UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark  One)
 X   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
---  Act  of  1934

FOR  THE  PERIOD  ENDED  DECEMBER  31,  2004

                                       OR

     Transition  report  pursuant  to  Section  13  or  15(d)  of the Securities
---  Exchange  Act  of  1934

COMMISSION  FILE  NUMBER:  0-15245


                         ELECTRONIC CLEARING HOUSE, INC.
             (Exact name of registrant as specified in its charter)


     NEVADA                                          93-0946274
     (State  or  other  jurisdiction  of             (I.R.S.  Employer
     incorporation  or  organization)                Identification  No.)


                              730 PASEO CAMARILLO,
                           CAMARILLO, CALIFORNIA 93010
                    (Address of principal executive offices)


           TELEPHONE NUMBER (805) 419-8700, FAX NUMBER (805) 419-8689
                                WWW.ECHO-INC.COM
     (Registrant's telephone number, including area code; fax number; web site
                                    address)

     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 whether the registrant is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act).

                          Yes                     No  X
                                                     ---

     As  of  February  1,  2005,  there were 6,500,581shares of the Registrant's
Common  Stock  outstanding.





                         ELECTRONIC CLEARING HOUSE, INC.

                                      INDEX
                                      -----


                                                                      Page No.
                                                                      --------

                       PART I.  FINANCIAL INFORMATION

                                                                
Item 1.  Consolidated Financial Statements (unaudited)

         Consolidated Balance Sheets                                         3
          December 31, 2004 and September 30, 2004

         Consolidated Statements of Operations                               4
          Three months ended December 31, 2004 and 2003

         Consolidated Statements of Cash Flows                               5
          Three months ended December 31, 2004 and 2003

         Notes to Consolidated Financial Statements                          6

Item 2.  Management's Discussion and Analysis of                            11
          Financial Condition and Results of Operations

Item 3.  Quantitative and Qualitative Disclosures About Market Risk         23

Item 4.  Controls and Procedures                                            23


                        PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings                                                  24

Item 6.  Exhibits and Reports on Form 8-K                                   24

         Signatures                                                         25



                                        2



PART  I.  FINANCIAL  INFORMATION
--------------------------------
ITEM  1.  CONSOLIDATED  FINANCIAL  STATEMENTS

                                 ELECTRONIC CLEARING HOUSE, INC.
                                   CONSOLIDATED BALANCE SHEETS
                                           (UNAUDITED)

                                             ASSETS
                                             ------
                                                                  DECEMBER 31,    SEPTEMBER 30,
                                                                      2004            2004
                                                                 --------------  ---------------
                                                                           
Current assets:
    Cash and cash equivalents                                    $   7,274,000   $    7,576,000 
    Restricted cash                                                  1,260,000        1,024,000 
    Settlement deposits                                             15,082,000       18,282,000 
    Settlement receivable less allowance of $25,000 and $22,000        841,000          451,000 
    Accounts receivable less allowance of $158,000 and $111,000      2,063,000        1,943,000 
    Prepaid expenses and other assets                                  542,000          368,000 
    Deferred tax asset                                                  70,000          279,000 
                                                                 --------------  ---------------
        Total current assets                                        27,132,000       29,923,000 

Noncurrent assets:
    Property and equipment, net                                      2,250,000        2,293,000 
    Software, net                                                    7,385,000        6,844,000 
    Other assets, net                                                  356,000          368,000 
                                                                 --------------  ---------------

        Total assets                                             $  37,123,000   $    39,428,00 
                                                                 ==============  ===============

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

Current liabilities:
    Short-term borrowings and current portion of long-term debt
      and capital leases                                         $     752,000   $      878,000 
    Accounts payable                                                   384,000          305,000 
    Settlement payable                                              15,923,000       18,733,000 
    Accrued expenses                                                 2,668,000        2,003,000 
                                                                 --------------  ---------------
        Total current liabilities                                   19,727,000       21,919,000 

Noncurrent liabilities:
    Long-term debt and capital leases                                  583,000          704,000 
    Deferred tax liability                                             390,000          565,000 
                                                                 --------------  ---------------
        Total liabilities                                           20,700,000       23,188,000 
                                                                 --------------  ---------------

Commitments and contingencies - see Note 6

Stockholders' equity:
    Common stock, $.01 par value, 36,000,000 authorized;
    6,488,281 and 6,451,331 shares issued; 6,450,012 and
    6,413,062 shares outstanding, respectively                          65,000           64,000 
    Additional paid-in capital                                      24,788,000       24,658,000 
    Accumulated deficit                                             (7,964,000)      (8,016,000)
Less treasury stock at cost, 38,269 common shares                     (466,000)        (466,000)
                                                                 --------------  ---------------
        Total stockholders' equity                                  16,423,000       16,240,000 
                                                                 --------------  ---------------

        Total liabilities and stockholders' equity               $  37,123,000   $   39,428,000 
                                                                 ==============  ===============

                   See accompanying notes to consolidated financial statements



                                        3



                         ELECTRONIC CLEARING HOUSE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                         THREE MONTHS
                                                       ENDED DECEMBER 31,
                                                  --------------------------
                                                      2004          2003
                                                  ------------  ------------
                                                          
REVENUES                                          $12,760,000   $11,483,000 
                                                  ------------  ------------

COSTS AND EXPENSES:
    Processing and transaction expense              8,171,000     7,019,000 
    Other operating costs                           1,333,000     1,340,000 
    Research and development expense                  448,000       383,000 
    Selling, general and administrative expenses    2,721,000     1,728,000 
                                                  ------------  ------------

                                                   12,673,000    10,470,000 
                                                  ------------  ------------

Income from operations                                 87,000     1,013,000 

Interest income                                        28,000        13,000 
Interest expense                                      (28,000)      (56,000)
                                                  ------------  ------------

Income before provision for income taxes               87,000       970,000 

Provision for income taxes                            (35,000)     (381,000)
                                                  ------------  ------------
Net income                                        $    52,000   $   589,000 
                                                  ============  ============

Basic net earnings per share                      $      0.01   $      0.10 
                                                  ============  ============

Diluted net earnings per share                    $      0.01   $      0.09 
                                                  ============  ============

Weighted average shares outstanding
    Basic                                           6,427,305     6,182,767 
                                                  ============  ============
    Diluted                                         6,882,761     6,678,880 
                                                  ============  ============

          See accompanying notes to consolidated financial statements.



                                        4



                           ELECTRONIC CLEARING HOUSE, INC.
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)


                                                                 THREE MONTHS
                                                              ENDED DECEMBER 31,
                                                          --------------------------
                                                              2004          2003
                                                          ------------  ------------
                                                                  
Cash flows from operating activities:
  Net income                                              $    52,000   $   589,000 
  Adjustments to reconcile net income to net
    cash provided by operating activities:
  Depreciation                                                183,000       176,000 
  Amortization of software                                    407,000       330,000 
  Provisions for losses on accounts and notes receivable       50,000        28,000 
  Deferred income taxes                                        34,000       381,000 
  Stock option compensation                                     8,000         9,000 
Changes in assets and liabilities:
  Restricted cash                                            (236,000)     (152,000)
  Settlement deposits                                       3,200,000    (4,954,000)
  Accounts receivable                                        (167,000)     (131,000)
  Settlement receivable                                      (393,000)     (361,000)
  Accounts payable                                             79,000      (329,000)
  Settlement payable                                       (2,810,000)    5,315,000 
  Deferred income                                                 -0-       100,000 
  Accrued expenses                                            665,000        69,000 
  Prepaid expenses                                           (174,000)      (35,000)
                                                          ------------  ------------

  Net cash provided by operating activities                   898,000     1,035,000 
                                                          ------------  ------------

Cash flows from investing activities:
  Other assets                                                  3,000         1,000 
  Purchase of equipment                                      (140,000)     (305,000)
  Purchased and capitalized software                         (939,000)     (664,000)
                                                          ------------  ------------

  Net cash used in investing activities                    (1,076,000)     (968,000)
                                                          ------------  ------------


Cash flows from financing activities:
  Proceeds from issuance of notes payable                         -0-       211,000 
  Repayment of notes payable                                 (111,000)     (112,000)
  Repayment of capitalized leases                            (136,000)     (129,000)
  Proceeds from private placement of common stock                 -0-     2,761,000 
  Proceeds from exercise of stock options                     123,000        47,000 
                                                          ------------  ------------
  Net cash (used in) provided by financing activities        (124,000)    2,778,000 
                                                          ------------  ------------

Net (decrease) increase in cash                              (302,000)    2,845,000 
Cash and cash equivalents at beginning of period            7,576,000     2,908,000 
                                                          ------------  ------------

Cash and cash equivalents at end of period                $ 7,274,000   $ 5,753,000 
                                                          ============  ============

            See accompanying notes to consolidated financial statements.



