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 endedSept. 30, 2000

          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                  (IRS Employer
    of incorporation or organization)         Identification No.)

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

Registrant's telephone number, including area code:  (818) 706-8999, fax
number: (818) 597-8999
                         ------------------------------
           Securities registered pursuant to Section 12(b) of the Act:

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

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

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

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

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

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on December
15, 2000 as reported on the NASDAQ National Market, was approximately
$19,042,590.  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 15, 2000, Registrant had outstanding 21,730,934 shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE


                                      None




                         ELECTRONIC CLEARING HOUSE, INC.
                          2000 FORM 10-K ANNUAL REPORT


                                TABLE OF CONTENTS


PART I                                                          Page

Item 1.          Business. . . . . . . . . . . . . . . . . . . . . 3
Item 2.          Properties. . . . . . . . . . . . . . . . . . . .15
Item 3.          Legal Proceedings . . . . . . . . . . . . . . . .16
Item 4.          Submission of Matters to a Vote of
                   Security Holders  . . . . . . . . . . . . . . .16


PART II

Item 5.          Market for Registrant's Common Equity and
                 Related Stockholder Security Matters. . . . . . .17
Item 6.          Selected Consolidated Financial Data. . . . . . .18
Item 7.          Management's Discussion and Analysis of
                   Financial Condition and Results of Operations .19
Item 8.          Financial Statements and Supplemental Data. . . .25
Item 9.          Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosures . . . . .25

PART III

Item 10.         Directors and Executive Officers of the
                   Registrant. . . . . . . . . . . . . . . . . . .26
Item 11.         Executive Compensation. . . . . . . . . . . . . .29
Item 12.         Security Ownership of Certain Beneficial
                   Owners and Management . . . . . . . . . . . . .31
Item 13.         Certain Relationships and Related Transactions. .33

PART IV

Item 14.         Exhibits, Financial Statement Schedules, and
                 Reports on Form 8-K . . . . . . . . . . . . . . .34















                                     PART I

ITEM 1.     Business

General

Electronic Clearing House, Inc., ("ECHO") is an electronic payments processor
of credit card, debit card, and/or check activity for over 58,000 merchants
nationally. ECHO also provides nationwide check verification services and
electronic and traditional check collection services.

During fiscal year 2000, ECHO filed applications with the Office of the
Comptroller of the Currency (OCC) and the Federal Deposit Insurance
Corporation (FDIC) to capitalize and operate a subsidiary bank that would
exclusively serve the merchant marketplace. Both applications are in final
review. The addition of the bank would allow ECHO to benefit from the sizable
deposits resulting from merchant processing activity. It would also allow ECHO
to fully integrate bank account reporting information with each merchant's
transactional data, a major step toward providing a useful, Internet-based
merchant service commonly referred to as Business-to-Business (B2B) payment.

Three acquisitions have been made in the past eighteen months, two check
processing companies and one collection agency. As a result of these
acquisitions, ECHO has increased its payment settlement and processing options
that it can provide to a merchant, it has significantly expanded the base of
merchants it serves and it has been recognized as the sixth largest provider
of check verification services in the nation.

ECHO has developed and maintains a variety of methods through which a merchant
may gain access to the services of the Company believing the ease of
conversion is a key in motivating a merchant to move from their current
processor or bank provider of services to ECHO. These methods of connection
include: a PC over the internet, various point-of-sale terminals, a fax
machine and both cellular and touch-tone phones.

The Company's largest client is U-Haul International whose dealers represent
approximately 15,000 of the Company's base of merchants. ECHO provides several
services to U-Haul dealers that include credit card processing, inventory
tracking and dealer compensation management and reporting to U-Haul corporate.
These services are being expanded to include ECHO's check and collection
related services as well.

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

1) National Credit Card Reserve Corporation ("NCCR") provides primary
corporate  data center and customer service activities relating to transaction
processing services which include electronic credit card and debit card
authorizations, electronic fund transfers, inventory tracking, electronic
deposits utilizing the Automated Clearing House ("ACH") for merchants, banks
and other customers, and management and development of Internet software and
related communication networks that are involved in providing transaction
processing services.

2) ECHO Payment Services, Inc. ("EPS") leases, rents and sells point-of-sale
(POS) systems and related equipment.

3) Computer Based Controls, Inc. ("CBC") designs and/or integrates various POS
systems and related equipment to address merchant needs.

4) XpressCheX, Inc. ("XCX"), formerly known as Magic Software Development,
provides secondary corporate data center services and is the primary data
center for check guarantee and verification services, check clearing services
to facilitate and track electronic funds transfer activity and the management
of check verification services and member compensation for a national check
association. All collection services, both electronic and traditional in
nature, are managed and operated by XCX.

5) Rocky Mountain Retail System ("RMRS") manages National Check Information
Service ("NCIS"), a national database of bad check writers, and provides check
verification and check conversion services to retail merchants and collection
agencies across the nation.

History of Company

The Company was incorporated in Nevada in 1981 under the name Bio Recovery
Technology, Inc.  In January 1986, the Company changed its name to Electronic
Clearing House, Inc. and acquired Electronic Financial Systems, Inc., which
was then engaged in credit card processing. 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 Computer Based Controls (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
and the United States Postal Service.

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 grew to more
than 15,000 by fiscal year 2000 (see U-Haul). With regard to proprietary
issues, three patent applications involved with the Company's printer
methodology have been granted (see Patents).


In early 1996, the Company purchased a business with specialties in the
Internet, Windows NT programming and world-wide communications networks.
Through this acquisition, the Company has been 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.

In 1999, ECHO acquired Magic Software Development, located in Albuquerque, New
Mexico. Since 1986, the Company maintained XpressCheX (XCX), a check guarantee
service that only served California merchants, but, with the addition of
Magic's check processing capabilities, the services provided by XCX were
expanded and are now being offered on a national basis. In fiscal 2000,
Magic's corporate name was changed to XpressCheX and all XpressCheX activity
was moved to the new XCX entity. XCX will provide and promote its check and
electronic funds transfer ("EFT") services to other processors and sales
organizations in addition to ECHO and is thereby expected to increase its
revenues and earnings therefrom in the coming years.

In November of 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 42 of 50 states to date. Registration
in all 50 states is expected to be complete by the second quarter of fiscal
2001. Having a fully integrated, nationally approved collection service adds
considerable value to the XCX suite of check services.

In January 2000, the Company acquired Rocky Mountain Retail Systems (RMRS)
located in Boulder, Colorado, which provides a national check verification
service. RMRS built and operates the National Check Information Service
(NCIS). The core of NCIS is a database of over 12 million bad check writers
compiled by RMRS over many years in cooperation with over 200 collection
agencies and many large retail merchants. Being recognized as one of the best
negative and positive databases in the nation, NCIS holds considerable value
to the Company as an integrated service that it can add to its other merchant
processing services.

In September of 2000, the Company initiated beta testing of its debit card
processing services through its primary processing center in California.
Connecting to three networks, Interlink (Visa), Mastro (MasterCard) and STAR,
the company can process approximately 90% of the debit cards issued in the USA
today.

In the most recent eighteen months, the Company has migrated from a single
transaction processing "engine" (credit card) to five transaction processing
engines which now include: credit card, debit card, check verification, check
(ACH) settlement and check collection. The integration of these services onto
point-of-sale equipment platforms in use in the marketplace today by merchants
and the reporting of all ECHO's services in a common, Internet-based
environment is a strategic Company objective. In light of the few third-party
processors or processing banks who have similar capabilities, the Company
believes it will have a distinctive advantage in fiscal year 2001 from a
marketing/sales and operational model viewpoint.

General Summary

In management's opinion, the Company's core competency and profitability is
realized by providing merchants electronic connectivity to various financial
services in both the credit card, debit card and check-related markets. The
Company has focused on developing the highest number of methods of access to
the Company, believing such flexibility is key to meeting the specific needs
of merchants in various stages of growth. Due to the technical capability of
the Company, new avenues of transmission and communication, such as the
Internet, have been integrated with the transaction processing services to
generate a distinctive, one-stop provider of services to the merchant
marketplace, including online access to full transaction detail. The Company
has additional expertise in designing both hardware and software systems to
integrate the Company's financially-based services into customers' information
systems, utilizing the Internet in several ways. Such services have been
performed for customers such as U-Haul International, American Express, the
United States Postal Service, and innoVentry.

Strategically, the Company believes that, in the years ahead, every merchant,
large and small, will need a suite of basic financial services.  Although the
Company enjoys a relationship with its base of merchants that allows the
Company to offer such services, it is logical for merchants generally to trust
a bank to provide such services over a third party processor. This is a key
reason the Company has undertaken the initiation of a bank, to strengthen the
trust and further develop the financial relationship between the Company and
its merchants.

The Company believes that merchants will increasingly want to have their
financial information aggregated into one source rather than monitor many
providers. The Company believes the Internet offers the most logical, low-cost
method of providing such information aggregation services. In addition, the
Company anticipates that every merchant will see the need to be represented on
the Internet for marketing purposes alone and, for some, to accommodate direct
purchase activity over the Internet, commonly referred to as "e-commerce".
Based upon this belief, the Company intends to build both its marketing
services and its e-commerce capabilities relating to the Internet.

The Company is committed to focusing its research and development energies to
integrate its credit card clearing, debit card clearing, electronic check
clearing, check verification, collection and bank account settlement data into
an Internet reporting model that is easy for merchants to access and
adequately secure.

Credit Card Processing Review

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

For the year ended September 30, 2000, NCCR accounted for approximately 84% of
the Company's revenues.  NCCR presently provides 24-hour daily credit card
processing capability, "800" number access to customer service personnel and,
as needed, various field support services.

Functioning like an electronic utility, NCCR earns a steady stream of
transaction and processing fees while the multiple computers in its processing
center communicate continuously with merchant terminals, and the databases of
Visa, MasterCard, American Express, Diner's Club, Carte Blanche and Discover.
Utilizing one of the numerous methods of access to the Company, the merchants'
systems dial the Company's host computers and receive credit card
authorizations for accounts which have been electronically verified for credit
validation and other security considerations. Electronic files are then
transmitted daily by NCCR to the major credit card organizations which
subsequently transfer funds from the card issuing banks to one of NCCR's
processing banks.  At NCCR's direction, funds are then electronically moved
from NCCR's processing banks and deposited into the bank of the merchant's
choice.  On a typical day, NCCR will make deposits to 450 banks across the
nation on behalf of its merchant base.

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

NCCR's compensation for credit card processing is derived primarily from three
primary 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. Once set, this percentage is deducted from the amount
of each transaction submitted by the merchant and the net amount is deposited
into the merchant's bank account. Discount rates range between 1.5% and 2.9%
and, overall, the Company's average discount rate is 2.1%.  Depending upon the
discount rate charged and the cost of clearing interchange, from 75% to 90% of
the discount rate revenue is paid to card issuing banks, the card issuing
organizations, and the sponsoring bank.

The transaction fee is charged for each transaction processed and the
Company's average transaction revenue is $0.17 per transaction. The Company
maintains a range from $.15 up to $0.32 per transaction, depending on the
merchant/customer interface. Both Visa and MasterCard have instituted $.05 to
$.10 transaction fees on each transaction processed that diminishes the
benefit the Company historically might see from such charges. Due to lower
costs of communications and negotiated contracts, the Company's direct costs
have been lowered to a range between $.03 and $.05 per transaction, depending
upon duration and method of transmission.

Over the past several years, industry consolidation has been occurring and
impressive growth in recent years in the credit card processing market has
occurred by firms through portfolio acquisitions. Such a strategy raises
special challenges that may involve supporting and integrating numerous
processing methodologies, initiating quality customer support and field
support services and, probably most difficult, maintaining merchant
relationships. Merchant portfolios can be purchased but the merchants who are
processing thereunder are under no obligation to continue to utilize the
services of the new owner. This lack of contractual obligation can lead to a
persistency issue. In the past year, some processors have started asking
merchants to sign longer term agreements (2 to 3 years) in exchange for a rate
reduction or cost savings.  The Company is considering this approach as well.

The Company's data center reliability and the costs associated with
communication activities of NCCR are presently favorable but no assurance or
guarantee can be made that such conditions will continue. Conversely, 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 an increasingly difficult
task. Fortunately, the Company has a base of processing activity that is
profitable and the Company has added other forms of transaction processing
(checks) that are not affected by such changes. Material changes in these
areas, such as interchange fees, could reduce the profitability expected to be
seen from NCCR operations in the future.

Check Processing 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
impunity. 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 (renamed
"XpressCheX") that provided ACH settlement services and supported a
membership-based national verification service for collection agencies. In
November of 1999, the Company acquired Peak 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 (RMRS), another provider of national check verification services
promoted by over 160 collection agencies. RMRS also originated and maintains
National Check Information Service (NCIS), a database of bad check writers
that is available to merchants and collection agencies across the nation on a
fee per transaction basis.

The combination of the Company's check guarantee service, XpressCheX's ACH set
of services, XpressCheX's collection capabilities and the RMRS verification
services through NCIS, constitute the basis of a fully integrated national
check service company. The following services are either being offered or will
be offered in the near term by the Company.

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

Check Guarantee
The merchant pays a fee based on the amount of the check for each transaction.
For this fee, the Company will search NCIS for the piece of identifying
information provided by the merchant.  If the identifying information is
matched, the Company issues a coded response instructing the merchant to
refuse to accept the check.  If the identifying information is not matched, a
coded response advises the merchant that the 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.

Check Conversion
The most recent new check service to be announced nationally is called "check
conversion". The merchant slips a customer's check either through a check
reader that reads the Magnetic Ink Character Recognition (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.
This new system is finding quick acceptance by both customers and banks.
Customers like it because they get their check back immediately and still have
their hard copy of the transaction. Banks like it because no paper has to be
handled by the bank to settle the transaction. Other advantages exist,
probably the most significant being an electronic record is settled in
priority to paper-based transactions which assures an electronic record first
access to limited funds in a customer's account.

Accounts Receivable Check Truncation (ARCT/Lockbox)
For companies that receive large volumes of checks in the mail, such as
utility companies and ISP's, a need exists to convert these checks to an
electronic settlement process to speed processing and lower costs.  In order
to provide such services, a full tracking methodology must exist to assure all
rejected items are ultimately settled.  Utilizing the Internet, XpressCheX has
developed a fully integrated reporting and tracking system that addresses the
informational needs of companies who wish to automate check processing in this
manner.


RCK (Returned Check)
XpressCheX is presently providing a service to merchants that allows the
merchant to advise its bank that a returned check should be sent to the
XpressCheX data processing center in Albuquerque, New Mexico, rather than
returned 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. 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.

The Company intends to actively promote these services to its national base of
merchants and plans to incorporate these check-related services into the
normal services any new merchant receives upon becoming an ECHO merchant.

The costs of providing check services varies based upon transaction
communication timeframes, data file size, banking fees for access to the ACH
and reserve allocations for potential losses, to name a few. Gross margins in
check-related services can routinely exceed 50% over external costs.

Risk of Processing Credit Card and Check Transactions

The Company assumes the financial liability for any merchant-based fraudulent
use of credit card and/or check information.  To address this potential
liability, the Company has developed and deployed theECHODETECT system that
performs electronic surveillance and monitoring of fraudulent credit card or
check use by merchant. Despite this effective tool, the Company could incur
losses as the result of the unauthorized or fraudulent use of credit cards or
checks by unscrupulous merchants, which could, depending on the size of the
losses, have a materially adverse effect on the Company. The Company does not
maintain any insurance to protect it against any such losses and is not aware
of any insurance that could be acquired at a reasonable cost. Historically,
the Company has allocated ten basis points (.001) of daily processing activity
to serve as a reserve against any losses that it may sustain due to such
activity. The Company has approximately $336,000 and $910,000 in reserve
against chargeback receivables for the fiscal year ended 2000 and 1999,
respectively. The Company sustained expenses of $528,000 and $433,000 against
said chargeback losses for the fiscal years ended 2000 and 1999, respectively.
Over the past 15 years that the Company has made automatic reserve
contributions, no merchant loss has exceeded the reserve during the period
such losses were realized. Based upon this fact, the Company believes this
mechanism of allocating daily from processing revenues to a reserve to address
these obligations when they arise will be adequate to address the inherent
risks associated with merchant processing.

Banking Activities and Relationships

To engage in Visa and MasterCard processing, a cooperative relationship is
required with a bank which provides necessary sponsorship for the merchants to
process Visa and MasterCard transactions. From 1997 to 1999, the Company
enjoyed four processing bank relationships: Imperial Bank, Los Angeles,
California, First Charter Bank, Beverly Hills, California, First Regional
Bank, Los Angeles, California and The Berkshire Bank, New York, New York. In
1999, the Company acquired the merchant portfolio previously processed through
Imperial Bank and moved merchants from the sponsorship of Imperial Bank to
First Regional Bank. Multiple bank relationships are desirable due to
potential changes that can occur in the banking market wherein one of the
Company's banks might be acquired and the new owner not desire to continue the
relationship for any reason.

In December of 1999, the Company filed its bank application with the OCC and
in January, 2000, with the FDIC. Should approval of the bank be received, it
is anticipated that the bank will become a primary member of Visa and
MasterCard and that the Company will be better able to assure Visa and
MasterCard membership to its base of merchants. Additionally, it is
anticipated that the Company will benefit from the deposits generated by
merchant processing activity. Currently, the average daily total deposits at
all of the banks utilized by the Company exceeds $30 million.

Subsequent to fiscal 2000 year end, the Company terminated its processing
relationship with First Charter Bank. The Company also initiated legal
proceedings to recover processing fees from First Charter Bank that the
Company believes have been erroneously charged.

There can be no assurance that the Company will be approved to start a bank or
that the Company will always be able to maintain its present banking
relationships, establish other such relationships, or, if such other
relationships are available, that they can be obtained on terms satisfactory
to the Company.

U-Haul International

The U-Haul program began in 1995 after a year of development of special
software by the Company. The software operates on CBC's EB920 terminal,
provides credit card authorization, and keeps track of available inventory at
the dealer's site. The system also prepares the rental contract between the
dealer and the customer and reports the activity electronically to the
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. ECHO distributes the rental data on an hourly basis around the
nation to the points of destination. This allows a receiving dealer to accept
reservations for rental of the specific equipment prior to the equipment's
actual arrival.

The Company has capitalized part of its costs associated with the development
of the system and amortizes such costs over three years. Revenues are derived
from equipment sales to U-Haul and income resulting from daily transaction
processing services provided to dealers and U-Haul Corporate. U-Haul
transaction activity and equipment purchases constitute a significant portion
of the Company's growing profitability. During fiscal year 2000, the Company
entered into a three-year contract with U-Haul International which covers
processing services, software development, data distribution, equipment
purchases/warranty, customer support, and consulting.  The contract has
renewal provisions for extending the term. During 2000, the Company also
deployed an additional 4,000 terminals to the U-Haul dealers. The Company
presently serves approximately 15,000 U-Haul dealers.

Internet ("Net")

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

Security
Security of credit card numbers transmitted over the Net has been a recurring
question. Serious concern exists in the banking industry about unscrupulous
access to a customer's credit card number when it is presented over the Net.
In the first quarter of fiscal 1997, the Company deployed a secure Internet
World Wide Web ("WWW") server in anticipation of utilizing common commercial
WWW browsers and the Internet as an additional POS transaction delivery
mechanism. The Company has therefore been accepting credit card transactions
over the Internet since January 1997, using a combination of 40 and 128-bit
message encryption and digital signature standards, as well as proprietary
back-end technology that offers additional protection to the cardholder and
merchant. Management believes this combination of technologies offers superior
confidentiality protection as well as substantial cost advantages compared to
alternative, WWW-based transaction technologies.

In 1996, Visa, MasterCard and major software development corporations
established a methodology standard for moving transactions over the Net,
called Secure Electronic Transactions ("SET"). SET involves the integration of
several technologies and parties, including the purchaser, the seller, the
bank, the processor and the network service provider. Due to the growing
popularity and confidence in a simpler security transmission mode, Secure
Socket Layer (SSL), the need for a full SET solution is becoming less
apparent.  Therefore, the future viability of SET is in question as a standard
but, the Company intends to be a full participant in the SET community when,
and only when, there appears to be adequate interest and involvement by all
parties to make it a viable solution, when the response time is within
acceptable time frames and when the overall benefits outweigh the costs. In
preparation for SET deployment, the Company has already modified the interface
to its internal transaction processing system to accept transactions via
Transmission Control Protocol/Internet Protocol (TCP/IP).

The Company's service based on these technologies is the ECHONLINE service,
and it is aimed at enabling Internet Service Providers ("ISPs") to submit
transactions to the Company on behalf of themselves and of their own customers
using the Internet.  During fiscal 1997, the Company reached agreements with
two software developers to develop commercial interfaces toECHONLINE - one for
UNIX, and one for Windows NT. The UNIX software is available at no charge, and
ISPs have been able to process transactions withECHO within a week of securing
this software.  The Windows NT software is available for a modest fee, and
ISPs and larger merchants that have acquired this software have been able to
process transactions withECHO within a day of acquisition.

Internet Banking and Business Information
The Company believes that the Internet will become a common tool used by
financial officers and business owners to evaluate merchant bank account
information and make decisions regarding the status of checks written, funds
availability and other banking issues that are commonly of concern to a
merchant. In addition, small leases for office furniture, phone systems,
copiers, fax machines, POS equipment and such will continue to be desired
financial services of the merchant marketplace. Quick and easy access to
information that most merchants need, such as insurance, travel and shipping
services, are additional services the Company believes merchants would
appreciate. The Company believes it can integrate merchant financial
activities and informational services into a common Internet portal and
thereby attract new and strengthen existing merchant relationships by
providing greater value in a financial portal dedicated solely to merchants.

The Company sees the Internet as a ubiquitous communications network that can
provide low-cost access to the services the Company offers. Rather than refer
to the Company as an Internet-based company, the Company is attuned more to
building a suite of services that will be attractive to the merchant
marketplace and utilize the Internet as a secure access method for delivery of
those services.  In light of the above issues, the Company has highly trained
and knowledgeable people who are designing, developing and managing its Net
activities.  Although not expected, if for any reason certain key personnel
were no longer available to the Company, the Company would have to look to
outside sources for similar capabilities. No assurance can be made that such
expertise would be found and, if found, available to assist the Company.
Additionally, the Net products being developed and introduced are intended to
augment the Company's present processing activities and are intended to be
offered for low entry and low on-going processing costs when compared to other
similar services.  This strategy is intended to draw retail business
relationships presently processing with other providers to the Company, but
there is no assurance such a strategy will be effective or will be a
sustainable pricing strategy in the long-term.  The Company intends to review
this strategy regularly as a result and make changes in pricing, if necessary,
based upon actual experience.

Programs and Services

One of the Company's core beliefs is that the Company must accommodate as many
different "point-of-interaction" entry methods as possible in order to build
the credit card and check processing services business, while concentrating on
those methods and techniques that will provide the most leverage for the
Company. To these ends, the Company has developed the following programs and
services:

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

XpressCheXplus
TheXpressCheXsystem is an electronic process whereby a mail order/telephone
order-based merchant may collect checking account data from numerous customers
and submit the file to ECHO in order to electronically move funds from the
customer's checking account into the merchant's account.  This service
eliminates the need for paper checks to be received and processed by the
merchant.

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

ECHOTERM
The Company maintains compatibility with the most common POS terminals in the
nation built by Verifone. It also maintains compatibility with its own series
of systems sold over the past years. As a group, these POS terminals are
referred to as the ECHOTERM program.

ECHOLINK
In 1998, the Company announced theECHOLINK program, an Internet-based service
that allows any merchant to review their processing activity in a secure
manner over the Internet. TheECHOLINK program is a chargeable service and
provides the merchant with many methods of sorting the data, including
identifying frequent customers and quickly locating specific transactions
under question by the customer or by the card issuing banks, the latter issues
being commonly referred to as Retrieval Requests and Chargebacks. For
merchants who are in a mail order or telephone order type of business, the
ability to search and respond to Retrieval Requests and Chargebacks is a
significant advantage over the paper-based systems that are still being used
by other processors.

ECHONET
In 1999, the Company announced ECHONET, an Internet browser-based service that
allows a merchant to enter credit card data either manually or through a card
reader and receive an immediate authorization from the Company.ECHONET meets
the needs of retail merchants who have Internet access and also call center
type of businesses that desire operators to have immediate access to credit
card authorization capability while on the phone with a caller.

Financial Portal
The Company is designing an Internet financial portal through which it will
provide all of its transactional reporting services. The portal will also
provide access to all banking information and be linked to other information
sources commonly used by and beneficial to merchants. A marketing plan is
being developed to utilize existing relationships with sales organizations,
ISP's and other Internet specialists to promote and benefit from the
merchant's use of the internet-based portal. The effectiveness of such a
portal and of the marketing programs can not be assured but management is
encouraged by the growing interest and use of these special tools by various
merchants and by the interest of many Internet-based businesses to associate
withECHO in order to access its suite of financially-based services for their
merchants.

Equipment Design and Manufacture
Through the years, the Company has developed software that enables the
Company's host computer to interface with the largest POS manufacturer,
Verifone International, who is estimated to have a 65% share of the POS
terminal market. The acquisitions of XpressCheX and Rocky Mountain Retail
Systems has significantly expanded the number of terminal manufacturers that
connect to the Company for check related services. The Company is currently
developing credit card processing software to be used on these new POS
platforms so that all of the Company's services can be accessed by merchants
who own such systems. In addition, the Company is reviewing Internet capable
POS systems (TCP/IP) and plans to adopt a standard equipment package around
which it can design a merchant processing service that is fully Internet
based.

innoVentry
InnoVentry is a partnership between Wells Fargo Bank and Cash America and
provides cash advance services to casinos and the gaming industry at large. In
September 1999, the Company entered into a five-year strategic alliance
agreement with innoVentry to provide credit card transactions for innoVentry's
casino business.  In August of 2000, the two companies agreed to discontinue
this relationship and the Company susequently sold its interest to innoVentry
for $1,000,000. This resulted in a gain from sale of asset of $312,000
recorded by the Company in fiscal 2000.

