  long-term  promissory  note  collateralized  by  the
Company's  office  building in Agoura Hills, California in favor of Premiere for
an  additional  $1,300,000,  payable  over 15 years with an interest rate of 8%.


                                      F15
<PAGE>
NOTE 12  -  SEGMENT INFORMATION
-------------------------------

The  Company  has  adopted  FAS  No.  131,  "Disclosures  about  Segments  of an
Enterprise  and  Related  Information"  (FAS  131).  FAS 131 established revised
standards  for  public  companies  related  to  the  reporting  of financial and
descriptive  information about their operating segments in financial statements.

Certain  information  is  disclosed,  per  FAS  131, based on the way management
organizes  financial  information  for  making operating decisions and assessing
performance.

The  Company  currently  operates  in  three  business  segments:  Bankcard  and
Transaction  Processing,  Check  Related  Products,  and other, all of which are
located  in  the  United  States.

The  Company's  reportable operating segments have been determined in accordance
with  the  Company's  internal management structure, which is organized based on
operating activities.  The accounting policies of the operating segments are the
same  as those described in the summary of significant accounting policies.  The
Company  evaluates  performance  based  upon  two  primary  factors,  one is the
segment's  operating income and the other is based on the segment's contribution
to the Company's future strategic growth. Certain segment information for fiscal
year  2001  and  2000  were  reclassified  as a result of the elimination of the
terminal  sale  business  segment  in  fiscal  2002.

<TABLE>
<CAPTION>
                                                    September 30
                                       ----------------------------------------
Business Segments                          2002          2001          2000
-------------------------------------  ------------  ------------  ------------
<S>                                    <C>           <C>           <C>
Revenues:
  Bankcard and Transaction Processing  $27,339,000   $25,220,000   $26,210,000
  Check Related Products                 5,802,000     4,323,000     1,926,000
  Other                                    150,000       400,000       204,000
                                       ------------  ------------  ------------
                                       $33,291,000   $29,943,000   $28,340,000
                                       ============  ============  ============

Operating Income (loss):
  Bankcard and Transaction Processing  $ 1,996,000   $  3,183000   $ 2,668,000
  Check Related Products                  (872,000)     (234,000)     (883,000)
  Other - Corporate Expenses            (2,293,000)   (2,386,000)   (1,769,000)
  Legal Settlement                      (2,500,000)           -0-           -0-
                                       ------------  ------------  ------------
                                       $(3,669,000)  $   563,000   $    16,000
                                       ============  ============  ============

Depreciation and Amortization:
  Bankcard and Transaction Processing  $   727,000   $   571,000   $   472,000
  Check Related Products                   938,000       764,000       495,000
                                       ------------  ------------  ------------
                                       $ 1,665,000   $ 1,335,000   $   967,000
                                       ============  ============  ============

Capital Expenditures:
  Bankcard and Transaction Processing  $ 1,474,000   $   823,000   $   954,000
  Check Related Products                   712,000       859,000       187,000
                                       ------------  ------------  ------------
                                       $ 2,186,000   $ 1,682,000   $ 1,141,000
                                       ============  ============  ============

Total Assets:
  Bankcard and Transaction Processing  $ 5,399,000   $ 5,268,000   $ 4,459,000
  Check Related Products                 7,710,000     7,934,000     5,949,000
  Other                                  5,082,000     5,719,000     6,605,000
                                       ------------  ------------  ------------
                                       $18,191,000   $18,921,000   $17,013,000
                                       ============  ============  ============
</TABLE>


                                      F16
<PAGE>
NOTE 13  -  NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------------------

In  July  2001,  the FASB issued Statement of Financial Accounting Standards No.
142  ("SFAS"),  "Goodwill  and  Other Intangible Assets", which is effective for
fiscal  years beginning after December 15, 2001.  SFAS 142 requires, among other
things,  the discontinuance of goodwill amortization.  In addition, the standard
includes  provisions  for  the  reclassification  of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of existing recognized
intangibles,  reclassification of certain intangibles out of previously reported
goodwill  and  the  identification  of reporting units for purposes of assessing
potential  future  impairments of goodwill.  SFAS 142 also requires companies to
complete  a  transitional  goodwill  impairment test six months from the date of
adoption.  The Company is required to adopt these statements effective the first
quarter  of  fiscal  2003.  The  Company  has  completed  the  Step 1 - goodwill
impairment  test,  as  prescribed  by  SFAS  142, utilizing discounted cash flow
analysis  for  the check services reporting unit that has goodwill.  The results
of this analysis indicate potential goodwill impairment for this reporting unit.
The Company has begun, but not completed, Step 2 - measurement of the impairment
loss,  by  evaluating  the  fair  value  of  the check services business segment
through  discounted  cash  flow  models and other analytical means.  The Company
expects  to  record  any  impairment  loss as a cumulative effect of a change in
accounting  principle  in  the  first  quarter  of  2003.