                                        5

                         ELECTRONIC CLEARING HOUSE, INC.
                         -------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


NOTE  1  -  BASIS  OF  PRESENTATION:
------------------------------------

The  accompanying consolidated financial statements as of the three-month period
ended  December  31, 2004, are unaudited and reflect all adjustments (consisting
only  of  normal recurring adjustments) which are, in the opinion of management,
necessary  for  a  fair  statement  of the financial position and the results of
operations for the interim periods. The consolidated financial statements herein
should  be  read  in  conjunction with the consolidated financial statements and
notes  thereto,  together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Annual Report on
Form  10-K  for  the  fiscal  year  ended  September  30,  2004.  The results of
operations  for  the  three  months  ended December 31, 2004 are not necessarily
indicative of the likely results for the entire fiscal year ending September 30,
2005.  Certain  reclassifications  have  been  made  to the prior year financial
statements  to  conform  with  the  current  year  presentation.

During  the  first  quarter  of  2005, the Company revised the way it classifies
certain  commission  expenses  paid to its independent sales agents who sell the
Company's bankcard processing services to merchants.  The gross commissions paid
are  now  recorded  as  processing  and  transaction expense in the consolidated
statements  of  operations.  Previously, the commissions paid to the independent
sales  agents  were  recorded  as  a  reduction  to  the  revenue  earned on the
transaction.

For  the  presentation  of the three months ended December 31, 2004, the Company
has  revised  amounts  previously  reported  to  conform  to  the  revised
classification.  None  of  the classification changes has an impact on the gross
margin,  operating  income,  net  income,  net  cash  flow or any element of the
Company's  consolidated  balance  sheets  for all periods presented. The Company
does  not consider the effect of these revisions in classification in 2004 or in
prior  periods,  individually  or  in  the  aggregate,  to  be  material.


NOTE  2  -  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  amended  by  SFAS  No.  148.

The  Company  measures  compensation  expense  for  its  employee  stock-based
compensation  under  APB  25.  The Company provides pro-forma disclosures of net
income  and  earnings per share as if a fair value method had been applied using
the  Black  Scholes option pricing model.  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  the  optionee.  Compensation  expense is recorded over the vesting
period.  Pro forma compensation costs for employee stock and stock option awards
is  amortized  over  the related service periods using the straight-line method.

The  following  table  compares net income and earnings per share as reported to
the  pro  forma  amounts  that  would  be reported had compensation expense been
recognized  for  the  stock-compensation plans in accordance with the fair value
recognition  provisions of SFAS No. 123, as amended by SFAS No. 148, "Accounting
for  Stock-Based  Compensation":


                                        6



NOTE  2:  (CONTINUED)
-------

                                             THREE MONTHS ENDED
                                                DECEMBER 31,
                                          ------------------------
                                             2004         2003
                                          -----------  -----------
                                                 
Net income, as reported                   $   52,000   $  589,000 

Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effect                      5,000        5,000 

Deduct: Total stock-based employee
compensation expense determined
under fair value-based method for
all awards, net of related tax effects      (128,000)     (53,000)
                                          -----------  -----------

Pro forma net (loss) income               $  (71,000)  $  541,000 
                                          ===========  ===========

Net earnings (loss) per share:
  Basic - as reported                     $     0.01   $     0.10 
  Basic - pro forma                       $    (0.01)  $     0.09 

  Diluted - as reported                   $     0.01   $     0.09 
  Diluted - pro forma                     $    (0.0l)  $     0.08 



NOTE  3  -  EARNINGS  PER  SHARE:
---------------------------------

The  Company calculates earnings per share as required by Statement of Financial
Accounting  Standard  No.  128,  "Earnings  per  Share".



                                                        THREE MONTHS ENDED DECEMBER 31,
                                                            2004               2003
                                                      -----------------  ----------------
                                                                   
Numerator:
    Net income                                        $          52,000  $        589,000
                                                      =================  ================

Denominator:
    Weighted average shares outstanding for basic
      earnings per share                                      6,427,305         6,182,767
    Effect of dilutive stock options                            455,456           496,113
                                                      -----------------  ----------------
    Adjusted weighted average shares outstanding for
      diluted earnings per share                              6,882,761         6,678,880
                                                      =================  ================

    Basic net earnings per share                      $            0.01  $           0.10
                                                      =================  ================

    Diluted net earnings per share                    $            0.01  $           0.09
                                                      =================  ================


For  the three months ended December 31, 2004 and 2003, 89,500 and 85,750 shares
attributable  to  the  exercise  of  outstanding  options were excluded from the
calculation  of  diluted earnings per share because the effect was antidilutive.


                                        7



NOTE  4  -  SUPPLEMENTAL  CASH  FLOW  INFORMATION:
--------------------------------------------------

                               THREE  MONTHS
                                DECEMBER 31
                          ----------------------
                            2004          2003
                          --------       -------
                                   
Cash paid for:
  Interest                $ 28,000       $56,000
  Income taxes             110,000         7,000


Significant  non-cash  transactions for the three months ended December 31, 2004
were  as  follows:

     -    None.

Significant  non-cash  transactions for the three months ended December 31, 2003
were  as  follows:

     -    Software  purchases of $285,000 and capital equipment of $152,000 were
          acquired  under  capital  leases.


NOTE  5  -  SEGMENT  INFORMATION:
---------------------------------

The  Company  primarily  operates  in  two  business  segments:  Bankcard  and
transaction  processing  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
the  Company's  product  lines. 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.



                                          FOR THE THREE MONTHS ENDED
                                                 DECEMBER 31,
                                            2004             2003
                                       ---------------  ---------------
                                                  
Revenues:
  Bankcard and transaction processing  $    9,182,000   $    8,752,000 
  Check-related products                    3,578,000        2,731,000 
                                       ---------------  ---------------
                                       $   12,760,000   $   11,483,000 
                                       ===============  ===============

Operating income:
  Bankcard and transaction processing  $    1,332,000   $    1,551,000 
  Check-related products                      641,000          412,000 
  Other                                    (1,886,000)        (950,000)
                                       ---------------  ---------------
                                       $       87,000   $    1,013,000 
                                       ===============  ===============


                                          DECEMBER 31,   SEPTEMBER 30,
                                             2004            2004
                                       ---------------  ---------------
Total assets:
  Bankcard and transaction processing  $    8,170,000   $    8,014,000 
  Check-related products                   21,882,000       23,933,000 
  Other                                     7,071,000        7,481,000 
                                       ---------------  ---------------
                                       $   37,123,000   $   39,428,000 
                                       ===============  ===============



                                        8

NOTE  6  -  COMMITMENTS,  CONTINGENT  LIABILITIES,  AND  GUARANTEES:
--------------------------------------------------------------------

The  Company currently relies on cooperative relationships with, and sponsorship
by,  one  bank  in  order  to  process  its  Visa, MasterCard and other bankcard
transactions.  The  agreement  between  the  bank  and  the Company requires the
Company  to  assume and compensate the bank for bearing the risk of "chargeback"
losses.  Under  the  rules  of  Visa  and  MasterCard, when a merchant processor
acquires  card  transactions,  it  has  certain  contingent  liabilities for the
transactions  processed.  This  contingent  liability  arises  in the event of a
billing  dispute  between  the  merchant  and  a  cardholder  that is ultimately
resolved in the cardholder's favor.  In such a case, the disputed transaction is
charged  back  to  the merchant and the disputed amount is credited or otherwise
refunded  to  the  cardholder.  If  the Company is unable to collect this amount
from  the  merchant's  account,  and  if  the  merchant  refuses or is unable to
reimburse  the  Company  for the chargeback due to merchant fraud, insolvency or
other  reasons, the Company will bear the loss for the amount of the refund paid
to  the  cardholders. The Company utilizes a number of systems and procedures to
manage merchant risk. In addition, the Company requires cash deposits by certain
merchants,  which are held by the Company's sponsoring bank to minimize the risk
that  chargebacks  are not collectible from merchants. A cardholder, through its
issuing  bank, generally has until the later of up to four months after the date
a  transaction is processed or the delivery of the product or service to present
a  chargeback  to  the  Company's  sponsoring  bank  as  the merchant processor.
Therefore,  management  believes  that  the  maximum  potential exposure for the
chargebacks  would not exceed the total amount of transactions processed through
Visa and MasterCard for the last four months and other unresolved chargebacks in
the  process of resolution.  For the last four months through December 31, 2004,
this  potential  exposure  totaled  approximately  $352 million. At December 31,
2004,  the  Company,  through its sponsoring bank, had approximately $185,000 of
unresolved  chargebacks that were in the process of resolution.  At December 31,
2004,  the  Company,  through its sponsoring bank, had access to $8.2 million in
merchant  deposits  to  cover  any  potential  chargeback  losses.