United States Postal Service ("USPS") Pilot Program
In November 1995, CBC was awarded a contract to design and build 575
Electronic Money Order Dispensers ("EMOD") for the USPS.  The First Article
Test of the EMOD system was approved in February 1997.  In May 1997, 175
"Stand-Alone" EMOD units were deployed in the Dallas, Texas area. The Company
was informed in January 1998 that the pilot program was being extended and
that the USPS found that the EMOD system generated significant savings in time
and money for the USPS. The USPS subsequently asked CBC to bid the costs of
making a software change to the EMOD that allowed other printers to be
utilized with the EB921 control terminal. Final verbal permission to proceed
was received from the USPS in December,1998 but, prior to proceeding, the
Company asked for a formal funding approval. Such approval was not provided
and, by mid-1999, the USPS announced that it needed to dedicate all personnel
on special projects, such as EMOD, to other projects centered on confirming
readiness for the year 2000 (Y2K). Since the arrival of the year 2000, no
further indication has been received by the Company that the USPS intends to
broaden or continue its development activities with the Company's EMOD system.
No formal notice has been received from the USPS and, in the absence of formal
notice, the Company believes it is reasonable to assume further development is
not likely at this time.

Patents
The Company presently has three patents with respect to certain of its
proprietary technology in operating printers and reading financial documents.
The Company has obtained a patent on its method of electronically sensing the
serial number of a document.  This method relies on the use of its patented
ECHOSYMBOLOGY(TM) bar code.  The patent describes a unique method of
illuminating a form from one side while resolving the bar code image from the
opposite side.  No additional optical components are required beyond the basic
illumination source and the CCD image array.

The Company developed and obtained a patent to a proprietary type of bar code
reading technology, designated as font of machine readable patterns.

The Company has also obtained a financial document dispensing apparatus and
method patent for particular printing techniques and reporting presentations
used in the preparation and tracking of financial documents.  This patent
provides an opportunity for promotion of its financial document dispensing
devices as the issuance of financial documents becomes more common in non-bank
environments.

The Company has filed for a patent involved in Internet-based check submission
and subsequent re-presentment methodologies but no assurance can be given that
such patent filing will be granted.

There can be no assurance that if challenged, these patents can be judicially
sustained.  In the absence of such protection, competitors would be able to
duplicate the Company's products.  Furthermore, even though the Company has
patents, there can be no assurances that the Company's competitors will not
independently develop or patent technologies that are substantially equivalent
or superior to the Company's technologies.

The Company has expended considerable time and resources to develop
information systems to serve its merchant base.  There is no intellectual
property protection on the computer equipment and database that comprise these
systems.  Additionally, although the Company believes that its products and
technologies do not infringe upon the proprietary rights of any third parties,
there can be no assurance that third parties will not assert infringement
claims against the Company.  Similarly, infringement claims could be asserted
against products and technologies which the Company licenses, or has the
rights to use from third parties.  Any such claims, if proven, could
materially and adversely affect the Company's business and results of
operations.



Leasing

The Company sells and leases terminals and printers to retail merchants
through its subsidiary,ECHO Payment Services, Inc. ("EPS"). EPS cultivates
relationships with independent sales organizations, agent banks, and trade
associations and has formed strategic alliances with other marketing groups to
increase equipment sales and leases. EPS normally leases equipment at an
annual return between 18% and 24%, bundles leases in various sized packages
and sells them at a discounted rate to banks and individual investors.
Servicing and collection of leases sold is performed by the Company.

Real Estate

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

Marketing

Since 1997, the Company has slowed its reliance on a single Independent Sales
Organization (ISO) that it had utilized for the prior five years to acquire
new merchant accounts. The Company has set up several referral programs with
several ISO's and, over the past year, approximately 20% of new accounts were
generated by the ISO referral program. The balance of the Company's new
merchant accounts were generated through the Internet, theECHOTEL program, the
ECHONET program and direct merchant referrals by existing merchants to the
Company.

The acquisitions of XpressCheX, Inc. (formerly Magic Software Development) and
Rocky Mountain Retail Systems has broadened the number of sales channels
available to the Company and using these channels to sell credit and debit
card processing is planned once full integration of services onto a common POS
platform is finished in the first quarter of fiscal 2001. Additionally, cross-
selling of check services to ECHO's existing base of merchants and U-Haul
dealers is believed to be a significant opportunity for the Company to
maximize earnings with a minimum marketing expense.

Management believes the Company is unique in the number of methods of access
it allows, the combination of transaction types that it manages directly, its
ability to integrate additional services based upon customer needs and in its
ability to support each merchant through one vertically integrated source. In
most competitive instances, such services are performed by different parties
and, as a consequence, merchants become frustrated trying to solve a problem,
not knowing which party to call.  The Company believes its commitment to
maintaining a common Customer Support group serving all processing divisions
(ECHO, XpressCheX and RMRS) on a 24/7/365 basis will become a distinctive
advantage to merchants in choosing ECHO over its competitors.

In October of 1999, the Company entered into an agreement with National Bank
Drafting Services (NBDS), a sales organization with 2,000 licensees with
headquarters located in Fort Worth, Texas. Initially, XpressCheX-based check
services were to be offered by NBDS but in May, 2000, the services sold by
NBDS were expanded to include credit card processing. Currently, check
verification services from RMRS are being integrated with NBDS's other
services to allow a further expansion of services being sold by NBDS. Due in
part to delays in the full integration of services and difficulties in
licensee training, the NBDS sales activity has developed more slowly than
expected. However, due to an NBDS national conference held in October, 2000,
and ECHO's active participation therein, it is expected that NBDS productivity
will increase significantly in fiscal year 2001.

The Company's marketing strategy is as follows:

1)   To maximize its cross-selling activities to its existing base of
     merchants. Between its three transaction processing subsidiaries, the
     Company serves over 58,000 merchants, many of whom do not participate in
     the full range of services offered by the Company. This is due more to
     lack of information than choice by the merchant so the Company is
     dedicated to informing all merchants of its full capabilities and
     maximizing those relationships in fiscal year 2001.

2)   To sell its integrated suite of check, credit and debit card-related
     processing services to small banks. The Company believes it has a
     combination of services that makes it a very attractive partner to small
     banks who will never develop or have access to these set of services from
     a single provider.

3)   To finalize and release its merchant financial portal. The Company
     believes a centralized portal wherein all financial and informational
     data can be accessed by merchants will provide a marketing tool to its
     sales channels and will generate additional merchant referrals.

4)   To support the NBDS licensees. The sophistication and professional nature
     of the average NBDS licensee was confirmed by the Company at the NBDS
     national convention held in October, 2000. It is firmly believed that
     continued training and sales support by the Company will result in
     increased sales being generated through the NBDS licensees.

5)   To establish its bank as quickly as possible once approved and promote it
     nationally. Once the company is able to assert it has a bank dedicated
     solely to merchant processing, it is believed a national marketing
     campaign can be developed that will result in increased sales to the
     merchant marketplace. To management's knowledge, there is no bank in the
here is no bank in the
     nation today that is dedicated only to providing merchant processing
     activity.

6)   To support XpressCheX and RMRS in the independent and full development of
     their respective sales channels. Both XpressCheX and RMRS have existing
     opportunities to provide their respective services to nationally known
 of which might be competitors of ECHO from a credit
     card processing viewpoint. It is the Company's intent to support such
     alliances for XpressCheX and RMRS and to maintain the highest ethical
     treatment of such relationships to assure neither XpressCheX or RMRS
     customers have reason to question their reliance on an ECHO subsidiary
     for services.

Markets can change for numerous reasons, e.g., new technology, economic
factors, regulatory requirements, etc., many of which are not within the
control of the Company so it can not be assured that the marketing efforts of
the Company will be or continue to be effective or that the Company will see
or continue to see an increase in processing volume in the future.

Competition

The Company enjoyed the distinction of being listed as the sixth largest
provider of check verification services in the USA in the May, 2000 issue of
The Nilson Report, a monthly financial subscription-based newsletter. The five
providers of verification services in higher volume than ECHO were SCAN,
TeleCheck, Equifax, IPS and NDC. In management's opinion, the provider who the
Company most parallels in terms of range of processing services is TeleCheck.

The industries in which the Company operates are highly competitive and are
characterized by rapid technological change, rapid rates of product
obsolescence and introductions of competitive products often at lower prices
and/or with greater functionality than those currently on the market.  The
Company currently is not a major player in the industries in which it
competes, and, in management's opinion, the Company's share of the markets in
which it competes is relatively small in comparison to most of its
competitors.  Many of the Company's competitors have substantially 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, or to devote greater resources to the
development, promotion and sale of their products and services than is the
Company.

Furthermore, in the future, the Company may encounter substantial additional
competition.  There can be no assurance that the Company's current products
and services will not become obsolete, or that the Company will have the
financial resources, technical expertise, marketing capabilities or
manufacturing and support facilities to compete successfully in the future.

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

Employees

The Company employed 145 persons at September 30, 2000, none of whom are
represented by a labor union.  The Company's headquarters are based in Agoura
Hills with offices in Westlake Village, California; Albuquerque, New Mexico;
and Boulder, Colorado.  Management believes that its employee relations are
good at the present time.

Forward Looking Statements

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


ITEM 2.      Properties

In October 1994, the Company purchased the three-story, 13,500 square foot
building it currently occupies for $880,000.  The Company currently has a note
collaterized by this building.  The current monthly debt service is
approximately $7,000.  This building houses the Company's headquarters and
computer facilities.

The Company leases real property under various agreements which expires at
various times over the next two years.  The total lease payment is
approximately $14,000 per month.

The Company's cost of real estate held for investment was $528,000 for fiscal
years ended 2000 and 1999. A $276,000 reserve allowance was set up as of
September 30, 2000 and 1999 to reflect a net book value of $252,000 which is
based on the estimated fair value less estimated cost to sell the properties.
The Company owns several pieces of raw land for investment consisting of four
noncontiguous parcels in Missouri totaling approximately five acres, two
noncontiguous parcels in Texas totaling approximately forty-four acres, one
acre in Castilla County, Colorado, one-third acre in Eureka County, Nevada, a
single lot in Arrowhead County, Washington, a single lot in Ventura County,
California, three acres in Independence County, Arkansas, and 498 acres in San
Bernardino County, California. The Company has entered into an agreement with
a party to represent and sell its properties.


ITEM 3.     Legal Proceedings

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

The Company is currently involved in lawsuits against eighteen (18) merchants
for losses incurred from chargebacks that the Company has paid on behalf of
those merchants.  The amounts of losses claimed aggregate to more than
$272,000.  There is no assurance that these amounts are recoverable through
litigation.

In addition, litigation handled by outside law firms includes defense
litigation with respect to a merchant lawsuit filed against the Company by
Premiere Lifestyles International Corporation and a collection lawsuit filed
by the Company against First Charter Bank for amounts owed the Company.

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

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

Two matters were submitted to a vote of Security Holders during the fiscal
year ended September 30, 2000 at the Annual Shareholders' Meeting held on
February 4, 2000.  A majority of shareholders' votes approved two issues: (1)
election of one director; and (2) ratification and approval of auditors.

                                     PART II

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

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

<TABLE>
<CAPTION>

           FISCAL YEAR ENDED            High          Low
             SEPTEMBER 30

                     2000
              <S>                      <C>          <C>
              First Quarter             $3.68        $1.00
              Second Quarter            $6.75        $2.46
              Third Quarter             $3.96        $1.81
              Fourth Quarter            $2.37        $1.43

                     1999
              First Quarter             $4.19        $0.75
              Second Quarter            $3.12        $1.47
              Third Quarter             $2.41        $1.25
              Fourth Quarter            $1.62        $0.97

                     1998
              First Quarter             $1.38        $0.88
              Second Quarter            $1.25        $0.69
              Third Quarter             $2.00        $0.78
              Fourth Quarter            $1.88        $0.94

</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 4,406,442
shares for the period from October 1999 to September 2000.  On December 15,
2000, the closing representative price per share of the Company's common
stock, as reported through NASDAQ in the over-the-counter market, was $0.87.

Holders of Common Stock

As of September 30, 2000, there were 889 record holders of the Company's
Common Stock, with 21,730,934 shares outstanding. The number of holders of
record is based on the actual number of holders registered on the books of the
Company's transfer agent and does not reflect holders of shares in "street
name" or persons, partnerships, associations, corporations or other entities
identified in security position listings maintained by depository trust
companies.

Dividend Policy

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


ITEM 6.     Selected Consolidated Financial Data

The following table sets forth certain selected consolidated financial data,
which should be read in conjunction with the Consolidated Financial Statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations included at items 7 and 8 below.  The following data, insofar as
they relate to each of the five years ended September 30, have been derived
from annual financial statements, including the consolidated balance sheet at
September 30, 2000 and 1999 and the related consolidated statement of
operations and of cash flows for the three years ended September 30, 2000, and
notes thereto appearing elsewhere herein.

<TABLE>
<CAPTION>
                                           Year Ended September 30
                                       2000    1999    1998     1997    1996
                                        ( -----  Amounts in thousands, except
                                               per share  ----- )
Statement of Operations Data:
<S>                                 <C>      <C>     <C>     <C>     <C>
Revenues . . . . . . . . . . .      $28,340  $23,828 $21,063 $18,623  $14,342
Costs and expenses . . . . . .       28,324   22,636  19,852  18,103   14,526
Income (loss) from operations            16    1,192   1,211     520     (184)
Interest income (expense), net          196       95      14    (138)    (228)
Other income (expense), net. .          312      -0-     (35)    (50)    (182)
Income (loss) before income tax
 (Provision) benefit . . . . .          524    1,287   1,190     332     (594)
(Provision) benefit for
  income taxes . . . . . . . .         (233)   1,331     (36)     (4)      (5)

Net Income (loss). . . . . . .       $  291  $ 2,618 $ 1,154  $  328  ($  599)


Net Income (loss) per share-basic     $0.01    $0.14    $.08   $ .03    ($.05)
Net Income (loss) per share-diluted   $0.01    $0.11    $.05   $ .02     n/a


Weighted average number of
  common Shares and equivalents
  outstanding-basic. . . . . .       21,030   18,143  14,974  13,337   11,297

Weighted average number of
  common Shares and equivalents
  outstanding-diluted. . . . .       23,300   23,299  21,834  19,851      n/a

Balance Sheet Data:
Working capital surplus  . . .      $ 6,029  $ 5,010 $ 3,611 $ 2,054  $   238
Current assets . . . . . . . .        7,595    6,159   5,154   3,047    2,254
Total assets . . . . . . . . .       17,013   12,932   8,025   6,084    4,682
Current liabilities. . . . . .        1,566    1,149   1,543     993    2,016
Long-term debt, and payable to
 stockholders and related parties,
 less current portion. . . . .          767      599     639     681      597
Total stockholders' equity . .      $14,680  $11,184  $5,843  $4,410   $2,069


</TABLE>





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

Electronic Clearing House, Inc. provides credit card authorizations, debit
card authorizations, electronic deposit services, check guarantee, check
verification, check conversion, accounts receivable check truncation
(ARCT/Lockbox), RCK (Return Check), inventory tracking services and various
Internet services to retail and wholesale merchants and U-Haul dealers across
the nation.  In addition, the Company develops and sells and leases electronic
terminals for use by its customers and other processing companies.

On January 4, 2000, the Company acquired Rocky Mountain Retail Systems, Inc.
(RMRS), based in Boulder, Colorado.  RMRS operates as a wholly owned
subsidiary of the Company.

Pursuant to the Merger Agreement, the Company issued a total of 1,000,000
shares of restricted common stock to the selling shareholders of RMRS.  An
additional 1,500,000 restricted shares of common stock will be placed into
escrow to be issued to the RMRS selling shareholders under a performance
clause wherein, should the RMRS subsidiary's performance meet or exceed
predetermined earnings goals for years 2000 through 2002, a proportionate
number of performance-based shares will be issued.

RMRS is the creator/owner and processor for National Check Information Systems
(NCIS) through which RMRS provides check verification services to large retail
chains, processors and collection agencies across the nation.  NCIS's negative
check writer database is ranked No. 6 in the nation by The Nilson Report.

Result of Operations

Fiscal years 2000 and 1999

Net Income.    Electronic Clearing House, Inc. recorded income of $524,000
before income tax provision for fiscal year 2000, as compared to $1,287,000 in
fiscal year 1999, a decrease of 59.3%.  Net income after tax provision for
fiscal year 2000 was $291,000, as compared to $2,618,000 in net income for
fiscal year 1999 after a tax benefit of $1,331,000. Earnings per both basic
and diluted shares were $.01 in fiscal year 2000, as compared to $.14 per
basic share and $.11 per diluted share for fiscal year 1999.

Revenue.    Total revenues for fiscal year 2000 were $28,340,000, an 18.9%
increase over revenues of $23,828,000 for fiscal year 1999.

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 increased 13.3%, from $21,089,000 in fiscal
year 1999 to $23,902,000 for fiscal year 2000. This increase was primarily the
results of a 16.3% increase in bankcard processing volume year-over-year.
Check related revenues increased from $308,000 for fiscal year 1999 to
$1,979,000 in fiscal 2000, a 542.5% increase. This was mainly attributable to
the acquisition of Rocky Mountain Retail Systems (RMRS), which was completed
in January 2000, and the inclusion of a full year of operations for
XpressChex, which was acquired in April 1999.  Total processing and
transaction revenue increased from $21,323,000 for fiscal 1999 to $25,677,000
for fiscal 2000, an increase of 20.4%.

Transaction revenues generated from one of our major customers, U-Haul
International, increased 12.5% from the prior year as a result of the
additional terminal deployed during the last two fiscal years.

Revenue related to terminal sales is recognized when the equipment is shipped.
Terminal sales revenue for fiscal 2000 were $2,459,000, which represented a
16.8% increase over $2,106,000 for fiscal 1999. This increase reflected the
delivery of approximately 4,100 terminals to the U-Haul dealers during this
fiscal year as compared to 2,500 terminals delivered in fiscal 1999. The
increase was partially offset by fewer terminals sold to the merchants through
various sales channels during fiscal 2000. The total U-Haul dealer base served
by the Company nationwide has now grown to approximately 15,000 as a result of
these latest terminal deployments.  The Company believes that the U-Haul
transaction revenue will continue to increase as a result of these additional
units deployed.

Other revenue decreased from $399,000 in fiscal year 1999 to $204,000 in
fiscal 2000, a 48.9% decrease due to fewer billable software development work
completed during the current year.

XpressCheX, Inc., a wholly owned subsidiary of the Company, initiated its new
ACH backbone service in May 2000.  With a benchmark throughput in excess of
5.6 million transactions per day, a tenfold system processing improvement,
this ACH system was designed with redundancy and scalability to allow multiple
benchmark levels to be implemented and sustained simultaneously.  This
backbone will be used for check conversion (POP), check-representment (RCK),
accounts receivable truncated check (ARTC, lockbox), on-line check acceptance,
and batch processing.  This system is completely configurable by merchant.
Some of the features include automated sales commission tracing, multiple re-
initiation of items and service fees, fully automated funds distribution of
all fees and payments, integrated fraud protection, and automated return
matching.

In November 1999, the Company acquired Peak Services, a collection agency, and
successfully integrated its operations into the XpressChex group location in
Albuquerque, New Mexico. XpressCheX also has initiated a full RCH standard
collection service with Internet-based reporting and check imaging.  This
collection service has grown from processing 500 checks a month to over 4,000
checks in the first few months of operations.

In September 1999, the Company entered into a five-year strategic alliance
agreement with innoVentry, a company jointly owned by Wells Fargo and Cash
America International, Inc., to provide credit card transactions in
innoVentry's casino business.  In August 2000, the two companies agreed to
discontinue this relationship and the Company susequently sold its interest to
innoVentry for $1,000,000.  As a result, the Company recognized $312,000 of
gain.

Cost and Expenses.    Bankcard processing expenses should always 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 being based on a fixed rate applied to the transactions
processed.  Processing-related expenses, consisting of bankcard processing
expense and transaction expense, increased from $14,778,000 for fiscal year
1999 to $18,128,000 in the current fiscal year, a 22.7% increase.  This was in
direct relation to the 20.4% increase in processing and transaction revenues
for the current fiscal year.  The decrease in gross margin was attributable to
the marketing efforts being made to the retail sectors, which traditionally
carries a lower risk and therefore generates a smaller gross margin to the
processor.

Cost of terminals sold and leased increased from $1,166,000 in fiscal year
1999 to $1,790,000 in fiscal year 2000, an increase of 53.5%.  This is
attributable to the 16.8% increase in terminal sales and lease revenue for the
year. Additionally, the Company reduced the terminal price for the 4,100 U-
Haul systems sold during the current year.

Other operating costs increased from $2,424,000 in fiscal year 1999 to
$3,231,000 in fiscal year 2000, an increase of 33.3%.  This increase was
mainly attributable to the XpressChex and the RMRS acquisitions and the
significant integration expenses related to the various check products and
services.

Selling and general and administrative expenses increased from $4,176,000 in
fiscal year 1999 to $4,816,000 in fiscal year 2000, an increase of 15.3%. As a
percentage of total revenue, selling, general and administrative expenses
decreased slightly from 17.5% of total revenue in fiscal year 1999 to 17.0% of
total revenue in fiscal year 2000.  This decrease was partially offset by the
bank organization costs incurred during fiscal year 2000.

Amortization of goodwill expense increased from $92,000 in fiscal 1999 to
$359,000 in fiscal 2000 as a result of the XpressChex and the RMRS
acquisitions.

Overall, the Company has invested substantially and has made significant
progress in enhancing and integrating a suite of new check services during
this fiscal year.  The Company has expanded its sources of revenue from one
transaction type, credit card processing, to five different types of
transactions, i.e., credit cards, debit cards, check verifications, ACH
settlement and collections. Management believes that the overall effect of
this enhanced transaction capability will be positive on both revenues and
earnings in the future.

In December 1999, the Company filed an application to start an Internet-base
bank with the Office of the Controller of the Currency (OCC) and also filed an
application with the Federal Deposit Insurance Corporation (FDIC) in January
2000.  The bank would provide services exclusively to merchants and is,
therefore, being considered a "special purpose" bank by both the OCC and the
FDIC.  The Company was advised that the regional offices of both the OCC and
the FDIC have submitted the applications to their Washington D.C. offices
where special purpose banks receive final review. Due to the fact the
applications are classified as a "special purpose" bank, this application
process has been unexpectedly slow. However, management is still optimistic
about obtaining preliminary approvals from both the OCC and the FDIC within
the next couple of months. If the OCC and the FDIC approvals are obtained, the
Company will immediately file with the Federal Reserve Bank to become a bank
holding company, a process estimated to take at least 60 days.


LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2000, the Company had available cash of $3,941,000,
restricted cash of $1,017,000 in reserve with its primary processing banks and
working capital of $6,029,000.

The Company is currently financing its operations primarily from cash
generated from operations.  During fiscal 2000, the Company generated $788,000
from operations.  The Company generated $1,000,000 from the sale of asset.
Net cash used in investing activities was $332,000, mainly as a result of
equipment and software purchases.  Net cash provided by financing activities
was $585,000 of which $389,000 was from the exercise of stock options and
warants, and $400,000 from the issuance of a note payable.  This was offset by
$204,000 repayment of notes payable.  Overall, the Company's cash balance
increased by $1,041,000 in fiscal year 2000.

Accounts receivable net of allowance for doubtful accounts increased from
$1,532,000 at September 30, 1999 to $1,911,000 at September 30, 2000.  This is
reflective of the increased month-end billings to merchants due to revenue
growth year-over-year. Inventory costs remained relatively constant from
$580,000 at September 30, 1999 to $594,000 at September 30, 2000.


At the present, the Company's cash flows from operations is sufficient to
support the current level of developments costs and marketing costs which
would allow the Company to further develop all of its check related products
and services and fully integrate its sales and marketing efforts as a result
of the recent acquisitions.

However, once the OCC and the FDIC approved the bank application, the Company
will need to seek additional funding to satisfy the anticipated capital
requirements for the bank.  There is no assurance that the funding will be
obtained based on terms that are acceptable to the Company.


NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"), subsequently amended by SFAS No. 137, which the Company is required to
adopt effective October 1, 2000.  This Statement requires that all derivative
instruments be recorded on the balance sheet at their fair value.  Changes in
the fair value of derivatives will be recorded each period in current earnings
or other comprehensive income, depending on whether a derivative is designed
as part of a hedge transaction and, if it is the type of hedge transaction.
The Company does not believe that the new standard will have a material impact
on the Company's financial statements.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements",
which provides the SEC's views on applying generally accepted accounting
principles to selected revenue recognition issues.  The SAB is effective
fourth fiscal quarter of fiscal years beginning after December 15, 1999.  The
Company does not believe that the SAB will have a material impact on the
Company's financial statements.


Quarterly Financial Data (Unaudited)

The following summarizes the unaudited quarterly financial results of the
Company for the fiscal years ended September 30, 2000 and September 30, 1999
(in thousands, except share data):

<TABLE>

<CAPTION>
                                      Year Ended September 30, 2000
                                   First    Second    Third    Fourth
                                  Quarter   Quarter  Quarter   Quarter

  <S>                           <C>       <C>      <C>       <C>
  Net revenues                  $6,205    $6,574    $8,022   $7,539
  Income (loss) from operations    (56)     (288)      299       61
  Net income (loss)                (19)     (219)      321      208
  Basic net income (loss) per
    common share                $ 0.00    ($0.01)   $ 0.01   $ 0.01
  Diluted net income (loss) per
    common share                $ 0.00    ($0.01)   $ 0.01   $ 0.01

</TABLE>

<TABLE>
<CAPTION>
                                       Year Ended September 30, 1999
                                   First    Second    Third   Fourth
                                  Quarter   Quarter  Quarter  Quarter



  <S>                           <C>       <C>      <C>       <C>
  Net revenues                   $5,469    $6,356   $6,133   $5,870
  Income from operations            249       443      195      305
  Net income                        258       444      209    1,707
  Basic net income per
    common share                 $ 0.02     $0.03   $ 0.01   $ 0.08
  Diluted net income per
    common share                 $ 0.01    $ 0.02   $ 0.01   $ 0.07


</TABLE>

Result of Operations

Fiscal years 1999 and 1998

Revenues.  Electronic Clearing House, Inc. recorded income of $1,287,000
before tax benefit for the fiscal year ended September 30, 1999, as compared
to $1,190,000 in fiscal year 1998, an increase of 8.2%.  Net income for the
fiscal year 1999 rose to $2,618,000, a 126.9% increase over net income of
$1,154,000 in fiscal year 1998.

Total revenues for the fiscal year 1999 were $23,828,000, a 13.1% increase
over revenues of $21,063,000 for fiscal year 1998.  The primary revenue
increase was from bankcard processing and transaction processing, from
$18,835,000 in fiscal 1998 to $21,323,000 in fiscal 1999, a 13.2% increase.