In  August 2001, FASB issued Statement of Financial Accounting Standards No. 144
("SFAS  144"), "Accounting for the Impairment or Disposal of Long-Lived Assets."
This  Statement  supersedes  FASB Statement No. 121, ("SFAS 121") Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of,
and the accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results  of  Operations  -  Reporting  the Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual  and  Infrequently  Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in  that  Opinion).  This  statement  establishes  a single accounting model for
long-lived asset impairment, based on the framework established in SFAS 121, for
long-lived  assets  to  be  disposed  of  by  sale,  and  resolves  significant
implementation  issues  related  to  SFAS 121.  SFAS 144 is effective for fiscal
years  beginning after December 15, 2001.  The Company does not believe that the
adoption  of SFAS 144 will have a significant impact on its financial statements
and  the  results  of  operations  upon  adoption.

In  June  2002,  the FASB issued SFAS 146, "Accounting for Costs Associated with
Exit or Disposal Activities", which is effective for exit or disposal activities
initiated  after  December  31,  2002.  This  statement  addresses  financial
accounting  and  reporting for costs associated with exit or disposal activities
and  nullifies  Emerging  Issues  Task  Force  (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and other Costs to Exit an
Activity  (including  certain  costs incurred in a restructuring)."  The Company
does not believe that the adoption of SFAS 146 will have a significant impact on
its  financial  statements  and  the  results  of  operation  upon  adoption.

NOTE  14  -  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)
----------------------------------------------------

The  following  summarizes  the  unaudited  quarterly  financial  results of the
Company for the fiscal years ended September 30, 2002 and September 30, 2001 (in
thousands,  except  share  data):


<TABLE>
<CAPTION>
                                    Year Ended September 30, 2002
                             ------------------------------------------
                               First     Second      Third     Fourth
                              Quarter    Quarter    Quarter    Quarter
                             ---------  ---------  ---------  ---------
<S>                          <C>        <C>        <C>        <C>
Net revenues                 $  7,921   $  8,386   $  8,415   $8,569
Gross profit                    2,796      2,360      2,535    2,265
(Loss) from operations            (76)    (3,129)      (143)    (321)
Net (loss)                        (93)    (1,908)      (168)    (207)
(Loss) per share - basic     $  (0.02)  $  (0.33)  $  (0.03)  $(0.03)
(Loss) per share - diluted   $  (0.02)  $  (0.33)  $  (0.03)  $(0.03)
</TABLE>

<TABLE>
<CAPTION>


                                      F17
<PAGE>
Note 14:  (Continued)
--------

                                      Year Ended September 30, 2001
                                ---------------------------------------
                                 First     Second    Third     Fourth
                                Quarter   Quarter   Quarter    Quarter
                                --------  --------  --------  ---------
<S>                             <C>       <C>       <C>       <C>
Net revenues                    $  6,979  $  7,380  $  7,758  $  7,826
Gross profit                       2,266     2,788     2,644     2,587
Income (loss) from operations         63       350       203       (53)
Net income (loss)                     22       167       282       (37)
Basic net income (loss) per
  common share                  $   0.00  $   0.03  $   0.05  $  (0.01)
Diluted net income (loss) per
  common share                  $   0.00  $   0.03  $   0.05  $  (0.01)
</TABLE>


                                      F18
<PAGE>
<TABLE>
<CAPTION>
                        ELECTRONIC  CLEARING  HOUSE,  INC.  AND  CONSOLIDATED  SUBSIDIARIES

                                                SCHEDULE II TO FORM 10K

                               RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES





                                                   REDUCTION IN                             REDUCTION IN
                                                    RESERVE AND                              RESERVE AND
                         BALANCE AT   CHARGED TO     ACCOUNTS     BALANCE AT   CHARGED TO     ACCOUNTS     BALANCE AT
DESCRIPTION              09/30/1999     EXPENSE     RECEIVABLE    09/30/2000     EXPENSE     RECEIVABLE    09/30/2001
-----------------------  -----------  -----------  -------------  -----------  -----------  -------------  -----------
<S>                      <C>          <C>          <C>            <C>          <C>          <C>            <C>
Allowance for
 trade receivables/
 chargeback receivables  $ 1,001,000  $   586,000  $   1,207,000  $   380,000  $   326,000  $     393,000  $   313,000
Allowance for
 notes receivable        $   148,000  $    29,000  $         -0-  $   177,000  $       -0-  $     177,000  $       -0-
Allowance for
 obsolete inventories    $   202,000  $       -0-  $     199,000  $     3,000  $    15,000  $         -0-  $    18,000


                                      REDUCTION IN
                                       RESERVE AND
                         CHARGED TO     ACCOUNTS     BALANCE AT
DESCRIPTION                EXPENSE     RECEIVABLE    09/30/2002
-----------------------  -----------  -------------  -----------
<S>                      <C>          <C>            <C>
Allowance for
 trade receivables/
 chargeback receivables  $   302,000  $     184,000  $   431,000
Allowance for
 notes receivable        $       -0-  $         -0-  $       -0-
Allowance for
 obsolete inventories    $   300,000  $      18,000  $   300,000
</TABLE>


<PAGE>