For  the  three-month  period  ended  December  31,  2004  and 2003, the Company
processed  approximately $262 million (2004) and $251 million (2003) of Visa and
MasterCard  transactions,  which  resulted  in  $1.6 million in gross chargeback
activities for the three months ended December 31, 2004 and $1.8 million for the
three  months  ended  December  31, 2003. Substantially all of these chargebacks
were  recovered  from  the  merchants.

The  Company's  contingent  obligation with respect to chargebacks constitutes a
guarantee as defined in Financial Accounting Interpretation No. 45, "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantee,  Including  Indirect
Guarantees  of  Others"  ("FIN  45").  FIN 45 requires that guarantees issued or
modified subsequent to December 31, 2002 be initially recorded as liabilities in
the  Statement  of  Financial  Position  at  fair  value.  Since  the  Company's
agreement  with its sponsoring bank, which establishes the guarantee obligation,
was entered into prior to December 31, 2002 and has not been modified since that
date,  the measurement provisions of FIN 45 are not applicable to this guarantee
arrangement.

In  accordance  with  SFAS  No.  5,  "Accounting for Contingencies", the Company
records  a  reserve for chargeback loss allowance based on its processing volume
and historical trends and data.  As of December 31, 2004 and 2003, the allowance
for  chargeback  losses, which is classified as a component of the allowance for
uncollectible  accounts  receivable, was $63,000 and $49,000, respectively.  The
expense  associated  with  the valuation allowance is included in processing and
transaction  expense in the accompanying consolidated statements of income.  For
the  three-month  period  ended December 31, 2004 and 2003, the Company expensed
$20,000  and  $17,000.

In  its  check guarantee business, the Company charges the merchant a percentage
of  the  face  amount  of  the  check and guarantees payment of the check to the
merchant  in  the  event  the  check  is  not honored by the checkwriter's bank.
Merchants  typically  present  customer checks for processing on a regular basis
and,  therefore, dishonored checks are generally identified within a few days of
the  date  the  checks  are  guaranteed  by the Company. Accordingly, management
believes  that its best estimate of the Company's maximum potential exposure for
dishonored  checks  at  any  given balance sheet date would not exceed the total
amount of checks guaranteed in the last 10 days prior to the balance sheet date.
As  of  December  31,  2004,  the  Company  estimates that its maximum potential
dishonored  check  exposure  was  approximately  $939,000.


                                        9

NOTE  6:  (CONTINUED)
-------

For  the  quarters  ended  December  31,  2004  and 2003, the Company guaranteed
approximately  $7,107,000 (2004) and $3,958,000 (2003) of merchant checks, which
resulted  in $29,000 (2004) and $17,000 (2003) of dishonored checks presented to
the  Company for payments.  The Company has the right to collect the full amount
of  the  check from the checkwriter.  Based on its actual collection experience,
the  Company  collects  approximately 50-60% of the total dishonored checks with
image  and  10-20%  without  image.  The  Company establishes a reserve for this
activity  based on historical and projected loss experience.  As of December 31,
2004  and  2003,  the  reserve  for  check guarantee loss was $56,000 (2004) and
$14,000  (2003). The expense associated with the valuation allowance is included
in  processing  and  transaction  expense  in  the  accompanying  consolidated
statements  of  income.


NOTE  7  -  LITIGATION
----------------------

The  Company is involved in various legal matters 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.

In  August  2003,  one  of the Company's independent sales organizations filed a
breach  of  contract  arbitration  claim  against  the  Company  in Los Angeles,
California.  The  dispute involved a disagreement related to the manner in which
commissions  were  to be calculated under the agreement.  The agreement with the
ISO  required  binding  arbitration of all disputes arising under the agreement.
The  arbitration  proceedings  occurred  in December 2004.  In January 2005, the
arbitration  panel  overseeing  the  dispute  awarded  the  independent  sales
organization $501,000, which exceeded the Company's previous accrual of $300,000
at  September  30,  2004.  In addition to this award amount, the Company will be
required  to  pay  legal  fees on behalf of this independent sales organization,
which  are  estimated  to be up to $185,000. While the final determination as to
legal  fees  is  subject  to  change once the arbitration panel provides a final
determination,  management  believes  any change will not have a material effect
upon  either the Company's results of operations or its financial condition.  As
a  result  of  the  foregoing,  the  Company  has accrued a total of $400,000 in
connection  with  this  dispute.


                                       10

ITEM  2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               -------------------------------------------------
                      CONDITION AND RESULTS OF OPERATIONS
                      -----------------------------------


FORWARD-LOOKING  STATEMENTS

The  discussion  of  the  financial  condition  and results of operations of 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, and in the
Company's  Annual  Report  on  Form 10-K for the fiscal year ended September 30,
2004.


OVERVIEW

Electronic Clearing House, Inc. is an electronic payment processor that provides
for  the  payment  processing needs of merchants, banks and collection agencies.
We derive the majority of our revenues from two main business segments: bankcard
and  transaction  processing services, whereby we provide solutions to merchants
and banks to allow them to accept credit and debit card payments from consumers;
and check-related products, whereby we provide various services to merchants and
banks  to  allow  them to accept and process check payments from consumers.  The
principal  services  we  offer  within these two segments include the following:

With  respect  to  our  bankcard  and  transaction  processing  services:

     -    Debit  and  credit  card  processing;  and
     -    U-Haul  transaction  processing.

With  respect  to  our  check-related  products:

     -    Check  verification - where, prior to approving a check, we search our
          negative  and  positive  checkwriter database to determine whether the
          checkwriter  has  current,  delinquent  check-related  debts;
     -    Electronic  check  conversion - the conversion of a paper check at the
          point of sale to a direct bank debit which is processed for settlement
          through the Federal Reserve System's Automated Clearing House, or ACH,
          network.  The  ACH is the electronic banking network through which the
          vast  majority  of  electronic  fund  transfers are made in the United
          States;
     -    Check guarantee - where, if we approve a check transaction and a check
          is  subsequently dishonored by the checkwriter's bank, the merchant is
          reimbursed  by  us;
     -    Check  re-presentment  -  where,  upon  a check not clearing after its
          first  presentment, we resubmit the check via the ACH network prior to
          returning  the  check  to  the  merchant  in an effort to increase the
          number  of  cleared  check  transactions;  and
     -    Check collection - where we provide national scale collection services
          for  a  merchant  or  bank.

We  operate  our  services  under  the  following  brands:

     -    MERCHANTAMERICA, our retail provider of payment processing services to
          both  the  merchant  and  community  bank  markets;
     -    National  Check  Network(R),  or  NCN(R),  our proprietary database of
          negative  and  positive  checkwriter  accounts used for back-end check
          verification,  check authorization and check capture services, and for
          membership  to  collection  agencies.  Negative  checkwriter  accounts
          typically  identify  a checkwriter's delinquent history in the form of
          non-sufficient  funds  and  other  negative  transactions;  and
     -    XPRESSCHEX(R),  Inc.,  our  registered collection agency that provides
          retail  check  verification,  check  Conversion,  ACH  services, check
          collection  and  check  guarantee  services.


                                       11

Overall,  our  ability  to  program  and  oversee the management of a merchant's
point-of-sale  system,  provide  credit  card and debit card processing, provide
multiple  check  services  for the processing of checks, provide both electronic
and  traditional  collection services, and fully integrate all of these services
into  a  single Internet-based reporting capability allows us to provide for the
majority  of  the  payment  processing  needs  of  our  customers.

Bankcard  and  transaction  processing  services provide for the majority of our
revenues.  We  typically  receive  a  percentage-based  fee on the dollar amount
processed  and  a  transaction fee on the number of transactions processed.  For
the  quarter  ended  December  31, 2004, the bankcard and transaction processing
business  segment  accounted  for  approximately  72.0%  of  the Company's total
revenue.

Over the past three years, we have invested significant resources and management
focus  in  our  check  services business. Check services revenues are based on a
fixed  fee  per  transaction  or a fee based on the amount of the check for each
transaction.  For  the  quarter  ended  December  31,  2004,  the check services
business  segment  accounted  for  approximately  28.0%  of  the Company's total
revenue.  We  are  one  of a few check processors in the nation with both an ACH
engine,  which  gives  us the ability to transfer and settle funds, and a robust
checkwriter  database  (NCN),  which  provides a valuable service for check risk
management  to  merchants.  The  NCN  database  includes  over  20  million
bad-checkwriter  records,  100  million  positive  records, and is generated and
refreshed  daily  by  260  affiliated  collection  agencies  that  continually
contribute  to  the  database  to  enrich  its  depth  and  value.

NCN  provides  an  ongoing revenue stream as collection agencies, major national
merchants, other transaction processors, and thousands of small merchants access
the  NCN  database  daily  to  verify  the status of a checkwriter in real time.
Check  verification  has  been  recognized  as  one  of the lowest cost and most
effective ways for retailers to lower the risks and loss experience in accepting
checks  as  a  form  of  payment  and our NCN database is one of only four major
databases  in  the  nation  that can serve this market need on a national scale.