Revenues derived from the electronic processing of transactions are recognized
at the time the transactions are processed by the merchant. The principal
contributors to the increase in bankcard processing revenue and transaction
revenue are the increased revenue from the Magic acquisition and the
incremental effect of the pass-through of higher interchange rates from the
credit card associations, which was effective April 1999. Additionally,
transaction revenue from U-Haul also increased by 3.0% from the prior year. As
of September 1999, the Company processed for over 19,000 active retail
merchant accounts and equipment rental dealers located around the country.

In July 1999, U-Haul International awarded the Company a bid for credit card
processing service for its independent dealers who participate in the
Preferred Dealer Program.  The Company is also authorized to promote its
credit card processing service to the 11,000 dealers who are currently using
the Company's terminals for its daily inventory tracking and credit card
authorization activities.  The Company is now in the process of enhancing the
software in the terminals to include credit card processing for the dealer's
non-U-Haul activities. This will reduce the amount of equipment the dealer
must have on his counter and simplify the dealer's day-to-day operations.
However, there is no assurance that these independent dealers will sign-up
with the Company's credit card processing program.

Revenue related to terminal sales is recognized when the equipment is shipped.
Terminal sales increased from $2,055,000 in fiscal 1998 to $2,106,000 in
fiscal 1999, a 2.5% increase.  This increase was primarily due to more
terminals sold in fiscal 1999 as a result of several new sales programs.  This
increase was partially offset by 2,500 U-Haul systems shipped in fiscal 1999
versus 3,100 systems shipped in fiscal 1998.

Other revenue which consist mainly of research and development revenue
increased from $173,000 in fiscal 1998 to $399,000 in fiscal 1999, a 130.6%
increase.  This increase was attributable to software development work for
innoVentry, a casino cash advance provider, and the United States Postal
Service (USPS).

In September 1999, the Company entered into a five-year strategic alliance
agreement with innoVentry, a company jointly owned by Wells Fargo and Company
and Cash America International, Inc., to provide credit card transactions in
innoVentry's casino business.  The Company is responsible for the daily
overall credit card settlement functions and shares a percent of the net
proceeds from these transactions with innoVentry.  As of September 30, 1999,
the Company and innoVentry jointly serve five casinos with 20 kiosk and cage-
based systems deployed. The Company generated approximately $453,000 of
revenue during fiscal year 1999.

The Company provided software and hardware to the USPS for the development and
deployment of automated money order dispensing systems under a pilot program
awarded to Computer Based Controls, Inc. (CBC), a wholly owned subsidiary of
the Company.  CBC designed and implemented the requested features and a
successful First Article Test of the new features was completed by the USPS in
late June of 1998.

In May 1999, the USPS advised the Company that it is in the process of
evaluating the numerous USPS projects to 1) meet their strategic goals; 2)
reduce duplication of effort; 3) confirm they are Y2K compliant; and 4)
provide potential cost savings.  Until this evaluation is complete, all
further development is on hold. It was emphasized to the Company that the
delay of active development under the pilot program should not imply that a
decision has been made on the merits of the pilot program but that other
issues are requiring the full resources of the USPS at this time.  No
commitment or indication was given regarding when the USPS would complete its
evaluations and dedicate resources to the pilot program but it was evident, in
management's opinion, that the USPS is still very interested in the Company's
system that serves the small volume USPS offices.

Costs and Expenses.    Bankcard processing expenses have generally remained
constant as a percentage of processing revenue.  Most 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, transaction expense and customer service expense,
increased from $13,794,000 in fiscal 1998 to $14,778,000 in fiscal 1999, a
7.1% increase.  This was directly attributable to the 13.2% increase in
bankcard processing and transaction revenue in fiscal year 1999.

The cost of terminals sold and leased decreased from $1,519,000 in fiscal 1998
to $1,166,000 in fiscal 1999, a 23.2% decrease. This was the result of higher
gross margin from equipment sales due to lower pricing from equipment vendors.
Additionally, no inventory allowance was recorded in fiscal year 1999.

Other operating costs increased from $1,799,000 in fiscal 1998 to $2,424,000
in fiscal year 1999, a 34.7% increase.  This increase was the research and
development expenses on the cash advance project and the development costs of
the check products and services for fiscal year 1999.

Selling, and general and administrative expenses increased from $2,740,000 in
fiscal 1998 to $4,176,000 in fiscal 1999, a 52.4% increase. As a percentage of
total revenue, selling, general and administrative expenses increased from
13.0% in fiscal 1998 to 17.5% in fiscal year 1999.  This was primarily
attributable to the expansion of the Company's sales and marketing program and
the inclusion of Magic's operations started in April 1999.  Furthermore, the
increase was due to the higher employee-related costs to support the growth of
the Company.

Income Tax Benefit (Provision).  The Company recognized deferred tax credits
in the amount of $1,392,000 in this fiscal year primarily from net operating
loss carryforward and business tax credits from prior years.


Liquidity and Capital Resources

As of September 30, 1999, the Company had available cash of $2,900,000 and
restricted cash of $736,000 in reserve with its primary processing banks.  The
Company's working capital improved from $3,611,000 as of September 30, 1998,
to $5,010,000 as of September 30, 1999.

The Company is currently financing its operations primarily through cash
generated from operations.  During fiscal 1999, the Company generated $838,000
from operations.  In addition, the Company generated $816,000 from stock
options and warrants exercised.  Net cash used in investing activities was
$1,145,000 in fiscal 1999.  Cash increase of $540,000 from financing
activities was primarily from a refinancing of an existing note payable.
Overall, the Company total cash balance increased by $414,000 in fiscal year
1999.

The Company anticipates that cash on hand and cash provided by operating
activities will be sufficient to fund its existing operations for the next
twelve months.  However, the Company may need to raise additional funds in
order to support expansion or develop new business units that is strategic to
the Company's growth.  Thee can be no assurance that additional financing will
be available when needed on terms favorable to the Company, if at all.

In November 1999, the Company completed a $1 million post-petition secured
financing arrangement with Tropical Beaches, Inc. d.b.a. New Strategies, a
bankcard processing merchant who filed for Chapter 11 protection on June 29,
1999.  According to the terms of the loan agreement, New Strategies will begin
repayment in December 1999, and will retire the loan in full on or before
February 2000 together with interest.  The loan is secured by all the assets
of New Strategies and also has super-priority administrative claim status with
respect to any unpaid administrative claims in the Chapter 11 case.  As part
of the consideration for the loan, the Company also was granted a first right
of refusal to purchase New Strategies and is currently working with the
company, its professionals and representatives of the Official Unsecured
Creditors' Committee on formulating a plan of reorganization.

The Company and New Strategies are currently working on a revised repayment
schedule in order to provide additional working capital to New Strategies.
The Company believes that the loan extension will not impair the eventual
collectibility of the loan.

At the present, the Company's cash flows from operations is sufficient to
support the current level of research and development costs and marketing
costs which would allow the Company to further develop its suite of check
products, Internet products and services which is essential to the Company's
future growth.

The Company's current ratio improved significantly from 3.3 to 1 at September
30, 1998 to 5.4 to 1 at September 30, 1999.  The Company's debt-to-equity
ratio also improved from .37 to 1 at September 30, 1998, to .16 to 1 at
September 30, 1999.

ITEM 8.    Financial Statements and Supplemental Data

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

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

None

                                    PART III


ITEM 10.     Directors and Executive Officers of the Registrant

The officers and directors of the Company are:

<TABLE>
<CAPTION>

                                                         Date first became
Name                            Position                Officer or Director
<S>                             <C>                             <C>
Joel M. Barry <F1><F3>          Chairman of the Board,           1986
                                Chief Executive Officer,
                                President


Alice L. Cheung                 Chief Financial Officer,         1996
                                Treasurer

Lawrence M. Brown               Vice President                   1999

Jesse Fong                      Vice President                   1994

David Griffin                   Vice President                   1990

Rick Slater                     Vice President                   1998

Patricia Atlas Williams         Vice President                   1997

Jack Wilson                     Vice President                   1994

Donna L. Rehman                 Corporate Secretary              1990

R. Marshall Frost               Counsel                          1994

Aristides W.
  Georgantas<F1><F2><F3><F4>    Director                         1999

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

Herbert L.
  Lucas<F1><F2><F3><F4>         Director                         1991

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


JOEL M. BARRY, age 50, has been a Director of the Company since July 8, 1986,
and Chairman of the Board since December 26, 1986.  Mr. Barry served as Chief
Financial Officer from May 1, 1987 to June 9, 1990, and Executive Vice
President from October 12, 1987 to June 29, 1990, when he was designated Chief
Executive Officer of the Company. In May, 1999, Mr. Barry assumed the role of
President.  Mr. Barry is also a Director and Chief Executive Officer of the
NCCR,  CBC, and XpressCheX, Inc. (formerly Magic Software Development) 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 43, 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.

LAWRENCE M. BROWN, age 49, joined the Company in 1997 and was appointed Vice
President and Chief Information Officer in 1999.  Prior to joining the
Company, Mr. Brown was founder and sole proprietor of Cypress Productivity
Systems, an educational consultancy focused on software engineering processes
and project management methodologies.  Mr. Brown served Unisys Corporation for
eighteen years in various roles in Professional Services, Engineering, and
Marketing, with his last position as Director of Software Engineering.  Mr.
Brown holds a BA degree in English and a BS degree in physics from Rhodes
College in Memphis, Tennessee, as well as an MDiv from Claremont School of
Theology in Claremont, California.

JESSE FONG, age 49, has served as Vice President since September 1994.  Mr.
Fong joined the Company in 1984 and has served as programmer, Data Processing
manager and MIS director.  He received a degree major in M.E. and minor in
Computer Science in 1972, received an International Marketing certificate in
1975 and a Business Administration certificate in 1976.  Mr. Fong worked as
Marketing manager, Sales manager and Trainer with the Xerox Corporation in
Taiwan from 1974 to 1978.  After that, he joined Abbott Laboratory as Country
manager for two years.  After immigrating to the United States in 1980, he
worked as International Marketing manager in a trading firm for four years.

DAVID GRIFFIN, age 52, has served as Vice President since June 1990.  Previous
to this capacity, he was Vice President of Operations for the Company from
January 1986 until September 1989, at which time he became a consultant to the
Company.  Mr. Griffin has served as Senior Vice President and General Manager
for TeleCheck, Los Angeles 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.

RICK SLATER, age 40, joined the Company in May 1995 as Vice President of
Computer Based Controls, Inc. (CBC).  In December of 1995, Mr. Slater was
appointed President of CBC.  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 WILLIAMS, age 35, joined the Company in September 1996, serving as
Director of Program Management and was appointed Vice President in October
1997.  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.

JACK WILSON, age 56, has served as Vice President since June 1994 and was
Director of Bank Card Relations for the Company from October 1992 until May
1994.  Mr. Wilson served as Vice President for Truckee River Bank from August
1989 until September 1992.  Previously, he was Senior Vice President/Cashier
of Sunrise Bancorp and a Vice President of First Interstate Bank.  Mr. Wilson
holds a teaching credential from the California Community College System in
business and finance.

DONNA L. REHMAN, age 51, 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 53, has served the Company in varying capacities since
1987 and is currently In-House Counsel.  Mr. Frost received his BA degree in
business administration with emphasis in accounting from California State
University at Fullerton, his AA degree in pre-med from Fullerton College, his
JD degree from Ventura College of Law, and his MBA degree from the University
of Redlands.  Mr. Frost is an active member of the California Bar, a member of
the American Bar Association and the International Bar Association, and a
certified broker with the California Department of Real Estate.

ARISTIDES W. GEORGANTAS, age 56, has served as a Director since February,
1999.  Mr. Georgantas was Executive Vice President and Chief Operating
Officer, Global Asset Management/Private Banking, and Chairman and Chief
Executive Officer of Chemical Bank New Jersey, NA.  He had also served as
President and Chief Operating Officer of Horizon Bancorp and subsidiaries and
Princeton Bank.  His affiliations include Director of Blue Cross Blue Shield
of New Jersey; Director of Glenmede Trust Company; Chairman of the Foundation
for New Jersey Public Broadcasting; and Director of Mathematica Policy
Research, Inc.  Mr. Georgantas is a graduate of the University of
Massachusetts and Columbia University Graduate School of Business.

CARL W. SCHAFER, age 64, has been a Director since July 1986.  Mr. Schafer was
Financial Vice President and Treasurer (Chief Financial Officer) of Princeton
University from July 1976 to October 1987.  From October 1987 to April 1990,
Mr. Schafer was a Principal of Rockefeller & Co., Inc. of New York, an
investment management firm.  He is a Director of The Atlantic Foundation and
Harbor Branch Institution and became  President of the Atlantic Foundation in
April 1990.  Mr. Schafer also holds the following positions:  Director/Trustee
of the Paine Webber and Guardian Families of Mutual Funds; Director of Roadway
Express, Inc., a trucking company; Director of Frontier Oil Corporation, an
oil refiner; Director of Nutraceutix, Inc., a bio technology company; Director
of Labor Ready, Inc., a provider of temporary labor; and Chairman of The
Johnson Atelier and School Of Sculpture.  He graduated from the University of
Rochester in 1958, and served with the U.S. Bureau of the Budget,
successively, as Budget Examiner, Legislative Analyst, Deputy Director and
Director of Budget Preparation.  He resides in Princeton, New Jersey.

HERBERT L. LUCAS, age 74, 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.



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 4, 2000, and the election of directors was held at that time.


ITEM 11.     Executive Compensation

The following table sets forth the total compensation paid and stock options
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, 2000, 1999 and 1998.

<TABLE>

Summary Compensation Table

<CAPTION>

                                                     Annual         Long Term
                                                  Compensation    Compensation

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

<S>               <C>                <C>     <C>        <C>         <C>

Joel M. Barry     Chairman/Chief     2000   $190,000    $50,000     50,000
                  Executive Officer/ 1999    159,166     52,500    300,000
                  President          1998    148,616  <F3>14,000       -0-


Alice Cheung      Chief Financial    2000   $ 99,500     14,250     10,000
                  Officer/Treasurer  1999     94,416     12,000     20,000
                                     1998     89,333     11,000        -0-

Rick Slater       Vice President     2000   $113,300     13,200     20,000
                                     1999    110,000     10,000     20,000
                                     1998    100,000      5,000        -0-

Lawrence Brown    Vice President     2000   $100,000     12,750     40,000
                                     1999     88,600        -0-     20,000
                                     1998     78,951      3,000     20,000

David Griffin     Vice President     2000     90,910      9,100     10,000
                                     1999     88,682      7,500     20,000
                                     1998     69,981      3,000        -0-



----------------------------------------------
<FN>
<F1>
The Company provides Mr. Barry with an automobile.  Mr. Barry, Ms. Cheung, Mr.
Slater, Mr. Brown and Mr. Griffin are participants of a Company sponsored
401(K) plan. There has been no compensation paid other than that indicated in
the above table.
<F2>
None of these options has been exercised.  See "Stock Option Plan" and
"Warrants".
<F3>
Mr. Barry's salary includes a $1,117 vacation paydown.

</FN>
</TABLE>




Fiscal 2000 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
2000.  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
                          Percent of                             Stock Price
                         Total Granted                        Appreciation for
                         to Employees   Exercise                 Option Term
                 Options       in         Price  Expiration
Name             Granted  Fiscal Year   per share   Date        5%        10%


<S>              <C>       <C>          <C>       <C>        <C>       <C>
Joel M. Barry    50,000    11.76%       $2.56    02/04/10    $36,000   $78,000
Alice Cheung     10,000     2.35%       $1.75    12/23/09    $ 4,800   $11,000
Rick Slater      20,000     4.71%       $1.75    12/23/09    $ 9,600   $22,000
Lawrence Brown   10,000     2.35%       $1.75    12/23/09    $ 4,800   $11,000
                 30,000     7.06%       $2.56    02/04/10    $21,000   $47,000
David Griffin    10,000     2.35%       $1.75    12/23/09    $ 4,800   $11,000

</TABLE>

The following table sets forth the number of unexercised options and warrants
held by the Company's Chief Executive Officer and each of its executive
officers, other than the Chief Executive Officer whose compensation exceeded
$100,000 during fiscal 2000.  No options/warrants have been exercised.

<TABLE>

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

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

<S>                   <C>          <C>            <C>           <C>
Joel M. Barry         130,000     $143,000        870,000       $722,000
Alice Cheung              -0-     $    -0-        180,000       $ 98,000
Rick Slater             4,000     $  8,000        222,000       $192,000
Lawrence Brown            -0-     $    -0-        100,000       $ 11,200
David Griffin          10,000     $ 36,200        165,000       $119,000


------------------------------------------------------
<FN>
<F1>
Based on the closing sales price of the Common Stock on September 30, 2000 of
$1.50 per share, less the option exercise price.

</FN>
</TABLE>

Compensation Committee Interlocks and Insider Participation

Carl W. Schafer, Director, Herbert L. Lucas, Jr., Director, and Aristides W.
Georgantas, Director, serve on the compensation committee.  No executive
officer of the Company serves on the compensation committee of another entity
or as a director of another entity with an executive officer on the Company's
compensation committee.

Director Compensation

Each outside director received $15,000 and 5,859 shares of Common Stock in
fiscal 2000; $15,000 and 5,455 shares of Common Stock in fiscal 1999; and
$20,000 and 33,333 three-year options, exercisable at $0.91 per share in
fiscal 1998. 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.

Stock Option Plan

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

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

On February 4, 1999, the Company's Board of Directors authorized an increase
in the Plan to 5,375,000
options and was ratified by the shareholders at the Annual Meeting held in
February 1999.

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 8, 2000, there were 21,730,934 shares of the Company's Common
Stock outstanding.  To the Company's knowledge, 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 officers and directors, individually, and as a
group, as of November 8, 2000.

<TABLE>
<CAPTION>


                                     Amount and            Percentage of
                               Nature of Beneficial    Outstanding Stock<F1>
Name and Address                     Ownership             At 11/08/00

<S>                               <C>                        <C>
Joel M. Barry                     1,023,250   <F2>            4.50%
28001 Dorothy Drive
Agoura Hills, CA  91301

Lawrence Brown                      100,000   <F2>            0.45%
28001 Dorothy Drive
Agoura Hills, CA 91301

Alice L. Cheung                     180,000   <F2>            0.82%
28001 Dorothy Drive
Agoura Hills, CA  91301

Jesse Fong                           55,110   <F2>            0.25%
28001 Dorothy Drive
Agoura Hills, CA 91301

R. Marshall Frost                     5,000   <F2>            0.02%
28001 Dorothy Drive
Agoura Hills, CA 91301

Aristides W. Georgantas              11,314                   0.05%
28001 Dorothy Drive
Agoura Hills, CA 91301

David Griffin                       167,747   <F2>            0.76%
28001 Dorothy Drive
Agoura Hills, CA  91301

Herbert L. Lucas                    385,081   <F3><F4>        1.74%
12011 San Vicente Boulevard
Los Angeles, CA  90049

Donna Rehman                         60,000   <F2>            0.27%
28001 Dorothy Drive
Agoura Hills, CA  91301

Carl W. Schafer                     315,247   <F3>            1.42%
28001 Dorothy Drive
Agoura Hills, CA 91301


Rick Slater                         224,000   <F2>            1.01%
28001 Dorothy Drive
Agoura Hills, CA 91301

Patricia Atlas Williams             100,000   <F2>            0.45%
28001 Dorothy Drive
Agoura Hills, CA 91301

Jack Wilson                         144,300   <F2><F5>        0.66%
28001 Dorothy Drive
Agoura Hills, CA 91301

All officers and directors
as a group (13 persons)           2,771,049                  11.43%


--------------------------------------------------
<FN>
<F1>
Outstanding Common Shares with effect given to conversion of preferred stock
and options described in footnotes 2 through 5.
<F2>
Includes options according to the terms of the Incentive Stock Option Plan.
See "Item 11. Options, Warrants or Rights".
<F3>
Includes options granted to outside directors.
<F4>
Includes 71,889 shares indirectly owned by Mr. Lucas through a trust for his
wife.
<F5>
Includes 2,120 shares indirectly owned by Mr. Wilson through his wife.

</FN>
</TABLE>



ITEM 13.     Certain Relationships and Related Transactions

There were no material related-party transactions.

                                     PART IV


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

(a) The following documents are filed as part of this report:

   (1) Consolidated Financial Statements

                                                                          Page

     Report of Independent Accountants . . . . . . . . . . . . . . . . . .  F-1

     Consolidated Balance Sheet at September 30, 2000 and 1999 . . . . . . .F-2

     Consolidated Statement of Operations for each of the three years
     in the period ended September 30, 2000. . . . . . . . . . . . . . . . .F-3

     Consolidated Statement of Changes in Stockholders' Equity
     for each of the three years in the period ended September 30, 2000. . .F-4

     Consolidated Statement of Cash Flows for each of the three years
     in the period ended September 30, 2000. . . . . . . . . . . . . . . . .F-5

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

    (2) Financial Statement Schedules:

     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, 2000:

       Form 8K, dated September 1, 2000, incorporated herein by reference

(c) Exhibits:

        Exhibit
        Number                      Description of Document

        1.1    Form of Underwriting Agreement between the Company and J.W.
               Gant & Associates, Inc. <F3>
        1.2    Form of Agreement among Underwriters. <F3>
        1.3    Form of Selected Dealer's Agreement. <F3>
        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.
        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.
        3.1    Articles of Incorporation of Bio Recovery Technology, Inc.,
               filed with the Nevada Secretary of State on December 11, 1981.
               <F1>
        3.2    Certificate of Amendment to Articles of Incorporation of Bio
               Recovery Technology, Inc., filed with the Nevada Secretary of
               State on September 1, 1983. <F1>
        3.3    Certificate of Amendment of Articles of Incorporation of Bio
               Recovery Technology, Inc., filed with the Nevada Secretary of
               State on January 17, 1986. <F1>
        3.4    By-Laws of Bio Recovery Technology, Inc. <F1>
        4.1    Proposed Form of Purchase Option between the Company and J.W.
               Gant & Associates, Inc. <F3>
        4.2    Specimen Common Stock Certificate. <F3>
       10.31   Copy of Merchant Marketing and Processing Services Agreement
               between Electronic Clearing House, Inc. and First Charter Bank,
               dated January 25, 1994. <F6>
       10.35   Copy of Merchant Marketing and Processing Services Agreement
               between Electronic Clearing House, Inc. and First Regional
Bank,          dated June 24, 1997. <F8>
       10.36   Copy of Merchant Marketing and Processing Services Agreement
               between Electronic Clearing House, Inc. and The Berkshire Bank,
               dated July 31, 1997. <F8>
       10.38   Copy of Product and Software Development and License Agreement
               between Electronic Clearing House, Inc. and innoVentry, dated
               April 1, 1999.
       10.40   Copy of Merchant Account Assignment and Transfer Agreement
               between Electronic Clearing House, Inc. and Imperial Bank,
               dated July 8, 1999.
       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.
       10.42   Copy of Addendum to Agreement between Electronic Clearing
               House, Inc. and U-Haul International, dated January 1, 2000.
       10.43   Copy of Software System License Agreement between Magic
               Software Development, Inc. and National Check Network, dated
               February 29, 2000.
       10.44   Copy of Electronic Check Services Agreement between Electronic
               Clearing House, Inc. and National Bank Drafting Systems, Inc.,
               dated May 17, 2000.
       10.45   Copy of Amendment to Product and Software Development and
               License Agreement between Electronic Clearing House, Inc. and
               innoVentry, Inc., dated July 19, 2000.
       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.
       10.47   Copy of Addendum to Amended and Restated Merchant Marketing and
               Processing Services Agreement between Electronic Clearing
               House, Inc. and First Regional Bank, daated August 1, 2000.
       22.0    Subsidiaries of Registrant. <F2>


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

<F1>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1988 and incorporated herein by reference.
<F2>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1989 and incorporated herein by reference.
<F3>
Filed as an Exhibit to Registrant's Form S-1, Amendment No. 3, effective
November 13, 1990 and incorporated herein by reference.
<F4>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1992 and incorporated herein by reference.
<F5>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1993 and incorporated herein by reference.
<F6>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1994 and incorporated herein by reference.
<F7>
Filed as an Exhibit to Registrant's Annual Report on Form 10-K for fiscal year
ended September 30, 1996 and incorporated herein by reference.
<F8>
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.


<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 28, 2000
    Joel M. Barry            and Chief Executive         )
                             Officer                     )
                                                         )
                                                         )
\s\ Carl W. Schafer          Director                    )
    Carl W. Schafer                                      )
                                                         )
                                                         )
                                                         )
\s\ Herbert L. Lucas, Jr.    Director                    )
    Herbert L. Lucas, Jr.                                )
                                                         )
                                                         )
                                                         )
\s\ Alice L. Cheung          Chief Financial Officer     )
    Alice L. Cheung          and Treasurer               )
                                                         )
                                                         )
                                                         )
\s\ Marjan Hewson            Controller                  )
    Marjan Hewson                                        )














                        REPORT OF INDEPENDENT ACCOUNTANTS








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

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity and cash flows
present fairly, in all material respects, the financial position of Electronic
Clearing House, Inc. and its subsidiaries at September 30, 2000 and 1999, and
the results of their operations and their cash flows for each of the three
years in the period ended September 30, 2000, 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 accompanying
index present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits.  We conducted our audits of these statements
in accordance with 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.