XPRESSCHEX revenues are growing due to the increased use of our check conversion
services, which include capture of the necessary check data at the point of sale
and  submission  of  the  transaction  electronically to the ACH for settlement.
Since  we  provide  ACH and settlement services to the merchants, all settlement
funds  received  by  us  on  behalf  of the merchants are recorded as settlement
payable  and  all  settlement  funds  paid  by  us  in  advance  are recorded as
settlement  receivable.  XPRESSCHEX  also maintains an active collection agency,
registered in 48 states, that serves primarily as a referral agent to select NCN
members  that  are collection agencies and are located in various regions of the
country.  This  ability  to  provide  local  collection  capability  through one
national  entity  is  a  distinctive  advantage we have over other check service
companies  who  operate  centralized  collection  agencies  and only go to local
agencies  as  a  secondary  or  last  option.

In  2000,  Visa U.S.A. announced its intention to utilize its processing network
(VisaNet),  that connects to over 14,000 banks and about 5 million merchants, to
electronically  process  checks.  This  program  is  referred  to  as  the  Visa
Point-Of-Sale  ("POS") Check Service.  The Visa POS Check Service was offered as
a pilot program by Visa to its member banks from December of 2000 to December of
2002  over  which  time several banks electronically connected their checkwriter
data  to the Visa network, making verification of the checkwriter's bank account
balance  possible  when  checks  drawn on these select banks were processed.  In
December  of  2002,  the program was officially released out of pilot and, as of
December  2004,  depending on the geographic location of a merchant in the U.S.,
anywhere  from  0%  to  as  high  as  30%  of  all  the  checking  accounts  are
electronically  connected  to  the  Visa  network through the banks that are now
participating  in  the  Visa  POS  Check  Service.

Being  able  to  approve  or  decline  a check in real time at the point of sale
requires some method to verify the checkwriter has either an adequate balance in
the  bank to cover the check or, if that is not possible, to verify if the check
written  has  a match in a negative check account database.  In order to provide
this  check  service on 100% of the checks received by a merchant, Visa needed a
solution  to approve or decline (and for those approved, electronically deposit)
the  checks  that  processed  through  the  program  on  a bank that had not yet
connected its checkwriter data to the Visa network.  We are currently one of two
companies  that provide this service to Visa as a Third-Party Processor.  When a
Visa  member bank signs up to offer the Visa POS Check Service to its merchants,
it chooses a Third-Party Processor from the certified providers and we have been
chosen  by  over  90%  of  the  banks  in  the  program  to  date.


                                       12

In  addition to being a Third-Party Processor, we are one of only five companies
that  are  currently  certified  as an Acquirer Processor with Visa, a role that
accepts  transactions  from  the  merchant's  point-of-sale terminal/systems and
reformats  them  for submission to the Visa network. Most financial institutions
presently in the Visa POS Check Service are large national or regional banks and
already  had terminal management service providers that could act as an Acquirer
Processor  for  the  Visa POS Check Service. In the future, as smaller financial
institutions  make  the  decision  to  enter  the  Visa POS Check Service, it is
expected  that  many  will have no prior relationship with a terminal management
provider  and  therefore, may potentially choose us as their Acquirer Processor.
To  date,  ECHO  is the only company to register as both a Third-Party Processor
and  an  Acquirer  Processor with Visa under the Visa POS Check Service program.

We  derive  transaction  revenue  in  our role as a Third-Party Processor and/or
Acquirer  Processor  by  negotiating a transaction fee with Visa and/or the bank
that  chose  us  as  its  Third-Party Processor and/or Acquirer Processor.  This
transaction  fee  averages  $0.09  per  transaction.  The  party  that sells the
service  to  the  merchant  (usually the bank) enjoys the largest mark-up on the
product,  offering  the  service  in the range of $0.30 to $0.60 per check, with
external cost in the $0.12 to $0.20 range, depending on what the bank negotiates
with  Visa  and  any  other  third-party  providers.

During  the  third quarter of fiscal 2003, a major national retail merchant with
approximately  3,000 storefronts initiated the Visa POS Check Service program in
all of its stores nationwide.  We are the Third-Party Processor in this Visa POS
relationship.  As  of  December  31,  2004, this retail merchant was the largest
merchant  in  the  Visa  POS  Check  Service  program, measured by the volume of
transactions  initiated  by  the merchant and, in January of 2005, the bank that
sponsored  this  merchant into the Visa POS Check Service program announced that
they  had  secured  an  agreement  with  the  merchant to continue through 2005.

ECHO  has  invested  significant  resources  and  management  focus in its check
services  business,  particularly  with  respect  to  the Visa POS Check Service
program and we anticipate continued growth in the Visa POS Check Service program
as  the  marketing  efforts of participating banks in the Visa POS Check Service
program  become  more  widely  implemented.

STRATEGY
Our strategy is to provide merchants, banks and industry-specific resellers with
electronic  connectivity  to  various payment services in the credit card, debit
card  and  check-related  markets.  Our  platform  of services is very flexible,
enabling merchant customization and scalability to meet the requirements of high
transaction  volumes,  as  well as access to the Visa POS Check Service program.
Our services enable merchants to maximize revenues by offering a wide variety of
payment  options,  reducing  the  costs  associated with processing and handling
checks,  improving  collections  and  managing  risk  more  effectively.

We plan to grow our check services business by aggressively cross-selling to our
credit  card customers and continuing to train the sales teams and associates of
Visa  member  banks  on the many benefits the Visa POS Check program provides to
merchants.  In  addition to providing sales training to Visa banks, our strategy
is  to  focus  part of our sales team on mid-size retail chains that can benefit
most from automating check processing and verification.  These mid-size accounts
typically offer higher margins than larger accounts and offer a less competitive
marketplace.

As the Visa POS Check program continues to grow, new enhancements are requested.
These  include  enhanced  fraud  detection,  check  guarantee,  decline reversal
techniques,  and  accelerated  program  set-up, to name a few, and the Company's
strategy is to focus on providing these types of enhancements to the program. As
the  market  gains acceptance of the Visa POS Check Service, it is expected that
this  will  create  a new marketing channel for us to cross sell our other check
products  such  as  electronic  check  re-presentment,  check  guarantee,  and
collections to the Visa member banks participating in the Visa POS Check Service
program.

We also have a strategy to bundle all of our services and market them to smaller
regional  and  community banks under what we call our Agent Bank Program. We are
providing a solution to allow smaller banks to offer a full spectrum of bankcard
and  check  processing  services  to  their  customer  base  using  ECHO's
MERCHANTAMERICA product offering. The program is being sold at a low incremental
cost  to  ECHO  and still provides a better priced and a more integrated product
offering  to  small  banks than they can currently receive from other providers.
Most


                                       13

significantly,  our  program  allows  the  banks  to  retain  ownership of their
merchants,  which provides both stability and economic benefits to the bank that
other programs generally do not provide.  To date, 22 banks have enlisted in the
program  and the program is showing signs of continued growth for the balance of
the  year.

SALES  AND  MARKETING
As  a  result  of the growing interest in the Visa POS Check Service, we plan to
continue  using  our  marketing  and sales resources to aggressively promote the
Visa POS Check Service during the balance of this year. We sell our bankcard and
check  services  through several marketing channels, including independent sales
organizations  (i.e, authorized resellers of our products and services), our own
internal  sales  force  and  direct  merchant  referrals  by existing merchants.
Approximately  20%  of our new accounts have historically been generated through
the  authorized  resellers  of our products and services. We also offer merchant
services  through  a  direct  online  sales  channel,  MERCHANTAMERICA.  We have
developed  a  comprehensive  marketing plan to promote the MERCHANTAMERICA brand
name  and  this  marketing  plan  was  officially  rolled  out  in January 2005,
including  through  our  first  regional  merchant  directory  in  San  Diego.

Management believes that we are unique in the number of payment services that we
offer  to  our  merchants,  the  combination of transaction types that we manage
directly,  our  ability  to  integrate  additional  services  and our ability to
support  each  merchant  through  one  vertically  integrated  source.

Our  marketing  strategy  is  to  maximize  cross-selling  opportunities  to our
existing  base  of  merchants  and  financial institutions in the Visa POS Check
Service  program; sell integrated suites of payment services, bankcard and check
processing  services  to  small  banks;  enhance and market MERCHANTAMERICA; and
develop  the  private  label  check  service  program.

COMPETITION
Bankcard  processing  and  check  processing  services  are  highly  competitive
industries  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.