PRICEWATERHOUSECOOPERS LLP

Los Angeles, California
November 28, 2000

<PAGE>
                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>

                           CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                           September 30,

                                                      2000            1999

                                     ASSETS
<S>                                              <C>              <C>
Current assets:
  Cash and cash equivalents                       $3,941,000       $2,900,000
  Restricted cash                                  1,017,000          736,000
  Accounts receivable less allowance
   of $380,000 and $1,001,000                      1,911,000        1,532,000
  Inventory less allowance of
   $3,000 and $202,000                               594,000          580,000
  Prepaid expenses and other assets                  132,000           88,000
  Other receivable                                       -0-          323,000

            Total current assets                   7,595,000        6,159,000

Noncurrent assets:
  Long term receivables                               19,000           27,000
  Property and equipment, net                      2,949,000        2,678,000
  Real estate held for investment, net               252,000          252,000
  Deferred tax asset                               1,214,000        1,392,000
  Other assets, net                                  411,000          506,000
  Goodwill, net                                    4,573,000        1,918,000

            Total assets                         $17,013,000      $12,932,000

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Short-term borrowings and current portion of
   long-term debt                                 $  177,000       $  149,000
  Accounts payable                                   290,000          159,000
  Accrued expenses                                 1,046,000          779,000
  Deferred income                                     53,000           62,000

            Total current liabilities              1,566,000        1,149,000


Long-term debt                                       767,000          599,000

            Total liabilities                      2,333,000        1,748,000

Commitments and contingencies

Stockholders' equity:
  Convertible preferred stock, $.01 par value,
   5,000,000 shares authorized
  Series "K", 25,000 and 25,000 shares
   issued and outstanding,                             -0-               -0-
  Series "L", 0 and 40,000 shares
   issued and outstanding,                             -0-               -0-
  Common stock, $.01 par value,
   36,000,000 shares authorized;
   21,888,036 and 19,874,126 shares
    issued;
   21,730,934 and 19,788,213 shares
    outstanding                                      219,000          199,000
  Additional paid-in capital                      20,474,000       16,958,000
  Accumulated deficit                             (5,544,000)      (5,835,000)
  Less treasury stock at cost,
   157,102 and 85,913 common shares                 (469,000)        (138,000)

            Total stockholders' equity            14,680,000       11,184,000

            Total liabilities and
             stockholders' equity               $ 17,013,000     $ 12,932,000

</TABLE>

          See accompanying notes to consolidated financial statements.

                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<CAPTION>
                                              Year ended September 30,
                                              2000         1999          1998

<S>                                     <C>          <C>          <C>
REVENUES:
   Processing revenue                   $14,917,000  $13,222,000  $12,251,000

   Transaction revenue                   10,760,000    8,101,000    6,584,000
   Terminal sales                         2,459,000    2,106,000    2,055,000
   Other revenue                            204,000      399,000      173,000

                                         28,340,000    23,828,000     21,063,000

COSTS AND EXPENSES:
   Processing and transaction expense    18,128,000   14,778,000   13,794,000
   Cost of terminals sold                 1,790,000    1,166,000    1,519,000
   Other operating costs                  3,231,000    2,424,000    1,799,000
   Selling, general and
    administrative expenses               4,816,000    4,176,000    2,740,000
   Amortization expense - acquisitions      359,000       92,000         -0-

                                         28,324,000   22,636,000   19,852,000

Income from operations                       16,000    1,192,000    1,211,000

Interest income                             284,000      180,000      118,000
Interest expense                            (88,000)     (85,000)    (104,000)
Gain on sale of asset                       312,000         -0-          -0-
Other expense                                  -0-          -0-       (35,000)

Income before (provision) benefit
 for income taxes                           524,000    1,287,000    1,190,000

(Provision) benefit for income taxes       (233,000)   1,331,000      (36,000)

Net income                                $ 291,000   $2,618,000   $1,154,000

   Earnings per share - Basic                 $0.01        $0.14        $0.08

   Earnings per share - Diluted               $0.01        $0.11        $0.05


   Shares used in computing basic
   earnings per share                    21,029,572   18,143,109   14,974,125

   Shares used in computing diluted
   earnings per share                    23,300,391   23,299,486   21,834,034

</TABLE>

          See accompanying notes to consolidated financial statements.


                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<CAPTION>




                                                        Stock
                                     Treasury     Common     Preferred   Amount



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

Exercise of warrants                             100,000                 1,000
Exercise of stock options                         44,000
Conversion of preferred to common                376,000    (94,000)     3,000
Issuance of preferred stock                                  40,000
Net income


Balance at September 30, 1998         6,241   15,120,541    516,511    156,000


Exercise of warrants                             650,000                 7,000
Exercise of stock options                        905,000                 9,000
Conversion of preferred to common              2,182,220   (451,511)    17,000
Issuance of common stock to
 outside directors                                16,365
Issuance of common stock
 - acquisition                                 1,000,000                10,000
Purchase of treasury stock           79,672
Net income


Balance at September 30, 1999        85,913   19,874,126     65,000    199,000

Exercise of warrants                             350,000                 4,000
Exercise of stock options                        466,333                 5,000
Conversion of preferred to common                160,000    (40,000)     1,000
Issuance of common stock to
  outside directors                               17,577
Issuance of common stock
  - acquisition                                1,020,000                10,000
Purchase of treasury stock           71,189
Net income

Balance at September 30, 2000       157,102   21,888,036     25,000   $219,000

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY CONTINUED:

<CAPTION>

                                    Additional
                                      Paid-In    Treasury              Accumulated

                                      Capital      Stock      Deficit     Total



<S>                            <C>            <C>     <C>           <C>
Balance at September 30, 1997  $13,865,000    $   -0- $(9,607,000)  $4,410,000

Exercise of warrants                49,000                              50,000
Exercise of stock options           29,000                              29,000
Conversion of preferred
  to common                         (3,000)                                -0-
Issuance of preferred stock        200,000                             200,000
Net income                                              1,154,000    1,154,000

Balance at September 30, 1998    14,140,000       -0-   (8,453,000)  5,843,000

Exercise of warrants               253,000                             260,000
Exercise of stock options          547,000                             556,000
Conversion of preferred
  to common                        (17,000)                                -0-
Issuance of common stock to
 outside directors                  45,000                              45,000
Issuance of common stock
 - acquisition                   1,990,000                           2,000,000
Purchase of treasury stock                   (138,000)                (138,000)
Net income                                              2,618,000    2,618,000

Balance at September 30, 1999      16,958,000(138,000) (5,835,000)  11,184,000

Exercise of warrants               136,000                             140,000
Exercise of stock options          244,000                             249,000
Conversion of preferred
  to common                         (1,000)                                -0-
Issuance of common stock to
  outside directors                 45,000                              45,000
Issuance of common stock
  - acquisition                  3,092,000                           3,102,000
Purchase of treasury stock                   (331,000)                (331,000)
Net income                                                291,000      291,000

Balance at September 30, 2000  $20,474,000  $(469,000)$(5,544,000) $14,680,000

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

                         ELECTRONIC CLEARING HOUSE, INC.

<TABLE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>


                                                 Year ended September 30,
                                                2000       1999       1998

<S>                                        <C>        <C>         <C>
Cash flows from operating activities:
   Net income                               $  291,000 $2,618,000 $1,154,000
Adjustments to reconcile net income
     to net cash provided by
     operating activities:
   Depreciation                                325,000    271,000    225,000
   Amortization                                585,000    217,000    186,000
Provisions for losses on accounts and
     notes receivable                          586,000    443,000    963,000
   Provision for obsolete inventory              3,000        -0-    132,000
   Provision (benefit) for deferred
     income taxes                              178,000 (1,392,000)       -0-
   Fair value of stock issued in
     connection with director's compensation    45,000     45,000        -0-
   Gain on sale of asset                      (312,000)      -0-         -0-
   Changes in assets and liabilities, net of
     effects of acquisitions:
    Restricted cash                           (281,000)   (85,000)  (328,000)
    Accounts receivable                       (824,000)  (790,000)(1,031,000)
    Inventory                                  (17,000)   139,000   (102,000)
    Prepaid expenses and other current assets  (27,000)   (45,000)     7,000
    Accounts payable                           117,000    (46,000)    61,000
    Accrued expenses                           128,000    (98,000)   114,000
    Deferred income                             (9,000)  (421,000)   433,000
    Other receivable                               -0-    (18,000)       -0-


        Net cash provided by
          operating activities                 788,000    838,000  1,814,000

Cash flows from investing activities:
   Other assets                               (139,000)   (83,000)       -0-
   Purchase of equipment and software       (1,246,000)(1,062,000)  (241,000)
   Increase in notes receivable             (1,027,000)      -0-         -0-
   Repayment of notes receivable             1,000,000      5,000     19,000
   Proceeds from sale of asset               1,000,000        -0-        -0-
   Cash acquired through acquisition            80,000        -0-        -0-

        Net cash used in
          investing activities                (332,000)(1,140,000)  (222,000)

Cash flows from financing activities:
   Proceeds from issuance of notes payable     400,000    540,000        -0-
   Repayment of notes payable                 (204,000)  (640,000)  (157,000)
   Proceeds from issuance of preferred stock      -0-        -0-     200,000
   Proceeds from common stock
     warrants exercised                        140,000    260,000     50,000
   Proceeds from exercise of stock options     249,000    556,000     29,000

        Net cash provided by
          financing activities                 585,000    716,000    122,000

Net increase in cash                         1,041,000    414,000  1,714,000
Cash and cash equivalents at
  beginning of period                        2,900,000  2,486,000    772,000

Cash and cash equivalents at
  end of period                            $ 3,941,000  $ 2,900,000    $ 2,486,000

</TABLE>

          See accompanying notes to consolidated financial statements.

                         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 credit card authorizations, electronic deposit services,
check guarantee, check verification, check conversion, inventory tracking
services and various Internet services to retail and wholesale merchants and
U-Haul dealers across the nation. In addition, the Company develops and sells
electronic terminals for use by its customers and other processing companies.
The Company has seven wholly owned subsidiaries:  ECHO Payment Services, Inc.
(formerly GCLC Corporation), Computer Based Controls, Inc., ECHO R&D
Corporation (inactive), XpressCheX, Inc. (California), National Credit Card
Reserve Corporation, XpressCheX, Inc. (formerly Magic Software Development,
Inc.) and Rocky Mountain Retail Systems, Inc.  During fiscal year ended 2000,
the Company acquired Rocky Mountain Retail Systems, Inc. (RMRS), a Colorado
corporation, through a merger of the Company's wholly owned subsidiary, ECHO
Acquisition Corporation, a Colorado corporation, with and into RMRS.  RMRS's
primary operations consist of providing check verification services to large
retail chains, processors and collection agencies across the nation.

The following comments describe the more significant policies.

Principles of Consolidation

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

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted 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 agreement 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.

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:

<TABLE>

        <S>                                     <C>
        Building                                39 years
        Computer equipment and software        3-5 years
        Furniture, fixtures and equipment        5 years
        Building improvements                   10 years

</TABLE>

Other Assets

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

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 state 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.

Research and development costs and other computer software maintenance costs
related to software development are expensed as incurred.

Goodwill

Goodwill represents the excess of purchase price over net assets acquired in
the acquisition of XpressCheX and RMRS and is being amortized on a straight-
line basis over estimated useful lives of 10 years and 15 years, respectively.

Long-Lived Assets

The Company periodically 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, 2000 and 1999.

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. Terminal sales are recorded when product is
shipped.

The Company expensed $528,000, $433,000, and $930,000 for the years ended
September 30, 2000, 1999 and 1998, respectively for bankcard processing
chargeback losses.  The Company provided for other uncollectible leases and
notes receivable balances of $35,000, $48,000 and $24,000 for the years ended
September 30, 2000, 1999 and 1998, respectively.

The Company has one customer that accounted for approximately $4,082,000,
$2,898,000 and $3,409,000 of revenues for the years ended 2000, 1999 and 1998,
respectively.  The revenues for this customer are recorded as part of the
bankcard transaction fees and terminal sales and lease segments.

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.


Net Income Per Share

Net income 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.  As a result, the adoption of FAS 123 does not have
an impact on the financial position or results of operations of the Company.
The pro forma disclosure required by FAS 123 is included in Note 12.

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.  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".

Reclassifications

Certain amounts in the 1999 and 1998 financial statements have been
reclassified to conform to the 2000 presentation.


NOTE 2 - STATEMENT OF CASH FLOWS:

<TABLE>

<CAPTION>

                                                 September 30
                                          2000      1999       1998

<S>                                  <C>         <C>       <C>
Cash paid for:
  Interest                           $88,000     $85,000    $104,000
  Income taxes                        40,000      64,000       4,000


</TABLE>

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

-  In connection with business acquisition transactions, the Company issued
   1,020,000 shares of common stock with a market value of $3,102,000.

-  The Company acquired 71,189 shares of its common stock valued at $331,000
   for repayment of a note receivable.

Significant non-cash transactions for fiscal 1999 are as follows:

-  Capital equipment of $43,000 was acquired under capital leases.

-  In connection with a business acquisition transaction, the Company issued
   1,000,000 shares of common stock with a market value of $2 million.

-  The Company acquired 79,672 shares of its common stock valued at $138,000 as
   a result of a chargeback receivable settlement.

Significant non-cash transactions for fiscal 1998 are as follows:
-  Capital equipment of $57,000 was acquired under capital leases.


NOTE 3 - INVENTORY

The components of inventory are as follows:

<TABLE>

<CAPTION>
                                              September 30
                                           2000            1999
<S>                                    <C>             <C>
Raw materials                          $ 98,000        $249,000

Finished goods                          499,000         533,000

                                        597,000         782,000

Less: Allowance for obsolescence          3,000         202,000

                                      $ 594,000      $  580,000


</TABLE>





NOTE 4 - OTHER RECEIVABLES:

Other receivables are comprised of the following:


<TABLE>
<CAPTION>

                                                              September 30
                                                          2000           1999

<S>                                                   <C>            <C>
Lease receivables -  consist of
  long term portion of equipment leases to
  merchants, net of deferred interest                  $19,000       $ 27,000


Note receivable including accrued interest
 of $33,000 collateralized by 230,345 shares
 of the Company's common stock, due in
 May 2000, bears 6% interest                               -0-        323,000

                                                       $19,000        350,000
Less: long-term portion                                (19,000)       (27,000)

                                                     $   -0-        $ 323,000
</TABLE>


NOTE 5 - PROPERTY AND EQUIPMENT:

Property and equipment are comprised of the following:

<TABLE>

<CAPTION>
                                                              September 30
                                                          2000           1999

<S>                                                  <C>           <C>
Land and building                                   $  880,000     $  880,000
Computer equipment and software                      3,802,000      3,344,000
Furniture, fixtures and equipment                    1,023,000        900,000
Building improvements                                  271,000        203,000
Tooling equipment                                      285,000        285,000

Cost                                                 6,261,000      5,612,000
Less:  accumulated depreciation and amortization    (3,312,000)    (2,934,000)

Net book value                                      $2,949,000     $2,678,000

</TABLE>

Included in property and equipment are assets under capital lease of $209,000
and $241,000 at September 30, 2000 and 1999, with related accumulated
amortization of $119,000 and $94,000, respectively, and capitalized software
development costs of $1,120,000 and $1,207,000, with related accumulated
amortization of $485,000 and $491,000, respectively.


NOTE 6 - INCOME TAXES

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

<TABLE>
<CAPTION>
                                                September 30
                                     2000           1999          1998

<S>                             <C>            <C>           <C>
Current federal taxes           $  (4,000)     $ (11,000)    $ (28,000)
Current state taxes               (51,000)       (50,000)       (8,000)
Deferred taxes                   (178,000)     1,392,000           -0-

  Total (provision) benefit
   for income taxes             $(233,000)    $1,331,000      $(36,000)

</TABLE>



The Company's effective income tax rate differs from the statutory federal
income tax rate due primarily to the effect of non-deductible goodwill expense
and state income taxes.  In addition, 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:

<TABLE>
<CAPTION>

                                                  September 30
                                               2000           1999

<S>                                       <C>            <C>
Deferred tax assets:
   Bank organization cost                  $ 28,000           -0-
   Reserve for bad debts                     16,000         39,000
   Inventory reserve                          1,000         57,000
   Land reserve                             109,000            -0-
   Amortization of intangibles                  -0-         43,000
   State tax expense                         18,000            -0-
   Net operating loss carryforward          894,000      1,106,000
   Business tax credit                      113,000        113,000
   AMT credit                                35,000         34,000
Total deferred tax assets                $1,214,000     $1,392,000


</TABLE>

During 1999, the Company eliminated the valuation allowance previously
established with respect to its deferred tax asset.  This was based on the
realization of a portion of the asset during 1999, and a determination that it
is "more likely than not" that the remaining deferred tax asset as of
September 30, 1999, will be realized.

The Company has a federal net operating loss carryforward of $2,630,772 which
expires in 2007 through 2011.

NOTE 7 - BUSINESS ACQUISITIONS

On January 4, 2000, the Company acquired RMRS.  The acquisition was accounted
for using the purchase method of accounting and, accordingly, the purchase
price was allocated to the assets purchased and the liabilities assumed based
upon their estimated fair values at the date of acquisition.  Results of
RMRS's operations from the date of acquisition to September 30, 2000, have
been included in the consolidated financial statements.

Pursuant to the Merger Agreement, the Company issued a total of 1,000,000
shares of common stock to the selling shareholders of RMRS.  In addition, up
to 1,500,000 shares of common stock will be issued to the RMRS selling
shareholders upon the achievement of certain predetermined earnings goals for
year 2000 through 2002.  This additional consideration will be recorded as
goodwill when it is paid.  As a result of this transaction, the Company
recorded approximately $2,973,000 in goodwill and other acquisition costs
which are being amortized over fifteen years.

On April 20, 1999, the Company acquired Magic Software Development, Inc.  The
acquisition was accounted for using the purchase method of accounting and,
accordingly, the purchase price was allocated to the assets purchased and the
liabilities assumed based upon their estimated fair values at the date of
acquisition.  Results of Magic's operations from the date of acquisition to
September 30, 1999, have been included in the consolidated financial
statements.

Pursuant to the Merger Agreement, the Company issued a total of 1,000,000
shares of common stock to the selling shareholders of Magic.  In addition, up
to 1,000,000 shares of common stock will be issued to the Magic selling
shareholders upon the achievement of certain predetermined earnings goals for
fiscal 2000 and 2001.  This additional consideration will be recorded as
goodwill when it is paid.  As a result of this transaction, the Company
recorded approximately $2,010,000 in goodwill and other acquisition costs
which are being amortized over ten years.

Pro Forma Disclosures
The following summary, prepared on a pro forma basis, combines the operating
results of the Company and RMRS, as if the acquisition had occurred as of the
beginning of the periods presented.  In addition, the pro forma results
reflect the amortization of goodwill.  The pro forma operating results are not
necessarily indicative of what would have occurred had the merger actually
taken place as of the beginning of the periods presented or what may be
obtained in the future:

<TABLE>
<CAPTION>

                          For the year ended          For the year ended
                          September 30, 2000          September 30, 1999
                              (unaudited)                 (unaudited)

<S>                       <C>                         <C>
Revenue                   $28,662,000                 $24,846,000
Net income                    301,000                   2,542,000
Earnings per share - Basic     $ 0.01                     $  0.14
Earnings per share - Diluted   $ 0.01                     $  0.11


</TABLE>

NOTE 8 - SHORT-TERM BORROWINGS AND LONG-TERM DEBT:

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

<TABLE>
<CAPTION>
                                                            September 30
                                                        2000           1999

<S>                                                 <C>            <C>
Term loan collateralized by corporate
 headquarters building, due February 15, 2009,
 bearing interest at 7.87%                          $480,000       $518,000

Term loan, collateralized by equipment, due
 2005, bearing interest at prime rate, 9.5%
 at September 30, 2000                               346,000             -0-

Capital leases                                       106,000         154,000

Notes payable, bearing interest at 9.5%               12,000          76,000


                                                     944,000         748,000
Less:  current portion                              (177,000)       (149,000)

Total long-term debt                                $767,000        $599,000



</TABLE>

The weighted average interest rate on the variable rate term loan for the
period it was outstanding during the year ended September 30, 2000 was 9.08%

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

Future maturities of debt are as follows:

<TABLE>
<CAPTION>





            Fiscal year ended September 30

              <S>                                    <C>
              2001                                    $177,000
              2002                                     173,000
              2003                                     146,000
              2004                                     133,000
              2005                                      85,000
              thereafter                               230,000
                                                      $944,000

</TABLE>

NOTE 9 - ACCRUED EXPENSES:

Accrued expenses are comprised of the following:

<TABLE>
<CAPTION>

                                                          September 30
                                                     2000             1999


<S>                                              <C>              <C>
Accrued bank card fees                           $145,000         $111,000
Accrued compensation and taxes                    187,000          208,000
Accrued communication costs                       117,000          121,000
Accrued professional fees                         166,000          104,000
Accrued commission                                291,000          124,000
Other                                             140,000          111,000
                                               $1,046,000         $779,000

</TABLE>


NOTE 10 - STOCKHOLDERS' EQUITY:


Preferred Stock

During fiscal 1994, the Company issued 23,511 shares of Series H Preferred
Stock (Class H Stock) to two noteholders in exchange for $329,000 of debt and
accrued interest.  Class H Stock has a stated value of $14.00 and is
convertible into 20 shares of common stock.  The Company may call Class H
Stock at any time at a price of $14.50 per share.  Class H Stock has priority
in liquidation over the Company's common stock but is junior in liquidation to
all previous classes of preferred stock.  During fiscal 1999, 23,511 shares of
Class H Preferred Stock were converted into 470,220 shares of common stock.
As of September 30, 1999, all the Class H Stock had been converted into shares
of common stock.

During fiscal 1996, the Company issued 425,000 shares of Series K Preferred
Stock (Class K Stock) for an aggregated price of $850,000.  Class K Stock has
a stated value of $2.00 per share and is convertible into four shares of
common stock.  Class K Stock has priority in liquidation over the Company's
common stock but is junior in liquidation to all previous classes of preferred
stock. During fiscal 1999, 428,000 shares of Class K Stock were converted into
1,712,000 shares of the Company's common stock, respectively. As of September
30, 2000, there are 25,000 shares of Class K Stock convertible into 100,000
shares of common stock.

During fiscal 1997, the Company issued 172,000 shares of Series L Preferred
Stock (Class L Stock) for an aggregate price of $860,000.  Class L Stock has a
stated value of $5.00 per share and is convertible into four shares of common
stock.  During fiscal 1998, the Company issued 40,000 shares of Class L Stock
for $200,000.  During fiscal 2000 and fiscal 1999, 40,000 shares and 428,000
shares of Class L Stock were converted into 160,000 shares and 1,712,000
shares of common stock, respectively.  Class L Stock has priority in
liquidation over the Company's common stock, but is junior in liquidation to
all previous classes of preferred stock.  Class L and Class K Preferred Stock
have no dividend yield and are non-cumulative.  As of September 30, 2000, all
the Class L Stock have been converted into shares of 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
$0.50 per one one-hundredth of a share of Preferred Stock ("Purchase Price"),
subject to adjustment.  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.

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.

Earnings Per Share

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

<TABLE>
<CAPTION>

                                                         September 30
                                               2000          1999         1998

<S>                                        <C>         <C>           <C>
Net income:                                $291,000     $2,618,000   $1,154,000

Shares:
   Denominator for basic earnings per
    share - weighted-average shares
    outstanding                          21,029,572     18,143,109   14,974,125

Effect of dilutive securities:
   Employee stock options                 2,057,218      3,856,213    3,322,972
   Warrants                                  59,393        498,939    1,063,835
   Series H Convertible Preferred Stock         -0-        150,793      470,220
   Series K Convertible Preferred Stock     100,000        366,027    1,335,616
   Series L Convertible Preferred Stock      54,208        284,405      667,266

Dilutive potential common shares          2,270,819      5,156,377    6,859,909

Denominator for diluted earnings per
   share - adjusted weighted-average
   shares and assumed conversions        23,300,391     23,299,486   21,834,034

Basic earnings per share                      $0.01          $0.14        $0.08

Diluted earnings per share                    $0.01          $0.11        $0.05



</TABLE>

NOTE 11 - COMMON STOCK OPTIONS:


Stock option activity during 2000, 1999, and 1998 was as follows:

<TABLE>
<CAPTION>


                                                         Exercise
                                        Options            Price
`
   <S>                               <C>               <C>
   Outstanding September 30, 1997    3,480,000         $0.40 - $1.47

     Granted                           365,000          0.91 - 1.50
     Forfeited                            -0-              -0-
     Exercised                         (44,000)         0.50 - 1.15
   Outstanding September 30, 1998    3,801,000         $0.40 - $1.50

     Granted                           645,000          1.00 - 2.00
     Forfeited                        (223,000)         0.91 - 1.47
     Exercised                        (905,000)         0.50 - 0.85
   Outstanding September 30, 1999    3,318,000         $0.40 - $2.00

     Granted                           425,000          1.75 - 4.12
     Forfeited                        (131,000)         1.44 - 2.56
     Exercised                        (467,000)         0.40 - 1.12
   Outstanding September 30, 2000    3,145,000         $0.40 - $4.12


   Exercisable at September 30, 1998 2,881,000         $0.40 - $1.50
   Exercisable at September 30, 1999 2,378,000         $0.45 - $1.44
   Exercisable at September 30, 2000 2,110,000         $0.46 - $2.51
   Options available for grant
     at September 30, 1999           2,040,800
   Options available for grant
     at September 30, 2000           2,051,000

</TABLE>

All officer and key employee options are granted under the Company's incentive
stock option plan, with the exception of 350,000 shares of options granted to
three officers, vesting over a period of 3-5 years, which were not granted
under the plan.  Options granted to outside directors are not included in the
incentive stock option plan. 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 Company has an Incentive Stock Option Plan (the "Plan"), which provides
for the issuance of up to 5,375,000 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.

The following table summarizes information about stock options outstanding at
September 30, 2000:

<TABLE>
<CAPTION>

                             Options Outstanding          Options Exercisable

                                 Weighted
                                  Average    Weighted
Weighted
  Range of          Number       Remaining    Average      Number       Average
  Exercise       Outstanding at Contractual  Exercise  Exercisable at
Exercise
  Prices        Sept. 30, 2000     Life        Price   Sept. 30, 2000    Price

<S>              <C>               <C>       <C>      <C>             <C>
$0.40 - $0.50     1,169,000         3.9       $0.46    1,129,000        $0.45
$0.84 - $1.15     1,152,000         4.6       $1.00      712,000        $1.00
$1.21 - $1.75       529,000         6.1       $1.52      261,000        $1.45
$2.00 - $4.12       295,000         9.3       $2.51        8,000        $2.00

                  3,145,000         5.0       $1.03    2,110,000        $0.77

</TABLE>

The weighted average fair value of the options granted under the plan in
effect at September 30, 2000, during the fiscal years ended September 30,
2000, 1999 and 1998 were $0.80, $0.72, and $0.99, respectively.  Fair value
was determined using the Black Scholes options pricing formula. 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.  For options granted in fiscal 1999, the risk-free interest rate was
approximately 5%, the expected life was 3-5 years, the expected volatility was
approximately 88.4% and the expected dividend yield was 0%, all calculated on
a weighted average basis. For options granted in fiscal 1998, the risk-free
interest rate was approximately 5%, the expected life was 3-5 years, the
expected volatility was approximately 156.9%, and the expected dividend yield
was 0%, all calculated on a weighted average basis.