We  believe we are in the top 50 credit card processors in the nation based upon
total  annual  volume  processed  and in the top 10 based upon the extent of our
authorization  and  settlement  capture abilities.  We believe we are in the top
four  check  processors  in  the  nation  of  check  verification and conversion
transactions.  Many of our competitors have much greater financial and marketing
resources than us.  As a result, they may be better able to respond more quickly
to  new  or  emerging  technologies  and changes in customer requirements.  Many
competitors  also have economies of scale cost advantages over ECHO due to their
high  processing  volumes  that  may  make it difficult for ECHO to compete. Our
competitors  also  have  the  financial  resources  to  offer  services to large
merchants at a much lower rate than us in order to gain market share. We believe
that  our  success  will  depend  upon  our  ability to continuously develop new
products  and services and to enhance our current products and to introduce them
promptly  into  the  market.

RESULTS  OF  OPERATIONS

THREE  MONTHS  ENDED  DECEMBER  31,  2004
-----------------------------------------

Financial  highlights  for  the  first quarter of fiscal 2005 as compared to the
same  period  last  year  were  as  follows:

--Total  revenue  increased  11.1%  to  $12.8  million

--Gross  margins  from  processing  and  transaction  revenue  was 35.4% for the
  current  quarter  as  compared  to  38.5%  for  the  prior  year

--Diluted  EPS  of  $0.01  as  compared  to  diluted  EPS  of  $0.09

--Bankcard  and  transaction  processing  revenue increased 4.9% to $9.2 million


                                       14

--Check-related  revenue  increased  31.0%  to  $3.6  million

--ACH  transactions  processed  increased  19.7%  to  8.8  million  transactions

REVENUE.  Total  revenue  increased  11.1%  to  $12,760,000 for the three months
ended  December  31,  2004, from $11,483,000 for the same period last year.  The
increase  can  be  primarily  attributed  to  the  4.9%  growth  in the bankcard
processing  revenue  and  31.0% growth in the check services business segment as
compared  to  the  same  period last year.  This growth has occurred organically
from  our  existing  merchants  and  from  other  marketing  initiatives.

COST OF SALES.  A major portion of our bankcard processing expense is fixed as a
percentage  of  the  total  processing  volume, which is calculated by the total
dollar  value  processed,  with  the  remaining  costs  based  on  the number of
transactions  processed.  A major component of the Company's bankcard processing
expense,  the interchange fees paid to the card issuing banks, is normally fixed
as  a  percentage  of  each  bankcard  transaction  dollar  processed.
Processing-related  expenses,  consisting  primarily  of  data center processing
costs, interchange fees, third-party processing fees, and communication expense,
increased  from  $7,019,000 in the first fiscal quarter of 2004 to $8,171,000 in
the  quarter  ended  December  31,  2004,  a  16.4%  increase.  The increase was
primarily  attributable to the 11.1% increase in revenue for the current quarter
and  the  increase  in  commission  expense.

Gross  margin from processing and transaction services was 35.4% for the current
quarter  as  compared  to  38.5%  for  the  same  period  last  year.

EXPENSE.  Other  operating  costs  such  as  personnel  costs,  telephone  and
depreciation  expenses  decreased slightly, from $1,340,000 in the first quarter
of  2004  to  $1,333,000  for  the  current  fiscal  quarter.

Research  and  development  expense  increased  from  $383,000 in the prior year
quarter  to  $448,000  in  the  quarter  ended  December 31, 2004.  Research and
development  initiatives  are  critical  in  order  for  us  to  maintain  the
technological  advantages  over  some  of  our competitors and to strengthen our
infrastructure  due  to growth. We have been investing in several major software
development  projects  for the past years.  Several of these projects are in the
final phase of development, and we anticipate that this level of investment will
continue  throughout  the  remainder  of  this  fiscal  year.

Selling,  general  and  administrative expenses increased from $1,728,000 in the
first  fiscal  quarter  of 2004 to $2,721,000 for the current fiscal quarter, an
increase  of  57.5%. This $993,000 increase was primarily attributable to: 1) an
additional  $400,000 of litigation expense arising as a result of an arbitration
award granted in January 2005 by the arbitration panel overseeing a dispute with
an  independent sales organization. We previously accrued $300,000 of litigation
expense related to this matter in the fourth fiscal quarter of 2004 based on our
good  faith  estimate  at that time; 2) approximately $270,000 in legal expenses
primarily related to the dispute with the independent sales organization and the
defense  of a patent infringement lawsuit; 3) an increase in personnel costs due
to  cost of living adjustments and an increase in the costs of employee benefits
such  as health and worker's compensation insurance; 4) an increase in sales and
marketing  expenses  to  implement  our  sales  and marketing strategies; and 5)
approximately  $77,000  in professional service expenses and salaries related to
Sarbanes-Oxley  Act  Section 404 Compliance efforts underway. As a percentage of
total revenue, selling, general and administrative expenses increased from 15.0%
in  the  first fiscal quarter of 2004 to 21.3% in the quarter ended December 31,
2004.

OPERATING  INCOME.  Operating income for the quarter ended December 31, 2004 was
$87,000,  as  compared to operating income of $1,013,000 in the same period last
year.  The  decrease  in  operating  income was primarily due to the increase in
selling,  general  and  administrative  expenses  as  described  above.

INTEREST EXPENSE. Net interest expense decreased from $43,000 for the prior year
quarter  to  $0  in  the  current  fiscal  year.  This  was primarily due to the
repayment  of  loans  associated  with the sale of the Company's prior corporate
office  building  in  March  2004.


                                       15

EFFECTIVE  TAX  RATE.  The effective tax rate for the quarter ended December 31,
2004  was  40.2%  as compared to 39.3% for the prior year quarter. The statutory
rate  is  approximately  40%.

SEGMENT  RESULTS
Bankcard and Transaction Processing. Bankcard processing and transaction revenue
increased  4.9%,  from $8,752,000 in the first fiscal quarter 2004 to $9,182,000
for  the  quarter  ended  December  31,  2004.  This revenue increase was mainly
attributable  to  organic  growth  from our existing merchants and new merchants
generated  from  other  marketing  programs.

Operating  income  from  our  bankcard  and  transaction  processing segment was
$1,332,000  for the quarter ended December 31, 2004 as compared to $1,551,000 in
the  same  period  last  year.  This  decrease in operating income was primarily
attributable  to  the  higher  selling,  general  and  administrative  expenses.

Check Related Products. Check-related revenues increased from $2,731,000 for the
first fiscal quarter ended 2004 to $3,578,000 for the current fiscal quarter, an
increase  of  31.0%.  This  was  attributable  to the increase in ACH processing
revenue,  which  increased  as  a  result  of  a  19.7%  increase  in  total ACH
transactions  processed,  8.8 million transactions in the quarter ended December
31,  2004, as compared to 7.3 million in the prior year quarter, the increase in
check conversion revenue as a result of the growth in the Visa POS Check Service
program  and  the  increase  in check verification revenue.  The growth in these
services arose from our continued focus on check services in general, and on the
Visa  POS  Check  Service  program  specifically.

Check  services  revenue  made  up  28.0% of total revenues in the quarter ended
December  31, 2004 as compared to 23.8% in the prior year quarter. Check-related
operating  income  was  $641,000  for  the  quarter  ended  December 31, 2004 as
compared  to  $412,000  in  the  same  period last year. The improvement in this
business  segment  was  primarily attributable to the 31.0% increase in revenue.


LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  December  31,  2004,  we  had  available  cash  and  cash equivalents of
$7,274,000, restricted cash of $1,260,000 in reserve with our primary processing
bank  and  a  working  capital  of  $7,405,000.

Accounts  receivable  net  of  allowance  for  doubtful  accounts increased from
$1,943,000  at September 30, 2004 to $2,063,000 at December 31, 2004.  Allowance
for  doubtful  accounts  mainly  reserved  for  chargeback  losses  increased to
$158,000  at  December  31,  2004  from  $111,000  at  September  30,  2004.

Net  cash  provided  by operating activities for the three months ended December
31,  2004 was $898,000, as compared to net cash provided by operating activities
of  $1,035,000  for  the  three  months  ended  December  31,  2003.

Cash amounts classified as settlement receivable/payable are amounts due to/from
merchants  and  result  from  timing  differences in our settlement process with
those  merchants.  These  timing  differences account for the difference between
the  time  that  funds  are  received  in  our  bank  accounts and the time that
settlement  payments  are  made  to  merchants.  Therefore,  at  any given time,
settlement  receivable/payable  may vary and ultimately depends on the volume of
transactions  processed and the timing of the cut-off date.  Settlement deposits
are  cash  deposited  in  our  bank  accounts  from  the  merchant  settlement
transactions.

In  the  three months ended December 31, 2004, we used $140,000 for the purchase
of  equipment  and  $939,000  for the acquisition and capitalization of software
costs.  During the three months ended December 31, 2004, we paid off $247,000 of
notes  payable  and  capitalized lease obligations.  We had proceeds of $123,000
from  stock  option  exercises.


                                       16

During fiscal year 2004, we negotiated a secured $3,000,000 line of credit and a
$1,000,000 equipment lease line with Bank of the West.  As of December 31, 2004,
we  have  drawn  down  $600,000 against the $1 million equipment lease line.  We
have  not  drawn  down  against  the  $3,000,000  line  of  credit.

At  December  31,  2004,  we  had  the  following  cash  commitments:



                              PAYMENT DUE BY PERIOD
                              ---------------------

CONTRACTUAL                        LESS THAN                           AFTER
OBLIGATIONS             TOTAL      1 YEAR      2-3 YEARS   4-5 YEARS  5 YEARS
--------------------  ----------  ----------  ----------  ----------  --------
                                                       
Long-term debt
  including interest  $  855,000  $  398,000  $  329,000  $  128,000  $    -0-

Capital lease
  obligations            600,000     425,000     151,000      24,000       -0-

Operating leases       1,808,000     577,000     890,000     341,000       -0-
                      ----------  ----------  ----------  ----------  --------

Total contractual
  cash obligations    $3,263,000  $1,400,000  $1,370,000  $  493,000  $    -0-
                      ==========  ==========  ==========  ==========  ========


Our  primary  source  of  liquidity  is  expected to be cash flow generated from
operations  and  cash  and  cash  equivalents  currently on hand and the secured
$3,000,000  line  of  credit  which  has  yet  to  be  utilized.


                                       17

RISK FACTORS

Our  business,  and accordingly, your investment in our common stock, is subject
to  a  number  of  risks.  These  risks  could  affect our operating results and
liquidity.  You should consider the following risk factors, among others, before
investing  in  our  common  stock.

RISKS RELATED TO OUR BUSINESS
-----------------------------

WE  RELY  ON  COOPERATIVE  RELATIONSHIPS  WITH,  AND  SPONSORSHIP BY, BANKS, THE
ABSENCE  OF  WHICH  MAY  AFFECT  OUR  OPERATIONS.

We  currently  rely  on a cooperative relationship with, and sponsorship by, one
bank  in  order to process our Visa, MasterCard and other bankcard transactions.
We also rely on several banks for access to the Automated Clearing House ("ACH")
for  submission  of  both  credit  card  and  check  settlements.  Our  banking
relationships  are  currently  with  smaller  banks  (with  assets  of less than
$500,000,000).  Even though smaller banks tend to be more susceptible to mergers
or  acquisitions and are therefore less stable, these banks find the programs we
offer more attractive and we believe we cannot obtain similar relationships with
larger  banks  at  this  time.  A  bank  could  at  any  time  curtail  or place
restrictions  on our processing volume because of its internal business policies
or due to other adverse circumstances.  If a volume restriction is placed on us,
it  could materially adversely affect our business operations by restricting our
ability  to  process  credit  card transactions and receive the related revenue.
Our  relationships  with  our  customers  and  merchants would also be adversely
affected  by  our  inability  to  process  these  transactions.

We  currently  maintain  one  primary  bankcard  processing  and  sponsorship
relationship  with  First  Regional  Bank  in  Agoura  Hills,  California.  Our
agreement  with  First  Regional  Bank continues through 2005.  We also maintain
several  banking relationships for ACH processing.  While we believe our current
bank  relationship is sound, we cannot assure that these banks will not restrict
our  increasing  processing  volume  or  that we will always be able to maintain
these relationships or establish new banking relationships.  Even if new banking
relationships  are  available,  they may not be on terms acceptable to us.  With
respect  to  First  Regional Bank, while we believe its ability to terminate our
respective  relationships is cost-prohibitive, it may determine that the cost of
terminating  their  agreements is less than the cost of continuing to perform in
accordance  with  their  terms,  and  may  therefore  determine to terminate the
agreement  prior  to  its expiration.  Ultimately, our failure to maintain these
banking relationships and sponsorships may have a material adverse effect on our
business  and  results  of  operations.

MERCHANT  FRAUD  WITH RESPECT TO BANKCARD AND ACH TRANSACTIONS COULD CAUSE US TO
INCUR  SIGNIFICANT  LOSSES.

We  significantly  rely  on the processing revenue derived from bankcard and ACH
transactions.  If  any  merchants  were  to  submit  or  process unauthorized or
fraudulent  bankcard  or  ACH transactions, depending on the dollar amount, ECHO
could incur significant losses which could have a material adverse effect on our
business  and results of operations. ECHO assumes and compensates the sponsoring
bank  for  bearing  the  risk  of  these  types  of  transactions.

We  have  implemented  systems  and software for the electronic surveillance and
monitoring  of  fraudulent  bankcard  and  ACH use.  As of December 31, 2004, we
maintained  a  dedicated  chargeback  reserve  of  $974,000  at our primary bank
specifically  earmarked  for such activity. Additionally, through our sponsoring
bank,  we had access to approximately $8.2 million in merchant deposits to cover
any  potential chargeback losses.  Despite a long history of managing such risk,
we cannot guarantee that these systems will prevent fraudulent transactions from
being  submitted  and  processed  or  that  the  funds set aside to address such
activity  will  be  adequate to cover all potential situations that might occur.
We do not have insurance to protect us from these losses.  There is no assurance
that  our chargeback reserve will be adequate to offset against any unauthorized
or  fraudulent  processing  losses  that we may incur.  Depending on the size of
such  losses,  our  results  of  operations  could be immediately and materially
adversely  affected.

EXCESSIVE CHARGEBACK LOSSES COULD SIGNIFICANTLY AFFECT OUR RESULTS OF OPERATIONS
AND  LIQUIDITY.

Our  agreements with our sponsoring bank require us to assume and compensate the
bank  for  bearing  the risk of "chargeback" losses. Under the rules of Visa and
MasterCard, when a merchant processor acquires card transactions, it has certain
contingent  liabilities  for  the  transactions  processed.  This  contingent
liability  arises  in  the event of a billing dispute between the merchant and a
cardholder  that  is  ultimately  resolved in the cardholder's favor.  In such a
case,  the disputed transaction is charged back to the merchant and the disputed
amount is credited or otherwise refunded to the cardholder.  If we are unable to
collect  this  amount from the merchant's account, or if the merchant refuses or
is  unable  to reimburse us for the chargeback due to merchant fraud, insolvency
or other reasons, we will bear the loss for the amount of the refund paid to the
cardholders.


                                       18

A  cardholder,  through its issuing bank, generally has until the later of up to
four  months  after  the  date a transaction is processed or the delivery of the
product  or  service  to  present  a  chargeback  to  our sponsoring bank as the
merchant  processor.  Therefore,  management believes that the maximum potential
exposure  for  the chargebacks would not exceed the total amount of transactions
processed  through  Visa  and  MasterCard  for  the  last  four months and other
unresolved  chargebacks  in the process of resolution.  For the last four months
through  December  31,  2004, this potential exposure totaled approximately $352
million.  At  December  31,  2004, the Company, through its sponsoring bank, had
approximately  $185,000  of  unresolved  chargebacks that were in the process of
resolution.  At December 31, 2004, the Company, through its sponsoring bank, had
access  to  $8.2  million in merchant deposits to cover any potential chargeback
losses.

For  the  three-month  period  ended  December  31,  2004  and 2003, the Company
processed  approximately $262 million (2004) and $251 million (2003) of Visa and
MasterCard  transactions,  which  resulted  in  $1.6 million in gross chargeback
activities for the three months ended December 31, 2004 and $1.8 million for the
three  months  ended  December  31, 2003. Substantially all of these chargebacks
were  recovered  from  the  merchants.

Nevertheless,  if  we  are  unable  to  recover  these  chargeback  amounts from
merchants,  having  to pay the aggregate of any such amounts would significantly
affect  our  results  of  operations  and  liquidity.

FAILURE  TO  PARTICIPATE IN THE VISA POS CHECK SERVICE PROGRAM WOULD CAUSE US TO
SIGNIFICANTLY  SHIFT  OUR  OPERATING  AND  MARKETING  STRATEGY.

We  have  significantly  increased  our  infrastructure, personnel and marketing
strategy to focus on the potential growth of our check services through the Visa
POS  Check  Service  program.  We  currently  provide  critical  back-end
infrastructure  for the service, including our NCN database for verification and
our  access  to  the Federal Reserve System's Automated Clearing House for funds
settlement,  for checks written on bank accounts with banks not participating in
the  program.

Because  we  believe the market will continue to gain acceptance of the Visa POS
Check  Service  program,  we  have  expended significant resources to market our
check  conversion  services  and  verification services to our merchant base, to
solidify  our  strategic  relationships  with the various financial institutions
that  have chosen us as their Acquirer Processor and Third-Party Processor under
the  program,  and  to  sell  our  other check products such as electronic check
re-presentments and check collection services to the Visa member banks.  We have
also  increased  our  personnel  to  handle the increased volume of transactions
arising  directly  from  our  participation  in  the  program.