On a pro forma basis under the provision of FAS 123, net income and net income
per share would have decreased by $245,000 and $0.01 for the year ended
September 30, 2000, respectively; net income and net income per share would
have decreased by $207,000 and $0.01 for the year ended September 30, 1999,
respectively; and net income and net income per share would have decreased by
$125,000 and $0.01 for the year ended September 30, 1998, respectively.

NOTE 12 - 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, 2000 are as follows:


<TABLE>
<CAPTION>


   Fiscal Year                        Capital Leases        Operating Leases

   <S>                                <C>                    <C>
   2001                                $ 58,000               $108,000
   2002                                  50,000                 50,000
   2003                                  18,000                  5,000


   Total minimum lease payments         126,000               $163,000



   Less: imputed interest of 24%         19,000
   Present value of net
     minimum lease payment             $107,000

</TABLE>

Rent expense for the years ended September 30, 2000, 1999, and 1998 totaled
$155,000, $60,000, and $37,000, respectively.

NOTE 13 - 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.

NOTE 14 - 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, Terminal Sales and Leasing, and Check Related
Products, 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.

<TABLE>
<CAPTION>


                                                        September 30
Business Segments                             2000          1999          1998

<S>                                    <C>            <C>          <C>
Revenues:
  Bankcard and Transaction Processing  $23,902,000    $21,089,000  $18,925,000
  Terminal Sales                         2,459,000      2,431,000    2,076,000
  Check Related Products                 1,979,000        308,000       62,000
                                       $28,340,000    $23,828,000  $21,063,000

Operating Income:
  Bankcard and Transaction Processing  $   831,000     $1,499,000   $1,456,000
  Terminal Sales                           259,000        132,000     (269,000)
  Check Related Products                (1,074,000)      (439,000)      24,000
                                       $    16,000     $1,192,000   $1,211,000

Depreciation and Amortization:
  Bankcard and Transaction Processing  $   419,000       $302,000     $230,000
  Terminal Sales                            53,000         88,000      181,000
  Check Related Products                   495,000         98,000         -0-
                                       $   967,000       $488,000     $411,000

Capital Expenditures:
  Bankcard and Transaction Processing  $   419,000       $496,000     $216,000
  Terminal Sales                            20,000         16,000       49,000
  Check Related Products                   296,000        135,000         -0-
                                       $   735,000       $647,000     $265,000

Total Assets:
  Bankcard and Transaction Processing  $10,026,000    $ 9,300,000   $6,093,000
  Terminal Sales                         1,038,000      1,381,000    1,928,000
  Check Related Products                 5,949,000      2,251,000        4,000
                                       $17,013,000    $12,932,000   $8,025,000

</TABLE>




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

                             SCHEDULE II TO FORM 10K

            RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


<CAPTION>


                                                  REDUCTION  IN
                                                   RESERVE AND
                          BALANCE  AT  CHARGED TO   ACCOUNTS    BALANCE  AT
DESCRIPTION                 9/30/98      EXPENSE   RECEIVABLE     9/30/99


<S>                      <C>           <C>         <C>         <C>
Allowance for
 trade receivables/
 chargeback receivables  $1,829,000    $ 443,000  $1,271,000   $1,001,000

Allowance for
 notes receivable        $  148,000    $    -0-   $   -0-      $  148,000


Allowance for
 obsolete inventories    $  202,000    $    -0-   $   -0-      $  202,000

Allowance for
  deferred tax asset     $1,713,000    $     -0-  $1,713,000   $     -0-


SCHEDULE II TO FORM 10K
RULE 12-09 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Continued:

                                                  REDUCTION  IN
                                                   RESERVE AND
                                       CHARGED TO   ACCOUNTS    BALANCE  AT
DESCRIPTION                              EXPENSE   RECEIVABLE     9/30/00


<S>                                    <C>         <C>         <C>
Allowance for
 trade receivables/
 chargeback receivables                 $557,000  $1,178,000     $380,000


Allowance for
 notes receivable                        $29,000   $    -0-      $177,000


Allowance for
 obsolete inventories                     $3,000    $202,000       $3,000

Allowance for
  deferred tax asset                       $ -0-     $   -0-       $  -0-

</TABLE>



                                                                  EXHIBIT 10.42


                              U-HAUL/ECHO AGREEMENT
                                    ADDENDUM

THIS ADDENDUM ("Addendum") is hereby incorporated into the U-HAUL/ECHO
AGREEMENT ("Agreement") made effective on December 12, 1996 by and between
Electronic Clearing House, Inc. (ECHO) and U-Haul International (UHI).

SECTION 9.13 IS HEREBY AMENDED AS FOLLOWS:
9.13   Termination.
       This Agreement can not be terminated prior to the completion of its
       initial or any extension term.  Ninety (90) days prior to the
       Agreement's first term or any extension term, the Agreement can be
       terminated with a 90 day written notice from either party to terminate
       the Agreement.

EXHIBIT D, ARTICLE 3 - PROCESSING SERVICES IS HEREBY AMENDED AS FOLLOWS:
       Dealer Transaction Fees Per Month

1/97 through 6/98: $    per transaction
7/98 through 12/99: $     per transaction
1/00 through 12/02: $     per transaction

                Minimums are:
Year 1 (until 12/97):       transactions per month
Year 2 (until 12/98):       transactions per month
Year 3 (until 12/99):       transactions per month

PARTS OF Agreement NOT REVISED BY THIS Addemdum REMAIN IN FULL FORCE.

       This Addendum is executed by or on behalf of the parties by duly
authorized representatives as of January 01, 2000.

U-HAUL INTERNATIONAL (UHI)

By:
       Layton Baker, Vice President-Marketing


ELECTRONIC CLEARING HOUSE, iNC. (ECHO)

By:
       Joel M. Barry, CEO and Chairman of the Board







                                                             EXHIBIT 10.43











                        Magic Software Development, Inc.
                        Software System License Agreement







<PAGE>
Contents

1.   Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.   License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.   Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
4.   Copies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
5.   Price and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
6.   Audit Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
7.   Software System Ownership . . . . . . . . . . . . . . . . . . . . . . . .3
8.   Intent to Cooperate . . . . . . . . . . . . . . . . . . . . . . . . . . .3
9.   Confidentiality and Proprietary Rights. . . . . . . . . . . . . . . . . .4
    9.1.  Confidentiality Obligations of MSD . . . . . . . . . . . . . . . . .4
    9.2.  Confidentiality Obligations of NCN . . . . . . . . . . . . . . . . .4
    9.3.  Proprietary Rights of MSD. . . . . . . . . . . . . . . . . . . . . .4
    9.4.  Specific Remedies of Parties . . . . . . . . . . . . . . . . . . . .4
10.  Use and Training. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
11.  Limited Warranty and Disclaimer of Other Warranties . . . . . . . . . . .5
12.  Indemnity By MSD. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
13.  Indemnity By NCN. . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
14.  Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
    14.1.  Termination By MSD. . . . . . . . . . . . . . . . . . . . . . . . .6
    14.2.  Termination By NCN. . . . . . . . . . . . . . . . . . . . . . . . .7
    14.3.  Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . .7
15.  Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
16.  Hardware Requirements and Other Responsibilities of NCN . . . . . . . . .8
17.  Licensed Locations. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
18.  Delivery, Installation and Testing. . . . . . . . . . . . . . . . . . . .8
19.  Custom Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . .8
20.  Required Upgrades . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
21.  General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
    21.1.  Full Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .9
    21.2.  Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . .9
    21.3.  Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . .9
    21.4.  Limitation of Action. . . . . . . . . . . . . . . . . . . . . . . .9
    21.5.  Independent Contractors . . . . . . . . . . . . . . . . . . . . . .9
    21.6.  Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
    21.7.  Attorney Fees . . . . . . . . . . . . . . . . . . . . . . . . . . .9
    21.8.  Effect of Agreement . . . . . . . . . . . . . . . . . . . . . . . .9
    21.9.  Amendment of Agreement. . . . . . . . . . . . . . . . . . . . . . 10
    21.10. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    21.11. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    21.12. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    21.13. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    21.14. Titles and Words. . . . . . . . . . . . . . . . . . . . . . . . . 10
    21.15. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
    21.16. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
22.  Mutual Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Schedule A - DESCRIPTION of SOFTWARE . . . . . . . . . . . . . . . . . . . . 12
Schedule B -PRICE and PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule C -DELIVERY, INSTALLATION and TESTING . . . . . . . . . . . . . . . 15
Schedule D - LICENSOR'S CURRENT PUBLISHED SPECIFICATIONS . . . . . . . . . . 16
Schedule E - ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . 17


                        Software System License Agreement

This agreement is made by and between Magic Software Development, Inc., a New
Mexico corporation, ("MSD"), and National Check Network, Inc., a South Dakota
corporation (the "Licensee" or "Original Licensee") and is entered into the
date set forth below.

Recitals

Whereas, MSD is the sole owner of its Check Verification Software System
("Software System") and plans to allow paid access by third parties to such
Software System.

And, Whereas, NCN operates the NCN Network ("NCN Network"), an affiliation of
independently owned businesses each of which has, via execution of a NCN
Membership Agreement ("Membership Agreement"), contracted with NCN to
participate as a member ("Member") of the NCN Network.

And, Whereas, check verification services ("Services") being one of the
services that NCN provides to Members, NCN desires to utilize MSD's Software
System to provide Services.

Therefore, in consideration of the conditions set forth herein, the
sufficiency of which are acknowledged by both parties to this Agreement, NCN
and MSD agree as follows:

1. Definitions
For the purpose of this Agreement, the following definitions will apply:

AGENCY: An independent collection agency that is a member of the NCN Network
   and a Sublicensee.

AGENCY DATABASE: The database of each agency that is a member of NCN Network
   and a Sublicensee.

DOWNLOAD LOCATION: The computer hardware provided by NCN, operated and
   maintained by MSD for NCN, and in which MSD's operating system and
   verification Software System are installed.

NCN DATABASE: The aggregate of the Agency Databases, which is updated daily by
   each Sublicensee and is combined into a single database at the Download
   Location.

NCN NETWORK: An affiliation of independent collection agencies that have
   entered into a written membership agreement with National Check Network.

OTHER DATABASE: One or more databases, not incorporated into the NCN Database,
   that may consist of an individual Member's data, MSD's data or any
   combination of Member's, MSD's and other entities' data.

SUBLICENSEE: Members of the NCN Member Network that have been properly
   sublicensed to utilize NCN's check verification capabilities.

OUT-OF-AREA FEE: The fee an Agency pays to access the NCN Database out of the
   area code other than any area code(s) it may own.

2. License
In accordance with the terms of this Agreement, MSD grants to NCN, and NCN
accepts from MSD, a non-exclusive and non-transferable license ("License") to
use the current version of MSD's Software System which is described on
Schedule A.

NCN may sublicense the Software to Members of the NCN Network provided that
the Membership Agreement executed by each such Member contains text whereby
(a) each Member is informed of any contractual restrictions on NCN's use or
resale of MSD's Software System, and (b) the Member agrees to conform to and
comply with any such restrictions.

The Software System shall be used only on equipment and at location(s)
identified in Schedule C or in one or more writings from NCN to MSD ("Data
Processing Centers"). The Software System shall be used only for the
processing of NCN's and MSD's own business, which shall include servicing, and
maintaining records on behalf of, their customers and clients. A license may
be temporarily transferred to back-up equipment at any time; MSD reserves the
right to charge for installation of back-up equipment according to Schedule B.

NCN acknowledges and agrees that NCN has absolutely no ownership rights of any
kind to MSD's Software System or to any part of Software System. NCN further
agrees that it will make no future claim(s) of ownership to Software System or
any part of Software System that MSD has developed and that is used by NCN and
its licensees.

3. Term
This Agreement shall have an initial term of one (1) year from the Effective
Date set forth (the "Initial Term"), and shall thereafter automatically renew
for successive one (1) year periods (each a "Renewal Term"), unless earlier
terminated in accordance with the terms of this Agreement. Either party may
cancel this Agreement, by serving written notice of such termination on the
other party at least six (6) months prior to the next renewal date thereof.

In the event NCN gives notice to or merges with, sells, assigns or conveys in
any manner to another entity in whole or in part, MSD may:

Provide NCN a written notice that this Agreement in its entirety will revert
to a month to month term, cancelable by MSD by its serving written notice of
such termination on the other party at least 60 days prior to termination.

4. Copies
The license(s) granted herein include(s) the right to copy the Software System
in non-printed, machine readable form in whole or in part as necessary for
NCN's own business use. In order to protect MSD's trade secret and copyrights
in the Software System, NCN agrees not to reproduce and incorporate MSD's
trade secret or copyright notice in any copies, modifications or partial
copies. NCN shall maintain no more than three copies of the Software System
for each Data Processing Center at any time.

5. Price and Payment
NCN shall make payment to MSD for the Software System license pursuant to the
price and payment terms set forth in Schedule B.

6. Audit Rights
NCN shall maintain accurate books and records of all transactions done on the
Software System set forth on Schedule A. Upon reasonable notice to NCN, and no
more frequently than twice a year, NCN shall make such books and records
available to MSD, at NCN's home office place of business during normal
business hours, to audit the payment being made by NCN hereunder. MSD's audit
rights shall only apply to NCN and such of its permitted Sublicensees who use
the Software System.

NCN shall make available to MSD at all reasonable times access to such of
NCN's equipment so that MSD can monitor and ascertain the number of
transactions processed by NCN pursuant to this Software Systems License
Agreement.

7. Software System Ownership
MSD represents that it is the owner of the Software System and is therefore
duly licensed to use the Software System and all portions thereof and that it
has the right to modify same and to grant NCN a license for its use.

MSD is currently developing software packages. Concepts and ideas may be
learned from NCN's operations. MSD will not be liable to NCN for incorporating
such concepts and ideas into MSD's software packages.

8.Intent to Cooperate
Both MSD and NCN acknowledge that successful implementation of the Software
System pursuant to this Agreement shall require their full and mutual good
faith cooperation, and acknowledge that they shall timely fulfill their
respective responsibilities, including but not limited to those set forth
below.

9.Confidentiality and Proprietary Rights

9.1.Confidentiality Obligations of MSD
Except as provided for in Section 7 above, MSD acknowledges that in the course
of dealings between the parties, MSD may acquire information about NCN, its
business activities and operations, its technical information and trade
secrets, all of which are highly confidential and proprietary to NCN (the "NCN
Confidential Information"). NCN Confidential Information shall not include
information generally available to or known by the public, or information
independently developed outside the scope of this Agreement. MSD shall hold
all such NCN Confidential Information in strict confidence and shall not
reveal the same except pursuant to a court order or upon request of NCN. The
NCN Confidential Information shall be safeguarded with at least as great a
degree of care as MSD uses to safeguard its own most confidential materials or
data relating to its own business including all check information, but in no
event less than a reasonable degree of care.

9.2.Confidentiality Obligations of NCN
NCN acknowledges that in the course of dealings between the parties, NCN may
acquire information about MSD, its business activities and operations, its
technical information and trade secrets, including but not limited to the
Software System, all of which are highly confidential and proprietary to MSD
(the "MSD Confidential Information"). MSD Confidential Information shall not
include information generally available to or known by the public, or
information independently developed outside the scope of this Agreement. NCN
shall hold all such MSD Confidential Information in strict confidence and
shall not reveal the same except pursuant to a court order or upon request of
MSD. The MSD Confidential Information shall be safeguarded with at least as
great a degree of care as NCN uses to safeguard its own most confidential
materials or data relating to its own business, but in no event less than a
reasonable degree of care.

9.3.Proprietary Rights of MSD
NCN acknowledges and agrees that the Software System, and all copies thereof,
constitute valuable trade secrets of MSD and or proprietary and confidential
information of MSD and title thereto remains in MSD. Ownership of all
applicable copyrights, trade secrets, patents and other intellectual property
rights in the Software System are and shall remain vested in MSD or its
licensor as the case may be. All other aspects of the Software System,
including without limitation, programs, methods of processing, design and
structure of individual programs and their interaction, tangible media
(including but not limited to screens, documentation, manuals, and on-line
documentation) and programming techniques employed therein shall remain the
sole and exclusive property of MSD and shall not be used, sold, revealed,
disclosed or otherwise communicated, directly or indirectly, by NCN to any
person, company or institution whatsoever other than as expressly set forth
herein. The copyright notice and restricted rights legends contained in the
Software System shall appear on all tapes, diskettes and other tangible media
(including but not limited to screens, documentation, manuals, and on line
documentation) distributed by NCN.

9.4.Specific Remedies of Parties
Remedies of MSD: If NCN commits a material breach of any of the provisions of
Sections 9.2 and 9.3, MSD shall have, in addition to all other rights in law
and equity, (a) the right to have such provision specifically enforced by any
court having equity jurisdiction with no bond required, it being acknowledged
and agreed that any such breach will cause irreparable injury to MSD and that
money damages will not provide an adequate remedy, and (b) the right to
require NCN to account for and pay to MSD all compensation, profits, monies or
other tangible benefits (collectively "Benefits") derived or received as the
result of any transactions constituting a breach of any of the provisions of
Sections 9.2 and 9.3 and NCN hereby agrees to account for and pay such
Benefits.

Remedies of NCN: If MSD commits a breach of any of the provisions of Section
9.1 above, NCN shall have, in addition to all other rights in law and equity,
(a) the right to have such provision specifically enforced by any court having
equity jurisdiction with no bond required, it being acknowledged and agreed
that any such breach will cause irreparable injury to NCN and that money
damages will not provide an adequate remedy, and (b) the right to require MSD
to account for and pay to NCN all compensation, profits, monies or other
tangible benefits (collectively "Benefits") derived or received as the result
of any transactions constituting a breach of any of the provisions of Section
9.1, and MSD hereby agrees to account for and pay such Benefits.

10.Use and Training
NCN shall limit the use of the Software System to its employees who have been
appropriately trained. MSD shall provide training for its verification
software product to each NCN Member that joins NCN during the term of this
contract at a location and on a date determined by MSD as a part of the set-up
fee paid MSD.

11.Limited Warranty and Disclaimer of Other Warranties
MSD warrants that Software System will conform, as to all substantial
operational features, to MSD's current published specifications set forth on
Schedule D when installed and will be free of defects which substantially
affect system performance.

NCN must immediately notify MSD in writing of its claim of any such defect. If
the Software System is found defective by MSD, MSD's sole obligation under
this warranty is to remedy such defect in a manner consistent with regular
business practices.

THE ABOVE IS A LIMITED WARRANTY AND IT IS THE ONLY WARRANTY MADE BY MSD. MSD
MAKES AND NCN RECEIVES NO WARRANTY EXPRESS OR IMPLIED AND THERE ARE EXPRESSLY
EXCLUDED ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. MSD SHALL HAVE NO LIABILITY WITH RESPECT TO ITS OBLIGATIONS UNDER
THIS AGREEMENT FOR CONSEQUENTIAL, SPECIAL, DIRECT, EXEMPLARY, OR INCIDENTAL
DAMAGES TO NCN OR THIRD PARTIES DEALING WITH NCN EVEN IF MSD HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THE STATED EXPRESS WARRANTY IS IN LIEU OF
ALL LIABILITIES OR OBLIGATIONS OF MSD FOR DAMAGES ARISING OUT OF OR IN
CONNECTION WITH THE DELIVERY, USE, OR PERFORMANCE OF THE SOFTWARE SYSTEM.

If any modifications are made to the Software System by NCN, this warranty
shall immediately be terminated. Correction for difficulties or defects
traceable to NCN's errors, use of an operating system other than that supplied
by MSD or systems changes shall be billed at MSD's standard time, and material
charges, and any other related charges.

NCN agrees that MSD's liability arising out of contract, negligence, strict
liability in tort or warranty shall be limited to repair or replacement of the
Software System.

MSD agrees to repair NCN's hardware wrongfully damaged by MSD while such
hardware is in MSD's custody.

12.Indemnity By MSD
MSD at its own expense will defend any action brought against NCN to the
extent that it is based on a claim that any Software System used within the
scope of this Agreement infringes any patents, copyrights, license or other
property right, provided that MSD is immediately notified in writing of such
claim. MSD shall have the right to control the defense of all such claims,
lawsuits and other proceedings. In no event shall NCN settle any such claim,
lawsuit or proceeding without MSD's prior written approval. MSD shall also
indemnify and hold harmless NCN from any claims, demands or liabilities or
expenses (not including attorney fees), incurred by NCN as a result of any
such action.

If, as a result of any claim of infringement against any patent, copyright,
license or other property right, MSD is enjoined from using the Software
System, or if MSD believes that the Software System is likely to become the
subject of a claim of infringement, MSD at its option and expense may procure
the right for NCN to continue to use the Software System, or replace or modify
the Software System so as to make it non-infringing. If neither of these two
options is reasonably practicable MSD may discontinue the license granted
herein on one month's written notice. The foregoing states the entire
liability of MSD with respect to infringement of any copyrights or patents by
the Software System or any parts thereof.

MSD, without any search or investigation having been conducted, is not aware
that it is infringing on any patent, copyright, license or other property
right of any person.

13.Indemnity By NCN
NCN shall indemnify, defend and hold MSD harmless from any claims, demands,
liabilities or expenses, including reasonable attorneys' fees, incurred by MSD
as a result of any claim or proceeding against MSD arising out of or based
upon (i) the combination, operation or use of the Software System with any
hardware, products, programs or data not supplied or approved in writing by
MSD, if such infringement would have been avoided but for such combination,
operation or use or (ii) the modification of the Software System by NCN or
(iii) any claim against MSD by any customer of NCN or any customer of a
merchant served by NCN.

14.Termination

14.1.Termination By MSD
MSD shall have the right to terminate this agreement and license(s) granted
herein:

Upon thirty days' written notice in the event that NCN, its officers or
employees violates any material provision of this Agreement including, but not
limited to, confidentiality and payment which failure to pay can be cured by
payment within such thirty days;

In the event NCN (i) terminates or suspends its business; (ii) becomes subject
to any bankruptcy or insolvency proceeding under Federal or state statute or
(iii) becomes insolvent or becomes subject to direct control by a trustee,
receiver or similar authority.


In the event of termination by reason of NCN's failure to comply with any part
of this agreement, or upon any act which shall give rise to MSD's right to
terminate, MSD shall have the right, at any time, to terminate the license(s)
and take immediate possession of the Software System and documentation and all
copies wherever located, without demand or notice. Upon such termination NCN
shall cease using the Software System. Within five (5) days after termination
of the license(s), NCN will return to MSD the Software System (including but
not limited to TCL code, objects, scripts, libraries, on-line documentation
and manuals) in the form provided by MSD or as modified by NCN, or upon
request by MSD destroy the Software System (including but not limited to TCL
code, objects, scripts, libraries, on-line documentation and manuals) and all
copies, and certify in writing that they have been destroyed. Termination
under this paragraph shall not relieve NCN of its obligations regarding
confidentiality of the Software System.

Without limiting any of the above provisions, in the event of termination as a
result of NCN's failure to comply with any of its obligations under this
Agreement, NCN shall continue to be obligated for any payments due prior to
termination. Termination of the license(s) shall be in addition to and not in
lieu of any equitable remedies available to MSD.

14.2.Termination By NCN
NCN shall have the right to terminate this Agreement and license(s) granted
herein:

NCN must provide written notice in the event that MSD, its officers or
employees violates any material provision of this Agreement including, but not
limited to, confidentiality. MSD then has thirty days to cure said material
breach. If MSD fails to cure said breach, NCN can terminate the agreement with
thirty days notice;

In the event MSD (i) terminates or suspends its business; (ii) becomes subject
to any bankruptcy or insolvency proceeding under Federal or state statute or
(iii) becomes insolvent or becomes subject to direct control by a trustee,
receiver or similar authority.

14.3.Escrow Agreement
MSD and NCN agree to enter into the Escrow Agreement that is attached as
Schedule E.

15.Taxes
NCN shall, in addition to the other amounts payable under this Agreement, pay
all applicable sales and other taxes, federal, state, or otherwise, however
designated, which are levied or imposed by reason of the transactions
contemplated by this Agreement. Without limiting the foregoing, NCN shall
promptly reimburse to MSD an amount equal to any such items actually paid, or
required to be collected or paid by MSD.

16.Hardware Requirements and Other Responsibilities of NCN
NCN shall make available for the Software System implementation, at each
location, computer equipment and Software System configurations approved by
MSD as adequate for such implementation at such location.

In addition to other responsibilities of NCN under this Agreement, NCN shall
also be responsible for the following:

Data integrity of information passed to MSD.
Cost and maintenance of all hardware and phone lines.
Results of power failures and interruptions caused by unplugging system from a
 source of electricity at NCN's location (this applies only to potential sites
outside of MSD's control).

17.Licensed Locations
Use of the Software System by NCN at any location other than those described
in Schedule C and in writing from NCN to MSD from time to time shall be the
basis for immediate termination of this Agreement. Termination of the
Agreement shall be in addition to and not in lieu of any equitable remedies
available to MSD.

18.Delivery, Installation and Testing
The System has been delivered, installed and tested in accordance with the
Delivery, Installation and Testing Schedule attached as Schedule C.

19.Custom Modifications
NCN will have the opportunity to have input on upgrades to the Verification
System. NCN may submit a list of requests made by NCN or its members on a
quarterly basis. This list will include a brief description of each upgrade or
programming request. If MSD determines that the request is custom programming,
MSD will provide NCN the billing amount to create the program. MSD will use
NCN's input to establish priorities of verification projects to be completed.

All custom modifications to the Software System shall be undertaken by MSD at
its then current time and materials charges. For each custom modification
requested, NCN shall provide written specifications to MSD, which shall be
mutually agreed upon prior to commencement of such custom modification effort.
MSD will own all modifications to the Software System whether made by MSD or
NCN.

20.Required Upgrades
NCN agrees to perform each mutually agreed upon Software System and operating
system upgrades within 120 days of receiving written notice from MSD of the
availability thereof.

21.General

21.1.Full Agreement
Each party acknowledges that it has read this Agreement, including the
Schedules attached hereto, it understands it, and agrees to be bound by its
terms, and further agrees that this is the complete and exclusive statement of
the Agreement between the parties, which supersedes and merges all prior
proposals, understandings and all other agreements, oral and written, between
the parties relating to this Agreement.

21.2.Force Majeure
Dates or times by which MSD is required to make performance under this license
shall be postponed automatically to the extent that MSD is prevented from
meeting them by causes beyond its reasonable control.

21.3.Governing Law
This Agreement and performance hereunder shall be governed by the laws of the
State of New Mexico.