If  we  fail  to  adequately market our services through this relationship, this
could  materially affect our marketing strategy going forward.  Additionally, if
we fail to adequately grow our infrastructure to address increases in the volume
of transactions, cease providing services as a Third-Party Processor or Acquirer
Processor  or  are  otherwise  removed or terminated from the Visa program, this
would  require  us  to  dramatically  shift  our  current  operating  strategy.

THE BUSINESS IN WHICH WE COMPETE IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE
THAT  OUR CURRENT PRODUCTS AND SERVICES WILL STAY COMPETITIVE OR THAT WE WILL BE
ABLE  TO  INTRODUCE  NEW  PRODUCTS  AND  SERVICES  TO  COMPETE  SUCCESSFULLY.

We  are  in  the  business  of processing payment transactions and designing and
implementing  integrated  systems  for our customers so that they can better use
our services.  This business is highly competitive and is characterized by rapid
technological  change,  rapid  rates of product obsolescence, and rapid rates of
new  products introduction.  Our market share is relatively small as compared to
most  of  our  competitors and most of these competitors have substantially more
financial  and marketing resources to run their businesses. While we believe our
small  size  provides  us  the  ability  to  move  quickly  in  some  areas, our
competitors'  greater  resources enables them to investigate and embrace new and
emerging  technologies  quickly to respond to changes in customers needs, and to
devote more resources to product and services development and marketing.  We may
face  increased competition in the future and there is no assurance that current
or  new  competition will allow us to keep our customers.  If we lose customers,
our  business operations may be materially adversely affected, which could cause
us  to  cease  our  business  or curtail our business to a point where we are no
longer  able  to  generate  sufficient revenues to fund operations.  There is no
assurance  that  our  current  products  and services will stay competitive with
those  of  our competitors or that we will be able to introduce new products and
services  to  compete  successfully  in  the  future.


                                       19

IF  WE ARE UNABLE TO PROCESS SIGNIFICANTLY INCREASED VOLUME ACTIVITY, THIS COULD
AFFECT  OUR  OPERATIONS  AND  WE  COULD  LOSE  OUR  COMPETITIVE  POSITION.

We  have  built  transaction  processing  systems  for check verification, check
conversion,  ACH  processing,  and bank card processing activity.  While current
estimates regarding increased volume are within the capabilities of each system,
it is possible that a significant increase in volume in one of the markets would
exceed  a  specific  system's  capabilities.  To  minimize  this  risk, ECHO has
redesigned and upgraded its check related processing systems and has purchased a
high-end  system  to  process  bankcard  activity.  This  system  is  not  yet
operational,  and  even  when  it becomes operational, no assurance can be given
that  the  current  systems  would  be  able to handle a significant increase in
volume  or  that the operational enhancements and improvements will be completed
in  such  time to avoid such a situation.  In the event we are unable to process
increases  in  volume,  this  could  significantly  adversely affect our banking
relationships,  our  merchant  customers  and  our overall competitive position.
Losses of such relationships would severely impact our results of operations and
financial  condition.

WE  INCUR  FINANCIAL  RISK  FROM OUR CHECK GUARANTEE SERVICE.

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

SECURITY  BREACHES  COULD  IMPACT  OUR  CONTINUED  OPERATIONS.

We  process  confidential  financial  information and maintain several levels of
security  to  protect  this  data.  Security  includes  hand  and  card-based
identification  systems at our data center locations that restrict access to the
specific  facilities,  various  employee  monitoring  and  access  restriction
policies,  and  various  firewall  and  network  management  methodologies  that
restrict  unauthorized  access  through  the  Internet. While these systems have
worked  effectively  in  the  past,  there  can  be  no assurance that they will
continue to operate without a security breach in the future.  Depending upon the
nature of the breach, the consequences of security breaches could be significant
and  dramatic  to  ECHO's  continued  operations.

THE  INDUSTRY  IN  WHICH WE OPERATE INVOLVES RAPIDLY CHANGING TECHNOLOGY AND OUR
FAILURE  TO  IMPROVE  OUR  PRODUCTS  AND  SERVICES  OR TO OFFER NEW PRODUCTS AND
SERVICES  COULD  CAUSE  US  TO  LOSE  CUSTOMERS.

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

OUR  INABILITY  TO  PROTECT  OR  DEFEND OUR TRADE SECRETS AND OTHER INTELLECTUAL
PROPERTY  COULD  HARM  OUR  BUSINESS.

We  have expended a considerable amount of time and money to develop information
systems for our merchants.  We regard these information systems as trade secrets
that  are  extremely  important to our payment processing operations. We rely on
trade  secret  protection  and  confidentiality  and/or  license agreements with
employees,  customers, partners and others to protect this intellectual property
and  have  not  otherwise taken steps to obtain additional intellectual property
protection  or  other  protection  on  these  information systems.  We cannot be
certain  that we have taken adequate steps to protect our intellectual property.
In  addition, our third-party confidentiality agreements can be breached and, if
they  are,  there  may  not be an adequate remedy available to us.  If our trade
secrets  become  known, we may lose our competitive position, including the loss
of  our  merchant  and  bank  customers.  Such  a loss could severely impact our
results  of  operations  and  financial  condition.


                                       20

Additionally,  while  we  believe that the technology underlying our information
systems  does  not  infringe  upon  the rights of any third parties, there is no
assurance  that third parties will not bring infringement claims against us.  We
also  have  the  right  to  use the technology of others through various license
agreements.  If  a third party claimed our activities and/or these licenses were
infringing  their  technology,  while we may have some protection from our third
party  licensors,  we  could face additional infringement claims or otherwise be
obligated  to  stop  utilizing  intellectual property critical to our technology
infrastructure.  If  we are not able to implement other technology to substitute
the  intellectual  property underlying a claim, our business operations could be
severely  affected.  Additionally, infringement claims would require us to incur
significant defense costs and expenses and, to the extent we are unsuccessful in
defending  these claims, could cause us to pay monetary damages to the person or
entity making the claim.  Continuously having to defend such claims or otherwise
making monetary damage payments could materially adversely affect our results of
operations.

IF  WE  DO NOT CONTINUE TO INVEST IN RESEARCH AND DEVELOPMENT, WE COULD LOSE OUR
COMPETITIVE  POSITION.

Because  technology  in the payment processing industry evolves rapidly, we need
to  continue  to  invest  in  research  and  development  in  both  the bankcard
processing  business  segment and the check-related products segment in order to
remain  competitive.  Research  and development expenses increased from $383,000
for  the  quarter  ended  December  31,  2003  to $448,000 for the quarter ended
December  31,  2004.  Most  of  our  research and development project costs were
capitalized  once  we  entered  into  coding and testing phases.  We continue to
evaluate  projects,  which  we  believe  will  assist  us in our efforts to stay
competitive.  Although  we  believe  that  our investment in these projects will
ultimately  increase  earnings, there is no assurance as to when or if these new
products will show profitability or if we will ever be able to recover the costs
invested  in  these  projects.  Additionally,  if  we  fail  to  commit adequate
resources  to  grow  our technology on pace with market growth, we could quickly
lose  our  competitive  position,  including  the  loss of our merchant and bank
customers.

FAILURE  TO OBTAIN ADDITIONAL FUNDS CAN IMPACT OUR OPERATIONS AND FUTURE GROWTH.

We use funds generated from operations, as well as funds obtained through credit
facilities  and  equity  financing,  to finance our operations.  In light of our
recent  financing  efforts,  and  as  a  result  of the cash flow generated from
operations,  we  believe  we  have  sufficient  cash  to  support  our  business
activities,  including  research,  development  and  marketing  costs.  However,
future  growth  may depend on our ability to continue to raise additional funds,
either through operations, bank borrowings, or equity or debt financings.  There
is no assurance that we will be able to continue to raise the funds necessary to
finance  growth  or  continue  to  generate  the  funds  necessary  to  finance
operations,  and  even  if  such  funds  are  available,  that the terms will be
acceptable to us.  The inability to generate the necessary funds from operations
or  from  third parties in the future may require us to scale back our research,
development  and  growth opportunities, which could harm our overall operations.

WHILE  WE  MAINTAIN INSURANCE PROTECTION AGAINST CLAIMS RELATED TO OUR SERVICES,
THERE  IS  NO ASSURANCE THAT SUCH PROTECTION WILL BE ADEQUATE TO COVER POTENTIAL
CLAIMS  AND  OUR INABILITY TO OTHERWISE PAY SUCH CLAIMS COULD HARM OUR BUSINESS.

We  maintain  errors and omissions insurance for the services we provide.  While
we  believe  the  limit on our errors and omissions insurance policy is adequate
and consistent with industry practice, if claims are brought by our customers or
other  third  parties,  we  could  be required to pay the required claim or make
significant  expenditures  to  defend against such claims in amounts that exceed
our  current  insurance  coverage.  There  is no assurance that we will have the
money  to  pay  potential  plaintiffs  for  such claims if they arise beyond the
amounts  insured  by  us.  Making  these  payments could have a material adverse
effect  on  our  business.