21.4.Limitation of Action
No action, regardless of form, arising out of this Agreement may be brought by
MSD or NCN more than two years after the cause of action has arisen.

21.5.Independent Contractors
It is expressly agreed that MSD and NCN are acting hereunder as independent
contractors and under no circumstances shall any of the employees of one party
be deemed the employees of the other for any purpose. This Agreement shall not
be construed as authority for either party to act for the other party in any
agency or other capacity, or to make commitments of any kind for the account
of or on behalf of the other except to the extent and for the purposes
provided for herein.

21.6.Assignment
NCN may not assign or sub-license its rights, duties or obligations under this
Agreement to any person or entity, in whole or in part, without providing
sixty days prior written notice to MSD.

21.7.Attorney Fees
The prevailing party shall have the right to collect from the other party its
reasonable expenses incurred in enforcing this agreement including attorney's
fees.

21.8.Effect of Agreement
This Agreement will be binding upon the heirs, personal representatives and
assigns of each of the parties.

21.9.Amendment of Agreement
This Agreement may not be modified or amended except by a writing signed by
each party.

21.10.Arbitration
All disputes that may come about because of ambiguous or uncertain language of
this agreement unresolved by the parties shall be submitted to binding
arbitration. Any matter submitted to arbitration under this Agreement will be
determined according to the following procedure: MSD will appoint one
arbitrator. Within ten (10) days of receipt of written notice of appointment
of an arbitrator by MSD, NCN will appoint one arbitrator. The two arbitrators
so chosen will appoint a third arbitrator within ten (10) days of the
appointment of the second arbitrator. The arbitrators so chosen will by
majority vote decide the issue in question within thirty (30) days of the
appointment of the third (3rd) arbitrator. The decision of the arbitrators
will be binding upon all parties. In the event that an arbitrator is not
appointed within the time period provided above, the party or parties failing
to make the appointment will lose the right to do so and the presiding judge
of the District Court for Bernalillo County New Mexico or other proper
judicial official will appoint said arbitrator. Each party will advance one-
half of the fees for the arbitrators and court reporter, if any, which fees
can be awarded as costs by the arbitrators.

21.11.Counterparts
This Agreement may be executed in several counterparts, each of which shall be
considered an original when executed by the parties.

21.12.Authority
All parties warrant that they have all the requisite authority and capacity to
execute this Agreement and that its terms and provisions constitute valid and
legally enforceable rights and obligations against the parties, their
successors, assigns and administrators. Each person signing on behalf of a
corporation, partnership or other form of business entity represents that such
person has all the requisite authority and capacity to execute this agreement
on behalf of the corporation, partnership or other form of business
entity.

21.13.Notice
All notices required or permitted to be given by MSD to NCN shall be deemed
sufficient if mailed by registered or certified mail, return receipt
requested, to NCN at the address set forth on page 11 of this Agreement or
other address provided to MSD from NCN in the form of a written notice. All
notices required or permitted to be given by MSD to NCN shall be deemed
sufficient if mailed by registered or certified mail, return receipt
requested, to MSD at the address set forth on page 11 of this Agreement or
other address provided to MSD from NCN in the form of a written notice.

21.14.Titles and Words
Section titles or captions contained in this Agreement are inserted only as a
matter of convenience and for reference and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provisions hereof.

Wherever the singular number is used in this Agreement and when required by
the context, the same shall include the plural; and the masculine gender shall
include the feminine and neuter genders and the word "person" shall include
corporations, firms, partnerships or other forms of associations.

21.15.Severability
The invalidity or unenforceability of any provision in the Agreement will not
in any way affect the validity or enforceability of any other provision and
this Agreement will be construed in all respects as if such invalid or
unenforceable provision had never been in the Agreement.

21.16.Waiver
The waiver or failure of MSD or NCN to exercise in any respect any right
provided for herein shall not be deemed a waiver of any further right
hereunder.

22.Mutual Release
Excluding claims for (a) breach or enforcement of this Agreement and (b)
enforcement of any judgment resulting herefrom, the parties irrevocably and
unconditionally release and forever discharge each other, and their respective
affiliates, subsidiaries, divisions, officers, directors, employees, attorneys
and agents, from any and all actions, causes of action, suits, controversies,
damages, demands, liabilities, of whatever kind or character, at law or in
equity, direct or indirect, whether known or unknown, suspected or
unsuspected, matured or unmatured (collectively "Claims") that each other ever
had or now have as of the date of this Agreement arising out of the subject
matter of this Agreement and all other prior written agreements between the
parties.

EXECUTED as of this 29th day of February, 2000 and effective the 1st day of
March, 2000 ("Effective Date").

MSD:                                   NCN:
Name: Magic Software Development, Inc. Name: National Check Network, Inc.
Address: 215 Central N.W., Ste. 3-A    Address: 215 Central N.W., Ste. 3-D
Albuquerque, NM 87102                  Albuquerque, NM 87102
Signature: . . . . . . . . . .          Signature: . . . . . . . . . . . . . .
Title: . . . . . . . . . . . .          Title: . . . . . . . . . . . . . . . .


Schedule A - DESCRIPTION of SOFTWARE

                        Magic Software Development, Inc.
                        Software System License Agreement

Description of Software System

The following is a description of the Software System, which is licensed to
NCN.

1. MSD's check verification software or any part thereof including but not
limited to:
1.1 Terminal Control Language (TCL)
1.2 Scripts
1.3 Objects
1.4 Libraries
1.5 On-line, printed and other documentation

2. Operating systems provided by MSD.




<PAGE>
Schedule B -PRICE and PAYMENT

                        Magic Software Development, Inc.
                        Software System License Agreement

Price and Payment

   1. The following sets forth the price and payments due for the Software
System that is licensed to NCN. The price per transaction is $     . NCN is
also responsible for the taxes set forth in section 15 of this Agreement. If
each Sub-Licensee does not verify        or more transactions through MSD each
month, the license fee shall be $     per month for each Sub-Licensee who does
not meet the minimum required transactions per month.

   2. Each new Sub-Licensee will pay a set-up fee of $       to MSD. In the
event MSD logs more than 20 hours per Sub-Licensee setup, the Sub-Licensee
will be billed an additional $        per hour for each additional hour
required to accomplish the setup.

   3. NCN is to use the Software System on one computer. In the event NCN
decides it would like to use the Software System on more than one computer,
the time and expenses required to accomplish that end must be agreed to and
acknowledged in writing between the parties before MSD performs the work for
said purpose.

   4. All services of MSD requested by NCN in addition to those required of
MSD by this Agreement shall be billed at the rate of $       per hour. Prior
to MSD beginning work for said services, NCN and MSD must define the work and
cost of it and agree to it in writing.

   5. MSD services and technical support are provided at no charge during the
hours of 7:00 a.m. to 6:00 p.m. Mountain Standard Time. Any technical support
required at any other hours will be billed at the rate of $      per hour; any
services required at any other hours will be billed at the rate of $       per
hour.

   6. There will be no charge to NCN for the following services of MSD:
      6.1.  Software and instructions required to perform Software System
            upgrades, if any.
      6.2.  Software and instructions required to perform operating system
            upgrades, if any.
      6.3.  Time and expenses required to correct defects in the Software
            System, if any.

   7. MSD may perform the following services for NCN at the hourly rate set
forth above:
      7.1.  Training in excess of that set forth in section 10 of the Software
            System License Agreement.
      7.2.  Correcting data integrity caused by NCN members.
      7.3.  Correcting any problems caused by Licensee or its members.
      7.4.  Authorized limited unanticipated maintenance and repair of
            Licensee's hardware as authorized by mutual consent.
      7.5.  Designing and implementing networks as requested by NCN.
      7.6.  General consulting services as requested by NCN.
      7.7.  Establishing and maintaining phone lines used by and requested by
            NCN.

   8. Fees and expenses will be billed monthly and due on the 15th day of the
month following the month in which they will have accrued. There will be a
late fee of 1.5% per month added to any fees and expenses that are not
received by MSD on the 20th day of the month payment is due.

   9. In regards to transactions that are received via the NCN Network and
computer system in behalf of MSD that do not access the NCN DATABASE, NCN will
charge MSD the then cumulative current tiered pricing per transaction that NCN
sublicensees are charged. MSD will not resell the transactions processed
through the NCN hardware for less than the processing rates that NCN is
charged.

<PAGE>
Schedule C -DELIVERY, INSTALLATION and TESTING

                        Magic Software Development, Inc.
                        Software System License Agreement

Delivery, Installation and Testing Schedule

The Software System will be completely installed and tested on each of the
computers at the following sites listed below by the following dates:

Location and Date:

1. Site has already been installed at 215 Central NW, Suite 3A, Albuquerque,
NM.



<PAGE>
Schedule D - LICENSOR'S CURRENT PUBLISHED SPECIFICATIONS

                        Magic Software Development, Inc.
                        Software System License Agreement

MSD's Current Published Specifications

The MSD's current NCN specifications. These specifications may be changed or
updated by MSD.

<PAGE>
Schedule E - ESCROW AGREEMENT

                        Magic Software Development, Inc.
                        Software System License Agreement

Escrow Agreement

This Escrow Agreement is entered into and effective as of the date set forth
below by and among NCN and MSD, and the Escrow Agent named below.

WHEREAS, MSD has granted a license to NCN to use certain computer software
pursuant to the terms and conditions of a Software License Agreement (the
"License Agreement"), annexed hereto as Exhibit A; and

WHEREAS, the uninterrupted availability of all forms of such computer software
is critical to NCN in the conduct of its business; and

WHEREAS, MSD has agreed to deposit in escrow a copy of the source code form of
the computer program ("Software") included in the Software System covered by
the License Agreement, as well as any corrections or enhancements to such
source code, but not including the source code for the sublicensed operating
system, to be held by Escrow Agent in accordance with the terms and conditions
of this Escrow Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree as follows:

1. Deposit
MSD has concurrently herewith deposited with Escrow Agent a copy of the source
code form of the Software (the "Source Code"), including all relevant
commentary, explanations, and other documentation of the Source Code
(collectively, "Commentary"). MSD also agrees to deposit with Escrow Agent, at
such times as they are made, a copy of all revisions to the Source Code or
Commentary encompassing all corrections or enhancements made to the Software
by MSD pursuant to the License Agreement. Promptly after any such revision is
deposited with Escrow Agent, both MSD and Escrow Agent shall give written
notice thereof to NCN.

2. Term
This Escrow Agreement shall remain in effect during the term of the License
Agreement. Termination hereof is automatic upon delivery of the deposited
Source Code and Commentary to NCN in accordance with the provisions hereof.

3. Default
A default by MSD shall be deemed to have occurred under this Escrow Agreement
upon the occurrence of any of the following:

if MSD has availed itself of, or been subjected to by any third party, a
proceeding in bankruptcy in which MSD is the named debtor, an assignment by
MSD for the benefit of its creditors, the appointment of a receiver for MSD,
or any other proceeding involving insolvency or the protection of, or from,
creditors, and same has not been discharged or terminated without any
prejudice to NCN's rights or interests under the License Agreement within
thirty (30) days; or

if MSD has ceased its on-going business operations;

if any other event or circumstance occurs which demonstrates with reasonable
certainty the inability or unwillingness of MSD to fulfill its obligations to
NCN under the License Agreement or this Escrow Agreement.

4. Notice of Default
NCN shall give written notice to Escrow Agent and MSD of the occurrence of a
default hereunder, except that Escrow Agent shall give notice of the default
to NCN and MSD if same is based on the failure of NCN to pay Escrow Agent's
annual fee. Unless within thirty (30) days thereafter MSD files with the
Escrow Agent its affidavit executed by an authorized officer stating that no
such default has occurred or that the default has been cured, then the Escrow
Agent shall upon the thirty-first (31st) day deliver to NCN in accordance with
NCN's instructions the entire Source Code and Commentary with respect to the
Software then being held by Escrow Agent.

5. Compensation
As compensation for the services to be performed by Escrow Agent hereunder,
NCN shall pay to Escrow Agent an initial fee set forth below payable at the
time of execution of this Agreement, and an annual fee in the amount set forth
below to be paid to Escrow Agent in advance on each anniversary date hereafter
during the term of this Agreement.

6. Liability
Escrow Agent shall not, by reason of its execution of its Agreement, assume
any responsibility or liability for any transaction between MSD and NCN, other
than the performance of its obligations, as Escrow Agent, with respect to the
Source Code and Commentary held by it in accordance with this Agreement.

7. Tests
Upon written notice to MSD and Escrow Agent, NCN shall have the right to
conduct tests of the Source Code held in escrow, under the supervision of MSD,
to confirm that it is the current Source Code for the Software running on the
Hardware specified in the License Agreement.

8. Confidentiality
Except as provided in this Agreement, Escrow Agent agrees that it shall not
divulge or disclose or otherwise make available to any third person
whatsoever, or make any use whatsoever, of the Source Code or Commentary,
without the express prior written consent of MSD.

9. Address
All notices or other communications required or contemplated herein shall be
in writing, sent by certified mail, return receipt requested, addressed to
another party at the address set forth in the License Agreement and to the
Escrow Agent at the address set forth below or as same may be changed from
time to time by notice similarly given.

10.   Assignment
Neither this Escrow Agreement, nor any rights, liabilities or obligations
hereunder may be assigned by Escrow Agent without the prior written consent of
NCN and MSD.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
29th of February,
2000.


ESCROW AGENT                           NCN
By: ____________________               By: ___________________
Its: ____________________              Its: ___________________
Address: ________________              Address: _______________

                              MSD
                              By: ___________________
                              Its: ___________________
                              Address: _______________



                                                   EXHIBIT 10.44



                       ELECTRONIC CHECK SERVICES AGREEMENT

THIS ELECTRONIC CHECK SERVICES AGREEMENT ("Agreement") is made effective May
17, 2000 by and between National Bank Drafting Systems, Inc. ("NBDS"), a Texas
corporation with principal offices located at 6707 Brentwood Stair Road, Suite
640, Fort Worth, Texas 76112, and Electronic Clearing House, Inc., ("ECHO"), a
Nevada corporation with principal offices located at 28001 Dorothy Drive,
Agoura Hills, CA .

RECITALS

WHEREAS ECHO, along with its XpressCheX and affiliates, is a processor of
electronic check services, including Electronic Check Recovery, Electronic
Phone Checks, Electronic ACH Payments, Remittance Processing and Electronic
Check Conversion, to banks, merchants, and independent sales organizations;
and,

WHEREAS, NBDS, along with its national network of NBDS licensees, is a
marketer of electronic check services and desires to engage ECHO to process
NBDS' electronic check services ("NBDS Services"),

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

ARTICLE 1 - DEFINITIONS
The definitions appearing in this Agreement or any supplement or addendum to
this Agreement shall be applicable to both singular and plural forms of the
defining terms.

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

   "Administrative Fees" means a fee charged to Merchants for miscellaneous
   services such as 24 hour customer support, batch processing, etc., as
   further defined in the applicable addenda for NBDS Services.

   "Administrative Reporting and Accounting Activities" means the mechanism by
   which ECHO, on a monthly basis, provides Merchant processing data to NBDS
   to facilitate NBDS' payment of sales commissions and reconciliation of
   revenues.

   "Daily Settlement Sheet" means the worksheet to be provided by ECHO to NBDS
   as further defined and described in Section 2.2.2 of this Agreement.

   "Discount Fee" means a percentage based fee, as further defined in the
   applicable addenda for NBDS Services, calculated on a Merchant's monthly
   sales volume

   "Collection Fee Revenue" means a fee charged to a Merchant's customer as
   further defined in the applicable addendum for each NBDS Service, for
   checks return unpaid by the checkwriter's bank.

   "Demand Deposit Account" means the demand deposit account or money market
   account at a financial institution designated for use in connection with
   NBDS Services.

   "Electronic Check Conversion" means the ability to convert a paper check
   into an electronic item at the point-of-purchase ("POP") and process it as
   an ACH transaction.

   "Electronic Check Recovery" means the ability to collect non-sufficient-
   funds (NSF) paper checks electronically.

   "Electronic ACH Payments" means the automating of receivables by
   originating recurring  electronic payments via the ACH network.

   "Electronic Phone Check" means the ability to take a consumer's payment
   information over the phone and charge the consumers' checking account with
   a paper draft or electronic ACH transaction.

   "Merchant" means any individual or business entity that contracts for and
   receives NBDS Services provided for in this Agreement and/or its addenda.

   "Processor" means the entity designated by ECHO to perform Settlement in
   association with the NBDS Services provided by ECHO under this Agreement.

   "Processing Revenues" means any fees charged to Merchants, by ECHO, for
   NBDS Services provided by ECHO under this Agreement.

   "Regular Collection" means the traditional, manpower intensive method of
   collecting funds from delinquent consumers consisting primarily of (a)
   outgoing telephone calls to the consumer, (b) mailing of collection notices
   to the consumer, (c) when applicable, initiating legal action for
   collection against the consumer, and (d) reporting delinquent consumers to
   credit reporting agencies.

   "Settlement" means the movement of information and funds via a Processor
   and Sponsoring Bank through the ACH that results in the withdrawal or
   deposit of funds to  bank accounts.

   "Sponsoring Bank" means one or more financial institutions through which
   ECHO contracts to gain access to the ACH.

   "Transaction Fee" means a fee per transaction charged to Merchants, as
   further defined in the applicable addenda, for NBDS Services.


ARTICLE 2  - DUTIES OF ECHO

2.1.  PROVIDE ELECTRONIC PROCESSING FOR NBDS SERVICES

     2.1.1.   Agreement to Provide NBDS Services. From time to time, as NBDS
     and ECHO reach agreement on specific NBDS Services to be provided through
     ECHO to NBDS, the details of each NBDS Service shall be documented in an
     addendum to this Agreement.  Each such addendum shall include, but not be
     limited to:

     a description of that NBDS Service
     any applicable technical specification, flow charts, etc.
     merchant and administrative reporting requirements (if different from
     those defined under section 2.2)
     pricing
     distribution of revenues, commissions
     exclusivity issues

     Each such addendum shall represent agreement of the parties with regard
     to ECHO providing that specific NBDS Service and shall be supplemented by
     the broader terms expressed in this Agreement.  In the event a specific
     issue is not addressed in an addendum, the applicable terms of this
     Agreement shall apply.

     2.1.2.   Cooperation.  ECHO acknowledges and agrees that successful
     development of NBDS Services so as to become operational for use by NBDS
     shall require the full and mutual good faith cooperation of both parties.

     2.1.3.   Acceptance.    NBDS' acceptance of each ECHO provided NBDS
     Service under this Agreement and the applicable addendum shall be deemed
     effective on the date ("Acceptance Date") that each such NBDS Service is
     (a) first utilized by any Merchant, or (b) upon the successful completion
     of acceptance testing conducted between ECHO and NBDS.  Such acceptance
     testing shall proceed as follows:

     NBDS shall test each ECHO provided NBDS Service for a period not to
     exceed sixty (60) days.  Upon the expiration of such sixty (60) day
     period, NBDS shall tender to ECHO a written description of any claimed
     defects in the NBDS Service.  Such claimed defects shall be limited to
     any failure of the NBDS Service to conform to the specifications as
     defined in the applicable addendum for that NBDS Service.

     Upon receipt by ECHO of any such written description from NBDS of claimed
     defects in NBDS Services, ECHO shall determine in its sole and good faith
     discretion whether the claimed defects do or do not conform to the
     specifications in the applicable addendum.  If the claimed defects do not
     conform to said specifications, ECHO shall proceed immediately to remedy
     the claimed defects, whereupon the acceptance test shall be repeated for
     another sixty (60) days, whereupon any subsequent defects claimed by
     NBDS, and any resulting remedial action by ECHO, shall be in conformance
     with, and identical to, the above mentioned testing procedures.

     2.1.4.   Performance and Systems Availability. ECHO warrants that ECHO's
     electronic processing systems ("ECHO's System") downtime for providing
     any NBDS Services will be limited to no more than 5% downtime in any one
     month of ECHO's operations, subject to the following exceptions and
     conditions:

     (a)  ACH and Bank Networks Excluded.  ECHO's System connects to and
          relies on the ACH network, and the Sponsoring Bank's processing
          system.  A failure of the ACH network or the Sponsoring Bank's
          system will not constitute a failure of ECHO's System and will
          not be computed toward the 5% downtime limitation.

     (b)  Public Networks Excluded.  ECHO's System has multiple national
                    communications networks, such as AT&T and MCI, it
                    utilizes to access ECHO's data center operations.
                    Any failure of such networks will not constitute
                    failure of ECHO's System and will not be computed
                    toward the 5% down time limitation.

     (c)  Scheduled Maintenance Excluded.  Scheduled system maintenance
                    of ECHO's System shall not count towards the 5%
                    downtime limitation set forth herein, provided such
                    maintenance does not occur more than 3 hours per
                    week.

     (d)  Force Majeure Excluded.   Force majeure events, as defined in
          section 8.16 herein, shall not be computed toward the 5% downtime
          limitation

     2.1.5.         Right To Remedy.  In the event ECHO's System exceeds the
     five percent (5%) downtime limitation in any given month, ECHO shall have
     one full calendar month to re-establish such performance standard.  NBDS
     agrees that only after ECHO's System has failed to re-establish the five
     percent (5%) downtime limitation for one full calendar month following
     the calendar month in which ECHO was notified by NBDS of ECHO's failure
     to meet the 5% downtime limitation, will NBDS have all remedies allowed
     in law and equity for ECHO's failure.

     2.1.6.   ECHO Warranty.  ECHO warrants that its providing of NBDS
     Services will conform to terms of this Agreement and the specifications
     set forth in the applicable addenda, provided that, and only to the
     extent that, NBDS notifies ECHO in writing, and in accordance with
     section 8.1 of this Agreement, during the term of this Agreement of any
     non-conformity in ECHO's providing of such NBDS Services.  In the event
     that ECHO's performance in providing NBDS Services is found to be non-
     conforming in any respect, and that notice with respect to such non-
     conformity has been given as provided above, ECHO's sole obligation under
     this warranty is to remedy such non-conformity within a reasonable time.


     THE WARRANTY STATED ABOVE IS A LIMITED WARRANTY AND IT IS THE ONLY
     WARRANTY MADE BY ECHO.  ECHO DOES NOT MAKE, AND NBDS HEREBY EXPRESSLY
     WAIVES, ALL OTHER WARRANTIES EXPRESS OR IMPLIED.  THERE ARE NO WARRANTIES
     OF MERCHANTIBILITY AND FITNESS FOR A PARTICULAR PURPOSE.  THE STATED
     EXPRESS WARRANTY IS IN LIEU OF ALL LIABILITIES OR OBLIGATIONS OF ECHO FOR
     DAMAGES ARISING OUT OF OR IN CONNECTION WITH ANY WARRANTY CLAIMS
     REGARDING THE DEVELOPMENT, DELIVERY, USE OR PERFORMANCE OF ECHO'S
     PROCESSING OF NBDS' SERVICES.  EXCEPT FOR LIABILITY UNDER ARTICLE 4,
     NEITHER PARTY SHALL HAVE LIABILITY WITH RESPECT TO ITS OBLIGATIONS UNDER
     THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, EXEMPLARY, INCIDENTAL OR
     PUNITIVE DAMAGES EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
     DAMAGES.

     2.1.7.   Sponsoring Bank(s).  ECHO agrees to provide a Sponsoring Bank
     for the purpose of providing access to ACH and the banking system in
     connection with the administrative reporting, accounting and processing
     activities contemplated under this Agreement and the requirements of the
     Sponsoring Bank.

     2.1.8.   ECHO Compliance with Collection Laws.  ECHO bears the full
     responsibility for insuring that its consumer collection activities are
     in full compliance with the requirements of all applicable state and
     federal laws.

     2.1.9.  Sales and Marketing Non-Exclusivity. ECHO retains the right to
     utilize additional sales organizations as, in its sole opinion, ECHO
     deems necessary to meet its growth requirements.

     2.1.10.  Telephone Merchant Support Services.  ECHO shall provide
     Merchants with telephone access to ECHO's customer support personnel.

2.2 ADMINISTRATIVE REPORTING, ACCOUNTING AND SETTLEMENT PROCESSING.

     2.2.1.  For each Merchant for whom ECHO is providing any NBDS Services
     set forth in this Agreement and in the applicable addenda, the following
     detailed information, which may be changed from time to time as mutually
     agreed upon between the parties, will be provided to NBDS by inclusion in
     a monthly report:

          Merchant Name
          Merchant ID Number
          Licensee Number

          Monthly Sales Volume - Number of Transactions and Gross Dollar
          Volume
          Returned Items - Number of Items and Dollar Volume
          Discount Fees - Gross Dollar Amount and Net Dollar Amount
          Transaction Fees  - Dollar Amount
          Administrative Fees - Dollar Amount
          Collection Fee Revenues - Number of Items and Collection Revenue
          Dollar Amount

     2.2.2.  As applicable for each NBDS Service, for each processing day,
     ECHO will provide the following funds distribution and settlement
     information, which may be changed from time to time as mutually agreed
     upon between the parties, to NBDS via a Daily Settlement Sheet:

     Day's Gross  Sales - Number of Transactions and Dollar Amount
     Day's Gross  Returns - Number of Transactions and Dollar Amount
     Day's Net  Returns
     Breakdown of day's revenues
          X $ @ (standard discount rate)          =    $
          X $ @ (allowance for rate exception)         =    $
          X $ @. applicable transaction fee       =    $
          X $ @ Collection Fees              =    $
          X $ @ Administrative Fees               =    $
     Days Total Revenues                =    $


ARTICLE 3  - DUTIES OF NBDS

3.1  PROCESSING SERVICES FEE
     NBDS agrees to pay ECHO a fee (Processing Fee), as set forth below and
     further defined in the applicable addendum for each NBDS Service, for
     ECHO's administrative reporting, accounting, and processing services.

     3.1.1.  Processing Fee.  ECHO and NBDS agree that ECHO may deduct its
     Processing Fee daily from the funds handled in Settlement. Via the ACH
     network, ECHO will pay NBDS its share of the Processing Revenues from
     NBDS Services as well as NBDS' share of any related fees by the 10th day
     of the month following the month in which the NBDS Services were
     provided.  ECHO and NBDS further agree that Section 2.2.2 provides a
     description of Daily Settlement Worksheet.

     3.1.2.  Audit Rights and Access to Books and Records.  During ECHO's
     regular business hours, NBDS shall have the right to inspect ECHO's
     business records which reflect the Processing Fees and daily Settlement
     calculations.  Such inspection shall be conducted at NBDS's sole cost and
     expense and shall only be permitted upon five (5) business days prior
     written notice to ECHO as provided in Section 8.1 of this Agreement.

3.2  NBDS' Obligations.

     3.2.1.  Processing Non-Exclusivity. NBDS retains the right to utilize
     additional processors from time to time as it deems necessary to meet its
     processing needs for NBDS' Services.

     3.2.2.  Cooperation and Development Support. NBDS acknowledges and
     agrees that successful providing of the NBDS Services, so as to become
     operational for use by NBDS, shall require the full and mutual good faith
     cooperation of both parties to this Agreement.  In addition to providing
     ECHO with full, good faith cooperation and such information as may be
     required by ECHO in order to provide NBDS Services, NBDS shall provide
     ECHO with reasonable information concerning NBDS' procedures, work flow,
     and transaction volumes applicable to providing NBDS Services.

     3.2.3. Check Clearing Data Transmission.  NBDS shall cause Merchants or
     NBDS' affiliates who have given NBDS check presentment authority to
     transmit to ECHO or ECHO's designee all data and information, in such
     electronic format and content as ECHO shall require in connection with
     the providing of NBDS Services, including but not limited to, check
     images and financial data to permit ECHO to perform its accounting and
     any Settlement in connection with the providing NBDS Services.

     3.2.4.  Sales and Marketing of NBDS Services.  During the term of this
     Agreement, NBDS agrees to perform, or cause to be performed, sales and
     marketing activities for the purpose of contracting with Merchants to
     utilize the NBDS Services provided by ECHO's System (except as provided
     in Sections 3.2.1 and 8.19).  NBDS will bear the cost of producing
     Merchant applications, Merchant agreements and all other marketing
     materials used by NBDS and NBDS affiliates.  Such agreements,
     applications and sales and marketing materials are to be reviewed and
     approved by ECHO prior to use.

     3.2.5.  Losses Due to Fraud, Return Activity and Regulatory Fines &
     Penalties.  NBDS agrees that losses due to fraud, unpaid check return
     activity, fines and penalties imposed by regulatory agencies will be
     shared equally by ECHO and NBDS except as provided in Sections 2.1.8 and
     3.2.6.  ECHO will provide a periodic accounting of such losses to NBDS.
     NBDS hereby authorizes ECHO to debit one-half of such losses from NBDS's
     Demand Deposit Account.  ECHO retains the unilateral right to decline to
     process for or terminate a Merchant if in ECHO's or Sponsoring Bank's
     sole discretion continued processing for that Merchant may constitute an
     unacceptable level of risk, profitability or potential for regulatory
     action.  ECHO will have no liability to NBDS or its affiliates for any
     revenues lost due to such actions.

     3.2.6.  Merchant Compliance with NACHA Rules.  NBDS bears the full
     responsibility of insuring that the policies and procedures of both NBDS
     and Merchants solicited by NBDS are in full compliance with the
     requirements of the National Automated Clearing House Association
     ("NACHA").  When required by the rules of NACHA or any other regulatory
     body, NBDS will provide Merchants with (a) appropriate consumer notices
     for posting at Merchant locations and (b) ink stamps or other means of
     obtaining consumer authorizations when required.  NBDS should consult
     with their legal counsel and NBDS agrees to advise Merchants to consult
     with their legal counsel regarding compliance with NACHA's rules and
     regulations.  This Agreement may not be construed so as to limit NBDS' or
     Merchants' obligation to comply with such rules and regulations.

     3.2.7.  NBDS Licensee Support.  NBDS shall provide any and all services
     required to train and support the marketing and sales activities of NBDS
     licensees.


     ARTICLE 4 - MUTUAL CONFIDENTIALITY AND TRADE SECRETS

4.1.      Confidentiality.  ECHO and NBDS shall not disclose, except as
authorized by this Agreement and applicable addenda, any proprietary or
confidential information or trade secret regarding the other party's products
and services. The parties recognize that in the performance of this Agreement
and applicable addenda, each party may learn confidential proprietary work
product of the other party and the parties agree not to disclose any
confidential proprietary work product of the other party, except as authorized
by this Agreement and applicable addenda, or expressly approved in writing by
the other party prior to the contemplated disclosure.

4.2.      ECHO Trade Secrets.  NBDS acknowledges that the information provided
to it by ECHO may represent or contain proprietary trade secrets of ECHO and
NBDS hereby agrees to maintain the confidentiality of any such proprietary
trade secrets of ECHO in a manner using at least as great a degree of care as
the manner used to maintain the confidentiality of NBDS own most confidential
information. In addition, information provided to NBDS by ECHO may represent
or contain proprietary trade secrets of ECHO that constitutes the work product
of ECHO and is confidential and proprietary to ECHO.

4.3.      NBDS Trade Secrets.  ECHO acknowledges that the information provided
to it by NBDS may represent or contain proprietary trade secrets of NBDS and
ECHO hereby agrees to maintain the confidentiality of any such proprietary
trade secrets of NBDS in a manner using at least as great a degree of care as
the manner used to maintain the confidentiality of ECHO's own most
confidential information. In addition, information provided to ECHO by NBDS
may represent or contain proprietary trade secrets of NBDS that constitutes
the work product of NBDS and is confidential and proprietary to NBDS.

ARTICLE 5 - TERM AND TERMINATION

5.1.      Term and Termination.  This Agreement shall remain in force until
either party terminates this Agreement as follows:

     5.1.1.  Term.  The initial term of this Agreement shall be five (5) years
     beginning on the effective date set forth in the preamble of this
     Agreement, and is subject to the right of NBDS to renew this Agreement
     for an additional five (5) years by delivery of written notice to ECHO,
     as provided for under section 8.1 of this Agreement, no later than six
     (6) months prior to the scheduled termination date of the initial five
     (5) year term of this Agreement.

     5.1.2.  Termination for Event of Default.  Either party shall have the
     right to terminate this Agreement six (6) months after delivery of
     written notice, as provided in Section 8.1 of this Agreement, to the
     other party upon the occurrence of and stating the express nature of an
     event of default.  For the purposes of this subsection, an event of
     default means:  (i) material violation or breach by the other party, its
     officers or employees of any provision of this Agreement and any
     applicable addenda, including, but not limited to, confidentiality and
     payment, and that has occurred not more than ninety (90) days prior to
     delivery of the written termination notice; (ii) the termination of the
     business of the other party; (iii) the revocation of any license issued
     by any state or federal regulatory agency, the issuance of which is
     necessary for the conduct of the business of the other party; (iv)
     voluntary or involuntary filing of a bankruptcy petition or similar
     proceeding under state or federal law with respect to the other party;
     (v) the other party's insolvency or the making of any assignment for the
     benefit of creditors by the other party.

     5.1.3.  Post Termination Relationship.  For a period of three (3) years
     following termination, NBDS and ECHO agree to continue to jointly
     service, under the terms of this Agreement and any related addenda, any
     Merchant relationships existing at the time of termination. Except as
     provided in Section 3.2.5 of this Agreement, ECHO may not terminate
     processing during this three-year period.  NBDS agrees not to solicit
     such existing Merchants to move from ECHO's System during this three-year
     period.


ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF ECHO

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

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

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

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

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

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


ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF NBDS

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

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

7.2.      Authorization, Validity and Enforcement.  The execution, delivery
and performance of this Agreement, and related addenda, executed by NBDS is
within NBDS' powers, has been duly authorized, and is not in conflict with
NBDS' operating agreement, or terms of any charter or other organizational
document of NBDS; and that this Agreement constitutes a valid and binding
obligation of NBDS, enforceable in accordance with its terms.

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

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

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


ARTICLE 8 - GENERAL

8.1.      Notice.  Any notice given by any party under this Agreement shall be
in writing and personally delivered, deposited in the U.S. mail, postage
prepaid, or sent by facsimile transmission, charges prepaid, and addressed as
follows:

To NBDS:

National Bank Drafting Systems, Inc.
6707 Brentwood Stair Road, Suite 640
Fort Worth, Texas 76112
Attn: George Gouffray
Facsimile No.: (817) 446-3236

To ECHO:

Electronic Clearing House
28001 Dorothy Drive
Agoura Hills, CA 91301
Attn: Joel Barry, CEO
Facsimile No.: (818) 597-8999


     Each party may change the address to which notices, requests and other
communications are to be sent by giving notice of such changes to the other
party.

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

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

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

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

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

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

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

8.9.      Legal Fees and Costs.  In the event of any dispute arising out of or
in connection with this Agreement and any related addenda, the prevailing
party in any judicial action, arbitration or proceeding shall be entitled to
recover its reasonable attorney's fees and court costs, in addition to any
other recovery permitted by law or equity.

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

8.11.     Schedules, Exhibits and Addenda.  The schedules, exhibits, and
addenda referenced in and attached to this Agreement are hereby incorporated
into this Agreement by reference for all purposes and are subject to revision,
modification, and such incorporation from time to time by mutual agreement
signed by both parties.

8.12.      Amendments.  This Agreement, including schedules, exhibits, and
addenda may be amended or modified only by prior written agreement signed by
both parties.

8.13.      Relationship with Parties.  This Agreement, including any related
addenda, is not intended by the parties to constitute or create a joint
venture, partnership, or formal business entity of any kind.  The rights and
obligations of the parties shall be only those expressly set forth herein, and
neither party shall act as the agent for the other.

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

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

8.16.     Force Majeure.  If performance by a party of any service or
obligation under this Agreement and any related addenda is prevented,
restricted, delayed or interfered with by reason of labor disputes, strikes,
acts of God, floods, lightning, earthquakes, shortage of materials, rationing,
utility or communication failures, failure or delay in receiving electronic
data, blockages, embargo, or any law, order, proclamation, regulation,
ordinance, demand or requirement having legal effect of any government or any
judicial authority or representative of any such government, or any other act
or omission whatsoever, which are beyond the reasonable control of such party,
then such party shall be excused from the performance to the extent of the
prevention, restriction, delay or interference.

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

8.18.     Time is of the Essence.  The parties acknowledge and agree that time
shall be of the essence in connection with the performance of all obligations
set forth herein.


8.19.     NBDS Excluded Accounts.    ECHO acknowledges that NBDS currently
provides its electronic check services to certain merchants by agreement
through other processors utilizing the ACH network.  ECHO acknowledges that it
has no right or claim to revenues derived therefrom.

8.20.     ECHO Excluded Accounts.  NBDS acknowledges that ECHO currently
provides its electronic check services to other business entities, including
but not limited to banks, merchants, and independent sales organizations. NBDS
acknowledges that it has no right or claim to revenues derived therefrom.

8.21.      Solicitation and Hiring of Employees.  The parties recognize that
the employees of each party, and such employees' loyalty and service,
constitute a valuable asset of each party.  Accordingly, the parties hereby
agree not to employ or make any offer of employment to, nor enter into a
consulting relationship with, any person who is currently employed by the
other party and for a period of two (2) years immediately following such
person's termination of employment from either party.

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

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

     IN WITNESS WHEREOF, NBDS and ECHO have executed this Agreement by duly
authorized representatives effective as of the date set forth in the preamble.


Electronic Clearing House, Inc.         National Bank Drafting Systems, Inc.
("ECHO")                                ("NBDS")


By:___________________________________  By:_______________________________
     Joel M. Barry, CEO                       George Gouffray, Senior Vice
                                             President





Addendum A - Electronic Check Recovery and Regular Collection Services

This Addendum A ("Addendum A") entitled Electronic Check Recovery and Regular
Collection Services is made effective April 10, 2000 by and between National
Bank Drafting Systems, Inc. ("NBDS"), a Texas corporation with principal
offices located at 6707 Brentwood Stair Road, Suite 640, Fort Worth, Texas
76112, and Electronic Clearing House, Inc., ("ECHO"), a Nevada corporation
with principal offices located at 28001 Dorothy Drive, Agoura Hills, CA.  As
authorized by section 2.1.1 of the Electronic Check Services Agreement
("Agreement") executed on May 17, 2000 by and between these same parties,
Addendum A, upon its execution, is incorporated into that Agreement by this
reference.

WHEREAS NBDS desires to market the following services to Merchants:

Electronic Check Recovery ("ECR") - a service that, utilizing electronic
submission of data via the ACH, attempts to collect checks which (a) were
presented for payment a first time as a paper item, and (b) subsequently
returned unpaid by the consumer's bank for either non-sufficient funds ("NSF")
or uncollected funds ("UCF") and (c) are less than 45 days old at the time
they are received at ECHO.

Regular collection service ("Regular Collection") - a service which begins
when a returned item can no longer be collected electronically via an ACH
debit to the consumer's account.  Regular Collection consists of telephone and
collection letter contacts with the consumer.

WHEREAS ECHO, through its XpressCheX affiliates, is a provider of ECR and
Regular Collection services,

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

Merchant Documentation and Merchant Approval
NBDS is responsible for electronically transmitting a complete Merchant
application to ECHO along with obtaining a signed Merchant agreement and any
supporting documentation as required by ECHO.  Originals of signed Merchant
agreement are forwarded to and retained by ECHO. ECHO retains the unilateral
right to decline to process for or terminate a Merchant if in ECHO's sole
discretion continued processing for that Merchant may constitute an
unacceptable level of risk, profitability or potential for regulatory action.
ECHO will have no liability to NBDS or its affiliates for any revenues lost
due to such actions.

Merchant Welcome Letter
Merchant requires a welcome letter containing a user ID for reporting system
and password, instruction for online service and report tutorials, and
telephone numbers for Merchant support, etc.  NBDS shall be responsible for
issuing such user IDs and password, and for generating and distributing the
Merchant welcome letter within five (5) days of ECHO's approval of a Merchant
application and agreement.

Merchant ECR and Regular Collection Options
Merchants may select from the following ECR and Regular Collection options.
Merchants choosing a Service Option below are required to post consumer
notices that allows ECHO to collect the face amount of the check plus a
collection fee.  Merchants choosing the Old Check Option are required to have
had an electronic processing notice posted during the time the old checks were
taken.  NBDS agrees to enforce and monitor for compliance the above posting of
notice.

     Service Option 1 - Merchant Chooses Both ECR and Regular Collection
     Preferred Method of Check Submission - Merchant's bank forwards checks to
     ECHO after 1st return.
     Alternate Method of Check Submission - When Merchant's bank either can
     not or will not forward checks, Merchant may forward checks to ECHO after
     1st return.

     Service Option 2 - Merchant Chooses ECR but not Regular Collection
     Only Acceptable Method of Check Submission - Merchant forwards NSF and
     UCF after 1st return to ECHO (If applicable, Merchant forwards AC, Stop
     Pay etc to Merchant's 3rd party collector)

     Service Option 3 - Merchant Chooses Regular Collection Only
     In the event that a Merchant does not want to utilize ECR, this option
     allows the Merchant to utilize ECHO for Regular Collection services only.

     Preferred Method of Check Submission - Merchant's bank forwards checks to
     ECHO after 1st return.
     Alternate Method of Check Submission - When Merchant's bank either can
     not or will not forward checks, Merchant may forward checks to ECHO.

     Old Check Option - One time submission of ECRable items less than 180
          days old
     Allows new Merchants a one-time opportunity to submit ECRable items, less
     than 180 days old, for ECR recovery.  Merchants submit NSF and UCF items
     less than 180 days old and, upon collection of an item via ECR, Merchant
     receives reimbursement equal to 50% of the face value of that item. May
     be selected along with either Service Option 1, 2, or 3 above.  If
     Merchant has selected a Service Option that includes Regular Collection,
     these "old checks" will be cycled into Regular Collection when ECR
     attempts are exhausted.  ECHO's Regular Collection efforts on "old items"
     will be limited to (a) collection letter series, and (b) report consumer
     to credit reporting agency.

When one of the above options allows for direct submission of checks by the
Merchant, NBDS will provide Merchants with (a) preaddressed (to ECHO)
envelopes, preformatted for Merchant to complete Merchant's return address
consisting of Merchant name, address and Merchant number, and (b) Check
Inventory Forms quantifying the number and amount of checks enclosed along
with the name and Merchant number of the submitting Merchant.

Reporting Options
Merchants have the option of (a) accessing account information via online
reporting (b) receiving paper based reporting via U.S. Mail, or (c) receiving
both online and paper reporting.   Merchant will be charged the applicable fee
for the type of reporting that they select (see "Merchant Reporting" section
on Page 6).

Shredding of Paper Checks
One hundred eighty (180) days after entry into the ECHO system, all checks
stored at ECHO are shredded and are then only available via the stored image.
Prior to the shredding of an item, a Merchant may request the return of the
original paper check.  For details on retrieval of a paper checks and the
associated fees (see Check Retrievals and Check Retrieval Fees section on Page
30).

Detailed Description of Electronic Check Recovery Service
Merchants accept checks in the normal course of business and deposit ("1st
Presentment") those paper checks with their local banks.
Returned items are forwarded to ECHO (either by Merchant or by Merchant's
bank).
Returned checks are received at ECHO.  All checks, including non-ECRable
items, are entered and imaged into ECHO's system.  At the Merchant's request
and subject to check retrieval fees, non-ECRable checks are returned to
Merchant.
Upon arrival at ECHO, each check is evaluated and assigned to one of two
collection groups
     a.   ECR Collection group.  Checks that returned for either NSF or UCF
     and are eligible for automated ECR collection.

     b.   Regular Collection group.  Checks that were returned Account Closed,
     Stop Payment, Fraud or any other reason that precludes an automated ECR
     collection and are therefore eligible only for Regular Collection.

     Items are re-evaluated each time they are returned following an automated
     ECR collection attempt and if no longer ECRable (and Merchant
     participates in Regular Collection), re-assigned to the Regular
     Collection group.

     Note 1: ECHO will assume that each NSF and UCF item submitted by a
     Merchant has been properly authorized by the consumer (for ECR) and that
     documentation of such authorization has been retained by the Merchant.
     In the event that evidence of the consumer's authorization is not present
     on the check, ECHO will assume that proper authorization was obtained
     either by way of the consumer's signature on a printed
     receipt/authorization, or that the consumer signed a contract with the
     Merchant containing an ongoing consumer authorization clause.  ECHO
     reserves the right to conduct periodic Merchant audits to insure that
     consumer authorizations are on file.  Merchants, in the Merchant ECR
     agreement, shall indemnify ECHO for their failure to obtain proper
     consumer authorization and authorize ECHO to periodically audit
     Merchant's consumer authorization documentation.

Note 2:  For every returned item submitted by a merchant, ECHO will assume
that proper consumer notices were posted at the Merchant location to allow for
the collection of a collection fee.


     Processing of ECR Collection Group :
     The item is immediately presented electronically (2nd Presentment) by
          ECHO for clearing via the ACH.
     If the 2nd Presentment clears the consumer's account (not returned by
                    consumer's bank within 5 banking days of 2nd presentment)
                    an electronic debit transaction, in an amount equal to the
                    maximum allowed by state law, is electronically presented
                    to the consumer's account via the ACH.
     If the 2nd Presentment of a item is returned (2nd Return) by the
                    consumer's bank, the check either remains in the ECR
                    Collection group (if eligible) or is placed in the Regular
                    Collection group.
     When a 3rd Presentment is necessary, ECHO will attempt to minimize the
                    likelihood of a 3rd Return by utilizing the following
                    procedure:
     For checks greater than fifty ($50) dollars, ECHO will attempt one (1)
                    funds verification call to the consumer's bank.  No
                    verification call will be attempted on checks of fifty
                    dollars or less.
     If a funds verification attempt verifies that sufficient funds are
                    available, the item will immediately be re-presented (3rd
                    Presentment).  Checks that do not require funds
                    verification (due to the amount) will immediately be re-
                    presented (3rd Presentment).
     On a check where a funds verification attempt was made, if the funds
                    verification attempt is not able to verify funds, the 3rd
                    Presentment of the item will be timed to hit the
                    consumer's account on the following 1st or 16th day of the
                    month without further funds verification attempts.
     If the 3rd Presentment clears the consumer's account (not returned by
                    consumer's bank within 5 banking days of 3rd Presentment)
                    the collection fee is charged to the consumer's account
                    via the ACH.
     If the 3rd Presentment is returned (3rd Return) by the consumer's bank,
                    the transaction can no longer be processed in the ECR
                    Collection group and (if applicable for this Merchant) is
                    placed in the Regular Collection group.

Note: If the 1st or 16th day of any month falls on a non-banking day, then any
banking related event scheduled for that day will be performed on the next
banking day following that 1st or 16th.

     Handling Regular Collection Group:
     a)   If a Merchant signs up for Regular Collection, ECHO will begin
                    normal Regular Collection efforts that typically include
                    sending collection letters and making phone calls.

          If a Merchant does not sign up for Regular Collection, ECHO will not
          perform any Regular Collection functions

Handling of Returned Collection Fees
In the event that a collection fee is returned unpaid by the consumer's bank,
that item will be re-presented (2nd Presentment) only one time.  That 2nd
Presentment will be timed to hit the consumer's account on the next 1st or
16th of the month.

Merchant Reimbursement for Recovered Items
Merchants will be reimbursed only for recovered items. Reimbursement will
occur on the 1st and 16th day of each month (or the first banking day
thereafter) via ACH credit to the Merchants' accounts as follows:

     Option 1 - ECR and Regular Collection (Merchant is required to post
     consumer notices and obtain a signature allowing electronic collection of
     the face amount of the check and a collection fee)
        % of funds collected via ECR
        % of funds collected via Regular Collection

     Option 2 - ECR only (Merchant is required to post consumer notices and
     obtain a signature allowing electronic collection of the face amount of
     the check and a collection fee)
        % of funds collected via ECR

     Option 3 - Regular Collection only (Merchant is required to post consumer
     notices allowing collection of a collection fee)
        % of funds collected via Regular Collection

     Old Checks Option (Merchant is required to have had consumer notices
     posted at the time the check was taken allowing electronic collection of
     the face amount of the check).
        % of Recovered Funds

Payment of Collection Fee Rebates to Merchants
Merchant will qualify to receive a rebate of a collection fee when the
following conditions are met:

Merchant's bank is forwarding returned items directly to ECHO.  This
requirement is due to the less profitable nature of Merchants that receive
returned items from their bank and either, (a) collect the "easy" items
themselves (and keep the collection fee), and/or (b) delay in forwarding them
for collection thereby reducing the likelihood of collection.
The full amount of both the collection item and the collection fee are
recovered via ECR.  (Items collected via Regular Collection are not subject to
Merchant rebates).
The collection fee transaction is not returned or otherwise charged back by
the consumer or the consumer's bank.
The amount of that collection fee is greater than $15

When the above conditions for rebate qualification are met, the Merchant will
receive rebates of    % of qualifying collection fees.  Rebates are paid twice
monthly via ACH credit to the Merchants' accounts.

When the above conditions for rebate qualification are not met, the Merchant
will not receive a collection fee rebate.
Technical Specifications, Flow Charts, etc.




<PAGE>
Merchant and Administrative Reporting Requirements

Administrative Reporting
NBDS will have online access to the following reports from ECHO:
     Check Status Report
     Total Merchant Listing
     Licensee Listing Report - future
     Sales Rep Listing Report
     Licensee Commission Report: ECR Collections
     Licensee Commission Report: Regular Collection
     NBDS Corporate Commissions Report: ECR Collections
     NBDS Corporate Commissions Report: Regular Collection
     Access to all reports available to ECR Merchants

Samples of the reports that ECHO will provide to NBDS are included in this
document.

Merchant Reporting
Electronic images of checks will be stored and available online for one (1)
year.  Merchant will receive detailed reporting of their account activity by
one of the following methods. Applicable reporting fees, as detailed below,
will be collected at the end of each calendar month via either ACH debit to
Merchant's account or net remittance.

Access to Online Reports - At any time throughout the collection process, the
Merchant can access their account activity information, via ECHO's online
reporting system, including a history and current status of each returned
item. Immediately upon entry of an item into the ECHO system and for one (1)
year thereafter, an item may be viewed or printed over the Internet.  To cover
the costs of supporting online reporting (password administration, etc.),
Merchants will be charged   ($      ) dollars per month for each Merchant site
set up to access online reporting.  This reporting fee structure is meant to
allow a Merchant to access ALL Merchant locations from a single Merchant site,
such as the home office, for the one ten dollar per month fee.

Reports via U.S. Mail - Merchant may receive reporting via U.S. Mail to
include (a) weekly check inventory report, (b) twice monthly remittance
statements reconciling the ACH credits to their accounts and, (c) monthly
collection statistics report.  Merchants will be charged   ($  ) dollars per
month for EACH Merchant location for which paper reports are generated
regardless of the address to which they are posted.  Paper reporting will be
sent via first class U.S. mail.

Merchant may choose reporting by both online and U.S. Mail.  In that event,
both online and paper reporting fees will be charged as applicable.


<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102


NBDS CORPORATE COMMISSIONS REPORT
REGULAR COLLECTIONS


BEGIN DATE:
END DATE:


Total Number of Checks=                        Gross Commission =$

Total Amount of Checks Entered=$               Licensee Commissions Due=$

Total Regular Fees =$

Total Special Fees =$



<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102



SALES REPS LISTING REPORT
LICENSEE: 500
LICENSEE NAME: CASH FLOW SOLUTIONS



BEGIN DATE:

END DATE:

Total Sales Reps Enrolled to Date: 2

Total New Sales Rep Enrolled: 1





<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102



LICENSEE LISTING REPORT



BEGIN DATE:

END DATE:

Total Sales Reps Enrolled to Date: 2

Total New Sales Rep Enrolled: 1





<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102

TOTAL MERCHANT LISTING
                                 SALES REP 500-A
                                  LICENSEE 500


BEGIN DATE:
END DATE:

NEW MERCHANTS ENROLLED: 3

MERCHANTS ENROLLED TO DATE: 5




<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102

LICENSEE COMMISSION REPORT
REGULAR COLLECTIONS
SALES REP 500-A
LICENSEE 500


BEGIN DATE:
END DATE:

Total Number of Checks=
Commissions Due=$




Recovery Rate = Percent of dollar amount of checks returned that are paid.
Total Recovery Rate = Average of recovery rate combined.

                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102


LICENSEE COMMISSION REPORT
RCK COLLECTIONS
SALES REP 500-A
LICENSEE 500


BEGIN DATE:
END DATE:


Total Number of Checks=
Commissions Due=$





Recovery Rate = Percent of dollar amount of checks returned that are paid,
plus rebates paid.
Total Recovery Rate = The average recovery rate combined.

<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102





                               CHECK STATUS REPORT
SALES REP 500-A
LICENSEE 500



BEGIN DATE:
END DATE:






Paid:Check paid in full.

Working:Account is still active and is being worked by our collection
department.

Returned:Returned to Merchant for internal collection, or criminal or civil
prosecution.

Uncollected:Check is uncollectable and has either been reported to credit
bureaus and/or check verification.
<PAGE>
                                   XpressCheX
               215 Central Ave. NW Ste. 3-B  Albuquerque, NM 87102


                        NBDS CORPORATE COMMISSIONS REPORT
RCK COLLECTIONS


BEGIN DATE:
END DATE:


Total Number of Checks=                        Total Retained Fees =$

Total Amount of Checks                         Gross Commission =$

Total Regular Fees =$                          Licensee Commissions Due=$

Total Rebates =$



<PAGE>
Pricing
Other than (a) applicable reporting fees (see "Merchant Reporting", page 6),
(b) check retrieval fees (see "Check Retrievals and Check Retrieval Fees"
below) and (c) any portion of the face value of a collected item retained by
ECHO, there is no charge to Merchants for the ECR or Regular Collection
service.

NBDS and ECHO reserve the right to mutually change or, on a Merchant by
Merchant basis, make exceptions to pricing policies as market conditions
warrant.

Check Retrievals and Check Retrieval Fees
Merchants with online reporting can retrieve check images online.  Check
images will be stored and available online for one (1) year from the date
received at ECHO.  Merchants requiring an image of a check subsequent to that
time will need to contact their original depository banks which are required
by law to retain check images for seven years.

Paper checks will be shredded one hundred and eighty (180) days after the date
received at ECHO.  Prior to the date an item is shredded, on an individual
check basis, Merchant may request the return of specific paper checks.  Such
checks will be mailed by ECHO within 3 business days of Merchant's request.
Actual receipt of the item(s) by Merchant is subject to U.S. Mail delivery
standards for first class mail.  The check retrieval fee for this service is
five dollars ($5) per item.

Retrieval Fees for Cancelled ECR Merchants - Upon written request from a
Merchant canceling the service, all original checks not yet shredded by ECHO
will be sent back to the Merchant without a retrieval fee.

Commissions
On items where the original item and the associated collection fee are both
recovered via ACH debit to the consumer's account, NBDS and ECHO will equally
split the Net Collection Fee.  As an example, the gross collection fee was
equal to $     ; the Merchant was paid a rebate of     ($    ) dollars,
therefore the resulting Net Collection Fee is $    .  This net fee is split
equally between ECHO and NBDS.

ECHO will retain    % of collection fees on items where either the original
check or the collection fee is recovered through Regular Collection
activities.

"Old Checks" Option - Typically these items will not include a collection fee
since the Merchant did not have the required consumer signature.  When an "Old
Check" is recovered, NBDS and ECHO will equally split the amount not refunded
to Merchant.

ECHO and NBDS will equally split online reporting fees.

ECHO will retain    % of paper reporting fees.

ECHO will retain    % of check retrieval fees.

On a periodic basis, ECHO and NBDS will each evaluate their respective
profitability derived from the ECR/Regular Collection service.  Should the
profitability of either party not meet its budgetary requirements, the
commission splits may be re-negotiated.  Should re-negotiation of the
commissions not achieve a solution that is suitable to both parties, increased
and/or additional fees to Merchants will be initiated.

Merchant Servicing
ECHO is responsible for providing Merchants with ongoing telephonic Merchant
support services.  NBDS is responsible for providing Merchant with an initial
orientation training on both the ECR and Regular Collection services and the
reporting system.

Licensee and Sales Person Servicing
NBDS is responsible for the training and ongoing support of NBDS licensee and
sales personnel.

Exclusivity issues
No exclusivity is attached to these services.


IN WITNESS WHEREOF, NBDS and ECHO have executed this Addendum by duly
authorized representatives effective as of the date set forth in the preamble.


Electronic Clearing House, Inc.    National Bank Drafting Systems, Inc.
("ECHO")                           ("NBDS")


By:___________________________________  By:_______________________________
     Jody Barry, CEO                         George Gouffray, Senior Vice
                                             President




                                                            EXHIBIT 10.45



                        AMENDMENT TO PRODUCT AND SOFTWARE
                        DEVELOPMENT AND LICENSE AGREEMENT

     This amendment to the Product and Software Development Agreement (which
original Agreement is dated as effective April 1, 1999) ("Amendment") is made
effective July 19, 2000, by and between innoVentry Corp. ("Licensee"), a
Delaware corporation with principal offices located at 534 Fourth Street, San
Francisco, California 94107, and Electronic Clearing House, Inc. ("Licensor"),
a Nevada corporation with principal offices located at 28001 Dorothy Drive,
Agoura Hills, California 91301.

                                    RECITALS

     Whereas the parties have mutually determined that it is in their best
interests to modify the original Agreement to accommodate a more mutually
beneficial commercial arrangement between the parties; and

     Whereas the parties have mutually agreed that such commercial arrangement
shall be in the form of a fully-paid, royalty free, exclusive, non-
transferrable, irrevocable and perpetual license to the Processing system and
sale of certain related equipment for the purpose of permitting Licensee to
perform Settlement Processing activities without the assistance or support of
Licensor;

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

                                   AMENDMENTS

The following terms shall be amended as described below:

     1.   Section 2.1.2, "Development and License," shall be replaced with the
          following new Section 2.1.2:

          "Section 2.1.2.  Processing System License.  Subject to all of the
          terms and conditions hereof, Licensor grants to Licensee and
          Licensee accepts from Licensor a fully-paid, royalty-free,
          exclusive, irrevocable and perpetual license to modify and use the
          Processing System for Licensee's own business purposes ("Software
          License").  Such license includes, but is not limited to, a license
          to all software and documentation set forth in Schedule 1, attached
          hereto.  Payment for such license is included in the fees set forth
          in Article 3 below."


     2.   Section 2.2, "EQUIPMENT & INSTALLATION," shall be replaced with the
          following new Section 2.2:

          2.2 Purchase of Equipment.

          2.2.1 Equipment and Prices.  Licensor agrees to sell and
          Licensee agrees to purchase the Equipment identified in
          Schedule 2, attached hereto.  Licensor agrees that
          Licensee shall be the beneficiary of any manufacturer's
          warranties that cover any such Equipment.

          2.2.2 Payment for Equipment.  Licensee agrees to pay
          Licensor for the Equipment, upon receipt of Licensor's
          invoice for such Equipment and upon payment terms as are
          set forth Schedule 2, attached hereto and incorporated by
          this reference.  Licensor will deliver the Equipment upon
          receipt of full payment for the Equipment.

          2.2.3 Warranty.  EXCEPT AS OTHERWISE EXPRESSLY AGREED IN
          WRITING, LICENSOR DISCLAIMS ALL WARRANTIES WITH RESPECT TO
          THE EQUIPMENT, INCLUDING THE IMPLIED WARRANTY OF
          MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
          DAMAGES HEREUNDER SHALL BE LIMITED TO THE FAIR MARKET
          VALUE OF EQUIPMENT ACTUALLY PURCHASED.  FOR THE PURPOSES
          OF THIS SECTION 2.2, LICENSOR SHALL NOT BE LIABLE, UNDER
          ANY LEGAL OR EQUITABLE THEORY, FOR SPECIAL, INCIDENTAL,
          CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING, BUT NOT
          LIMITED TO, LOSS OF PROFITS, REVENUE OR SAVINGS, EVEN IF
          ANY PARTY GIVES AND RECEIVES NOTICE OF THE POSSIBILITY OF
          SUCH DAMAGES.

          2.2.4 Equipment Assembly.  Licensee shall not be required
          to perform any assembly and testing of any Equipment or to
          perform any services of any kind or nature in connection
          with the Equipment other than to sell the Equipment to
          Licensee subject to the terms hereof.

     3.   Sections 2.3, 2.4, 3.2.5, and 3.2.6 are terminated in their
               entirety.

     4.   Sections 2.5, 2.6, 3.2.1, 3.2.2 and 3.2.4 shall continue in force
          and effect for a period of sixty (60) days from the effective date
          of this Amendment and shall terminate in their entirety thereafter.
          After September 30, 2000, Licensor shall have no obligation to
          perform any Settlement Processing of any kind or perform any daily
          settlement and/or chargeback processing activities, or any other
          activities required to be performed by Licensor pursuant to Sections
          2.5 and 2.6.

     5.   Sections 3.1.1 and 3.1.2 shall be replaced in their entirety
          with the following new Article 3, Section 3.1: "License Fee:
          For the License granted in Section 2.1.2, Licensee shall pay
          Licensor a one-time fee of $1,000,000.00 for the Software
          License as follows: $250,000 upon execution of this Amendment
          ("Amendment Effective Date"); and $750,000 on September 30,
          2000, and (ii) a daily fee from the funds handled in the
          settlement process performed by Licensor in connection with
          Scrip Gaming Transactions.  Licensor and Licensee further agree
          that the Daily Settlement Worksheet that has been utilized in
          the past accurately reflects the financial aspects of the Daily
          Settlement process and how Licensor's daily fee is calculated,
          on a daily basis, among other Daily Settlement calculations.
          Licensor's right to receive this daily fee shall terminate on
          October 1, 2000."

     6.   Article 5, "TERM/TERMINATION," shall be replaced with the
          following new Article 5: "Termination and Survival: The license
          granted to Licensee herein shall be irrevocable and perpetual,
          so long as Licensee remains in compliance with the terms
          herein.  Licensor shall have the right to terminate the License
          in the event Licensee materially breaches the terms of this
          Agreement, and such breach remains uncured for a period of
          greater than sixty (60) days after delivery of written notice
          to Licensee by Licensor.  Sections 2.1.2, 2.1.3, 2.1.4, 2.1.9,
          3.1, 3.2.3, Article 4 and Article 9 shall survive termination
          of this Amendment."

     7.   Article 6 is terminated in its entirety.

     8.   Section 9.9 shall be amended by adding new Section 9.9.1 at the
          end of the existing Section 9.9, as follows:

               "Section 9.1.1 - Provided, however, Licensor
               agrees that Licensee may assign its rights and
               obligations under this Agreement to any
               assignee.

     9.   Article 9 shall be amended by adding a new Section 9.17, as follows:

               "9.17 No Event of Default.  Neither party has
               knowledge of any Event of Default under the
               Agreement by the other party,

     10.  Software Development Services.  Licensor agrees to perform
          software development services for Licensee in connection with
          the Processing System software for the purpose of modifying the
          Processing System software and interfaces between software
          components and/or to accommodate any network changes.  Any such
          software development services performed by Licensor at
          Licensee's request shall be reimbursed to Licensor at the rate
          of $      per hour and shall be paid immediately upon receipt
          of Licensor's invoice.  Licensor reserves the right to require
          Licensee to make an advance deposit for the cost of performing
          software development services in the event any requests from
          Licensee to perform software development services will require,
          in Licensor's judgment, in excess of 200 hours of labor.
          Licensor further reserves the right to increase the hourly rate
          for which it will perform software development services or to
          terminate its obligation to provide software development
          services upon 30 days written notice to Licensee.

     All other Articles, Sections, terms and conditions of the Agreement shall
remain in full force and effect.

     IN WITNESS WHEREOF, Licensee and Licensor have executed this Amendment by
duly authorized representatives effective as of the date set forth in the
preamble

Dated:    July 19, 2000

Electronic Clearing House, Inc.

By:
Joel M. Barry
Chairman of the Board & CEO


Dated:    August 1, 2000

innoVentry, LLC

By:
Frank A. Petro, Jr.
CEO
<PAGE>
                                   Schedule 1

Software programs to be delivered to innoVentry:

1.   Cage/Kiosk Terminal Application.  The software that is the application
     for the cage terminals and the kiosk terminals.

2.   Terminal PROM Software: the software that is programmed into the boot
     PROM that exists in the case and kiosk terminals.

3.   TERM95 Terminal Upload/Download Software.  The software that is used to
     upload and download the cage and kiosk application software, printer
     software and configuration parameters.

4.   PostBridge Gateway Software: The software that inputs ATM requests and
     forwards them to TOAST/COAST.

5.   COAST Software: The software that runs the Casino Server (the computer)
     and is responsible for inputting requests from the terminals, PC Cage or
     the ATMs, parsing that request and routing the request to either OTP,
     POSTILION and/or the Casino Server (the software) and formatting a
     response to the originator.

6.   PostTerm Gateway Software: The software that forwards requests from COAST
     and delivers it to POSTILION.

7.   Casino Server Database: The database that provides procedures and tables
     that control and store the results of the Casino transactions.

8.   CasinoView Software: The application that allows a user to view, edit,
     delete or create transactions and sessions and to maintain configuration
     tables.

9.   Systest/Auto Download Software: The software that is used to control the
     processing of systest requests received from the cage and kiosk
     terminals.

10.  CreditDeposits Software: A scheduled function consisting of a program
     that performs deposits for credit card sessions based on time criteria.

11.  DebitReversal Software: A scheduled function consisting of two programs
     and two stored procedures that reverses debit card session based on time
     criteria.

12.  PPF Software: A scheduled function consisting of a program that creates a
     list of checks that comprise the positive pay file.

13.  DSW Software: A scheduled function that consists of a VBS script and two
     stored procedures that creates the daily settlement worksheets for
     individual casinos.

14.  DSWSum Software: A scheduled function that consists of a VBS script and
     two stored procedures that creates the daily settlement worksheet which
     is a summary of all casinos.

15.  Daily/ReportExtract Software: A scheduled function that consists of a
     program that summarizes in a flat file, the daily transaction activity
     for all casinos.

For each software program, the following is to be delivered:

"    Installation instructions: How the software is to be installed or
     alternatively, where it should be placed relative to a computer and file
     structure.

"    Software generation guide.  How to generate the software from its source
     form.

"    Brief description of each file: For each file (or stored procedure,
     table, etc.), a brief description of the function of that file.

Special Note: The PC Cage Software that runs on the Local Credit Server and
provides the intranet service to the casino cage PCs will also be provided as
well in this delivery of software but is not included in the purchase price
under Section 3.1.1.  An outstanding invoice of $     has already been sent to
innoVentry on March 7, 2000, that covers the costs associated therewith.


<PAGE>
                                   Schedule 2

                              Equipment and Prices

The prices shown for the kiosk and cage based equipment and supplies below
reflect ECHO's cost basis in the equipment and supplies.

1)   138 Kiosk Terminals at $      ea.  =
2)   15 boxes checks/10 packs/box at $     /pack  =
3)   4 electronic imprinters @ $    ea. =
4)   5 RP 121 printers @ $      ea.     =
5)   10 EB921 terminals @ $   =

Total Equipment Price:                                 $

Upon execution of the Amendment to the Agreement, ECHO will invoice innoVentry
for the equipment and supplies listed above and payment for the above
equipment and supplies will be due within 30 days of receipt of invoices from
ECHO.  ECHO will cease charging innoVentry for check supplies upon execution
of the Amendment and will ship the equipment and supplies as designated by
innoVentry on or before 9/30/00.





                                                       EXHIBIT 10.46



                              AMENDED AND RESTATED

              MERCHANT MARKETING AND PROCESSING SERVICES AGREEMENT


     THIS AMENDED AND RESTATED MERCHANT MARKETING AND PROCESSING SERVICES
AGREEMENT ("Agreement") is made effective as of August 1, 2000, by and between
First Regional Bank, ("Bank"), and Electronic Clearing House, Inc. ("ECHO")
and is intended to supercede the Agreement dated June 24, 1997.

                                    RECITALS

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

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

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

     WHEREAS, both Bank and ECHO desire to maintain a long-term, mutually
profitable business relationship.

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

                             ARTICLE 1 - DEFINITIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     1.14      "MasterCard" means MasterCard International.

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

     1.16      "Merchant" means businesses that accept the Card.

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

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

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

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

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

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

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

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

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

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

               ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF ECHO

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

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

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

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

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

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

               ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BANK

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

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

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

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

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

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

                    ARTICLE 4 - CONDITIONS PRECEDENT OF BANK

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

          (a)  This Agreement;

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

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

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

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

                    ARTICLE 5 - CONDITIONS PRECEDENT OF ECHO

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

          (a)  This Agreement;

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

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

                           ARTICLE 6 - DUTIES OF ECHO

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

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

     6.1  SALES AND MARKETING

     6.1.1     Sales and Marketing Compliance.  Conduct its Merchant
     solicitation activities in strict compliance with the rules and
     regulations of Visa, MasterCard and this Agreement, and use its best
     efforts to solicit Merchants for the Bank's Merchant Services program so
     that the number of new Merchants added averages     per month or Merchant
     sales volume increases by not less than $    million annually.

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

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

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

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

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

6.2       AUTHORIZATION

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

6.3       SETTLEMENT

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

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

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

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

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

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

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

6.4       FUNDS DISTRIBUTION

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

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

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


Percentage                    Previous Monthly Aggregate Average DDA
Balances of ECHO              Merchants and ECHO
Corporate Deposits

     %                        Less than and up to $   million


     %                        Greater than $   million and up to $   million


     %                        Greater than $   million and up to $   million


     %                        Greater than $   million and up to $   million


     %                        Greater than $   million and up to $   million


     %                        Greater than $   million

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

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

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

               (a)  Chargeback Reserve Account.

               (b)  Settlement Processor Reserve Account.

               (c)  MasterCard/Visa Reserve Account.

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

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

6.5       CHARGEBACKS

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

6.6       SECURITY; MONITORING

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

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

6.7       CUSTOMER SERVICE

     6.7.1     Customer Service.  Provide customer service to Merchants 7 days
     a week, 24 hours a day.  This customer service activity shall be
     available to Merchants via 800 number line access for the purpose of
     responding to Merchant inquiries regarding credit card transactions,
     equipment operation, and repair services offered.  At ECHO's sole
     election and determination, ECHO may provide field service to merchants.

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

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

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

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

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

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

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

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

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

                           ARTICLE 7 - DUTIES OF BANK

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

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

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

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

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

7.5       Exclusivity; Non-competition.  Not enter into any new relationship
with any other person or entity which would interfere or compete with ECHO's
relationship with Bank pursuant to this Agreement provided that ECHO continues
to meet the production standard for growth in the number of Merchants or the
Merchant sales volume as set forth in Section 6.1.1 hereof.  Bank acknowledges
and agrees that ECHO may provide its services through other credit card
processing banks and financial institutions in addition to Bank provided that
ECHO continues to meet the production standard for growth in the number of
Merchants or the Merchant sales volume as set forth in Section 6.1.1 hereof.

7.6       Registration of ECHO with the Federal Reserve Bank.  Register ECHO
with
the Federal Reserve Bank ("FRB") as a remote originator with ACH or any other
registration necessary to permit electronic funds transfer activity in
connection with Bank's Merchant Services credit card program.  ECHO's check
truncation and similar programs shall be governed by separate written
agreements between the parties.

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

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

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

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

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

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

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

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

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

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

7.17      Financial Statements.  Provide ECHO with copies of Bank's Annual
Report, and Quarterly Call Reports upon request.

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

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

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

7.21      Agent Bank Processing.   Bank agrees to allow any approved agent
bank, including EC Bank (proposed), to be added to Bank's Settlement Processor
arrangement, under the Settlement Processor Agreement currently in effect, and
with appropriate indemnities in favor of Bank, for the purpose of settling
agent bank's merchant sales transaction.  All costs associated with setup and
settlement shall be borne by ECHO.

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

7.23      Volume Restrictions.  Anything in this Agreement to the contrary
notwithstanding, Bank shall not be obligated to process Merchant sales volume
in excess of the maximum dollar volumes, if any, established from time to time
("Volume Restrictions") by Visa, MasterCard, or by any bank regulatory
authority having jurisdiction over Bank or by Bank, in its reasonable
judgment, based upon risk exposure or capital requirements.  The Bank's
inability to accept new merchants or process additional Merchant sales volume
due to Volume Restrictions shall not constitute a breach of Section 6.1.1. by
either party nor shall it relieve the Bank from the restrictions imposed under
Section 7.5 hereof.

                               ARTICLE 8 - GENERAL

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

TO BANK:                           TO ECHO:

First Regional Bank                Electronic Clearing House, Inc.
28310 Roadside Dr., #250           28001 Dorothy Drive
Agoura Hills, CA 91301             Agoura Hills, CA 91301-2697
Attention: Merchant Services       Attn: Jack Wilson
FAX or Telex No.: (818) 735-9699   FAX or Telex No.: (818) 879-7165

Each party may change the address to which notices, requests and other
communications are to be sent by giving written notice of such change to
either party.

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

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

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

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

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

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

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

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

8.10      Term.  This Agreement will be for an initial term of five (5) years
from the effective date set forth in the preamble and full execution hereof
and shall be subject to automatic renewals for five (5) year periods unless
previously terminated by either party in accordance with the terms herein.

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

8.12      Termination.  Either party may terminate this Agreement without
cause effective at the end of the initial term, or any renewal thereof, upon
not less than 180 days prior written notice.

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

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

          i)   Bank fails to qualify for, or maintain, Visa or MasterCard
               qualification as a credit card processing Bank; or

          ii)  Bank's capital falls below the level required by the regulatory
               agency overseeing state chartered banks, presently the
               California Department of Financial Institutions, to be an
               "adequately" capitalized bank; or

          (i)  Bank is merged with, or acquired by, any other entity and is
                         not the survivor.

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

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

8.14      Post Notice Of Termination Relationship.  In the event either Bank
or ECHO terminates this Agreement without cause, pursuant to the provisions of
Section 8.12, ECHO shall continue to process under the sponsorship of Bank
those Merchants approved by Bank under the terms of this Agreement, as well as
new Merchants approved by Bank during the period following notice of
termination.  Adding new Merchants may continue for up to six (6) months
following notice of termination.  During the period following notice of
termination, Bank shall not withhold its reasonable approval for any new
Merchants marketed and added for processing by ECHO under the terms of this
Agreement.  All compensation and processing costs shall continue to be paid
and ECHO's chargeback reserve account would continue to be maintained as set
forth under this Agreement following notice of termination and for a period of
one (1) year following the transfer of the Merchants to another qualified
sponsoring bank.  After termination, ECHO shall have the right to transfer
Merchants to another qualified sponsoring bank over a twenty-four (24) month
period in substantially equal installments so that the number of Merchants and
their related demand deposit balances decline in a constant manner.  Bank
shall execute all necessary transfer and assignment documents to accommodate
such transfer over a twenty-four (24) month period and compensation to Bank
shall cease upon transfer of each respective group of Merchants.  Bank shall
not solicit Merchants to leave ECHO nor shall ECHO solicit Merchants to leave
Bank.  In the event ECHO terminates this Agreement pursuant to any of the
provisions of Section 8.13, ECHO shall have the right to transfer Merchants to
another qualified sponsoring bank and Bank shall execute all necessary
transfer and assignment documents to accommodate such transfer and all
compensation to Bank shall cease upon transfer of Merchants.  If this
Agreement is terminated for cause as defined in Section 8.13, the post
termination relationship as set forth in this Section 8.14 does not apply
except for ECHO's ability to add new Merchants as provided for in this
Section.

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

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

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

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

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

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

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

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

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

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


ELECTRONIC CLEARING HOUSE, INC.


By: ________________________________________
       Jack Wilson
       Vice President


FIRST REGIONAL BANK


By: ________________________________________
      Thomas E. McCullough
      Executive Vice President


By: ________________________________________
       Charles Arrindell
       Senior Vice President



                        ADDENDUM TO AMENDED AND RESTATED

              MERCHANT MARKETING AND PROCESSING SERVICES AGREEMENT


     THIS ADDENDUM TO AMENDED AND RESTATED MERCHANT MARKETING AND PROCESSING
SERVICES AGREEMENT ("Addendum") is made effective as of the 1st day of August,
2000, by and between First Regional Bank ("Bank") and Electronic Clearing
House, Inc. ("ECHO").

                                    RECITALS

     WHEREAS, Bank and ECHO have entered into that certain Amended and
Restated Merchant Marketing and Processing Services Agreement ("Agreement") as
of August 1, 2000; and

     WHEREAS, Section 6.4.3 of the Agreement specifies compensation to be
received by the Bank based upon a percentage of the sum of each day's sales
transaction for each Merchant; and

     WHEREAS, as a marketing promotion, ECHO wishes to provide new Merchants
with processing at a lower rate than ECHO currently charges; and

     WHEREAS, in connection with the marketing promotion, ECHO has requested
that the Bank forgo the compensation specified in Section 6.4.3, with respect
to new Merchants only, and in lieu thereof to accept a flat processing fee
equal to       cents ($     ) per transaction; and

     WHEREAS, Bank is willing to accommodate ECHO on a temporary, experimental
basis with this new pricing formula.

     NOW, THEREFORE, it is agreed by and between the parties as follows:

     1.   For a period of one (1) year from the date hereof, with respect to
     new Merchants who are signed up from and after August 1, 2000, Bank shall
     forgo the monies it would otherwise be entitled to under Section 6.4.3 of
     the Agreement, and in lieu thereof will receive from ECHO a processing
     fee equal to      cents ($    ) per transaction.

     2.   The provisions of this Addendum, and particularly Paragraph 1 above,
     shall be applicable only to new Merchants, that is Merchants who have not
     processed their credit card business with, either Bank or ECHO under
     sponsorship of Bank, during the period from October 1, 1997 through
     August 1, 2000.

     3.   This Addendum, and the provisions thereof, shall be reviewed one (1)
     year from the execution of this Addendum.  At that time, any extension of
     the provisions of this Addendum beyond one (1) year from the date of
     execution hereof shall be at the sole and absolute discretion of each of
     the parties hereto.

     4.   Should the parties not be able to agree, in writing, to extend this
     Addendum or revise its provisions within ninety (90) days of its
     expiration date, then all Bank compensation shall revert to the terms in
     Section 6.4.3.  At that time, any extension of the provisions of this
     Addendum beyond one (1) year from the date of execution hereof shall be
     at the sole and absolute discretion of each of the parties hereto.

     Except as specifically set forth in this Addendum, all of the provisions
of the Agreement shall remain in full force and effect.

     IN WITNESS WHEREOF, this Addendum has been executed as of the date first
hereinabove written.

ELECTRONIC CLEARING HOUSE, INC.


By: ________________________________
       Jack Wilson
       Vice President


FIRST REGIONAL BANK


By: ____________________________
      Thomas E. McCullough
      Executive Vice President


By: ____________________________
      Charles Arrindell
      Senior Vice President