INVOLVEMENT  IN  LITIGATION  COULD  HARM  OUR  BUSINESS.

We  are involved in various lawsuits arising in the ordinary course of business.
Although we believe that the claims asserted in such lawsuits are without merit,
the  cost  to  us for the fees and expenses to defend such lawsuits could have a
material  adverse  effect  on  our financial condition, results of operations or
cash flow.  In addition, there can be no assurance that we will not at some time
in  the  future experience significant liability in connection with such claims.
For  the  three  months  ended  December  31,  2004, we have spent approximately
$270,000  in  legal  fees  and  expenses  defending  these  claims.


                                       21

OUR  INABILITY  TO  RECOVER  FROM  NATURAL  DISASTERS  COULD  HARM OUR BUSINESS.

We  currently maintain two data centers: one in Camarillo, California and one in
Albuquerque,  New  Mexico.  Should  a  natural  disaster  occur  in  any  of the
locations,  it  is  possible  that  ECHO would not be able to fully recover full
functionality  at  one  of  its  data  centers.  To minimize this risk, ECHO has
started to centralize its data processing functionality in Camarillo in 2004 and
intends  to make Albuquerque a fully redundant site as early as possible.  Prior
to  that  time, it is possible that a natural disaster could limit or completely
disable  a  specific  service  offered by ECHO until such time that the specific
location  could resume its functionality.  Our inability to provide such service
could  have a material adverse effect on our business and results of operations.

INCREASES  IN  THE  COSTS  OF  TECHNICAL  COMPLIANCE  COULD  HARM  OUR BUSINESS.

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

RISKS  ASSOCIATED  WITH  OUR  COMMON STOCK
------------------------------------------

IF  WE  NEED  TO  SELL  OR  ISSUE  ADDITIONAL  SHARES  OF COMMON STOCK OR ASSUME
ADDITIONAL  DEBT  TO FINANCE FUTURE GROWTH, OUR STOCKHOLDERS' OWNERSHIP COULD BE
DILUTED  OR  OUR  EARNINGS  COULD  BE  ADVERSELY  IMPACTED.

While  management believes that our cash flow from operations together with cash
on  hand  and  our  established  lines  of credit will be sufficient to meet our
current working capital and other commitments, our business strategy may include
expansion  through  internal growth, by acquiring complementary businesses or by
establishing  strategic relationships with targeted customers and suppliers.  If
we  choose  to  execute  on  these  business strategies, to propertly fund these
strategies  and  our other activities, we may issue additional equity securities
that  could  dilute  our  stockholders'  stock  ownership.  We  may  also assume
additional  debt  and  incur  impairment  losses  related  to goodwill and other
tangible  assets  if we acquire another company and this could negatively impact
our  results  of  operations.

WE HAVE ADOPTED A NUMBER OF ANTI-TAKEOVER MEASURES THAT MAY DEPRESS THE PRICE OF
OUR  COMMON  STOCK.

Our  rights agreement, our ability to issue additional shares of preferred stock
and  some  provisions  of our articles of incorporation and bylaws could make it
more  difficult for a third party to make an unsolicited takeover attempt of us.
We  also  have staggered three-year terms for our directors. These anti-takeover
measures  may  depress the price of our common stock by making it more difficult
for third parties to acquire us by offering to purchase shares of our stock at a
premium  to  its  market  price.

OUR  STOCK  PRICE  HAS  BEEN  VOLATILE.

Our  common  stock  is  quoted  on  the NASDAQ SmallCap Market, and there can be
substantial volatility in the market price of our common stock.  Over the course
of the quarter ended December 31, 2004, the market price of our common stock has
been as high as $9.65 and as low as $7.50.  Additionally, over the course of the
year  ended September 30, 2004, the market price of our common stock was as high
as  $13.06  and as low as $6.15.  The market price of our common stock has been,
and  is  likely  to continue to be, subject to significant fluctuations due to a
variety  of  factors,  including  quarterly  variations  in  operating  results,
operating  results  which  vary from the expectations of securities analysts and
investors,  changes  in  financial  estimates,  changes  in market valuations of
competitors,  announcements  by us or our competitors of a material nature, loss
of one or more customers, additions or departures of key personnel, future sales
of  common  stock  and stock market price and volume fluctuations.  In addition,
general  political and economic conditions such as a recession, or interest rate
or  currency  rate  fluctuations  may  adversely  affect the market price of our
common  stock.


                                       22

WE  HAVE  NOT PAID AND DO NOT CURRENTLY PLAN TO PAY DIVIDENDS, AND YOU MUST LOOK
TO  PRICE  APPRECIATION  ALONE  FOR  ANY  RETURN  ON  YOUR  INVESTMENT.

Some  investors  favor  companies  that  pay  dividends, particularly in general
downturns  in the stock market.  We have not declared or paid any cash dividends
on  our  common  stock.  We  currently  intend to retain any future earnings for
funding  growth, and we do not currently anticipate paying cash dividends on our
common  stock in the foreseeable future.  Because we may not pay dividends, your
return  on this investment likely depends on your selling our stock at a profit.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK
          ----------------------------------------------------------------

We  could  be exposed to market risk from changes in interest rates on our lease
lines.  Our  exposure  to  interest  rate risk relates to the $3,000,000 line of
credit and $1,000,000 equipment lease line.  There was an outstanding balance of
$600,000 against the $1,000,000 equipment lease line as of December 31, 2004.  A
hypothetical  1%  interest  rate  change  would  have  no material impact on our
results  of  operations.

ITEM  4.  CONTROLS  AND  PROCEDURES
          -------------------------

As  of  December  31,  2004,  the  end  of the period covered by this report, we
carried  out  an evaluation, under the supervision and with the participation of
our  management,  including  our  Chief  Executive  Officer  and Chief Financial
Officer,  of  the  effectiveness  of  the design and operation of our disclosure
controls  and  procedures  pursuant  to  Rule  13a-14(c)  and  15d-14(c)  of the
Securities  Exchange  Act  of  1934.  Based  upon  that  evaluation,  our  Chief
Executive  Officer and our Chief Financial Officer concluded that our disclosure
controls  and  procedures  are  effective  in causing material information to be
recorded, processed, summarized and reported by our management on a timely basis
and to ensure that the quality and timeliness of our public disclosures complies
with  our  Securities  and  Exchange  Commission  disclosure  obligations.

During  the quarter ended December 31, 2004, there was no change in our internal
control  over financial reporting that materially affects, or that is reasonably
likely  to  materially  affect,  our  internal control over financial reporting.


                                       23

PART  II.  OTHER  INFORMATION

ITEM  1.  LEGAL  PROCEEDINGS
          ------------------

The  Company is involved in various legal matters 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.

In  August  2003,  one  of the Company's independent sales organizations filed a
breach  of  contract  arbitration  claim  against  the  Company  in Los Angeles,
California.  The  dispute involved a disagreement related to the manner in which
commissions  were  to be calculated under the agreement.  The agreement with the
ISO  required  binding  arbitration of all disputes arising under the agreement.
The  arbitration  proceedings  occurred  in December 2004.  In January 2005, the
arbitration  panel  overseeing  the  dispute  awarded  the  independent  sales
organization $501,000, which exceeded the Company's previous accrual of $300,000
at  September  30,  2004.  In addition to this award amount, the Company will be
required  to  pay  legal  fees on behalf of this independent sales organization,
which  are  estimated  to be up to $185,000. While the final determination as to
legal  fees  is  subject  to  change once the arbitration panel provides a final
determination,  management  believes  any change will not have a material effect
upon  either the Company's results of operations or its financial condition.  As
a  result of the foregoing, however, the Company has accrued a total of $400,000
in  connection  with  this  dispute.



ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------
       
(a)       Exhibits:

          Certificate of Joel M. Barry, Chief Executive Officer of Electronic Clearing House, Inc. pursuant to Rule 13a-14(a)
31.1      under the Securities and Exchange Act of 1934, as amended.
          Certificate of Alice L. Cheung, Chief Financial Officer of Electronic Clearing House, Inc. pursuant to Rule 13a-14(a)
31.2      under the Securities and Exchange Act of 1934, as amended.
          Certificate of Joel M. Barry, Chief Executive Officer of Electronic Clearing House, Inc. pursuant to Rule 13a-14(b)
32.1      under the Securities and Exchange Act of 1934, as amended.
          Certificate of Alice L. Cheung, Chief Financial Officer of Electronic Clearing House, Inc. pursuant to Rule 13a-14(b)
32.2      under the Securities and Exchange Act of 1934, as amended.

(b)       Reports on Form 8-K:



Date of Report     Item Reported
--------------     -------------
                
December 21, 2004  On December 21, 2004, the Registrant filed a Current Report on Form 8-K with respect to a press
                   release announcing its financial results for the quarter and fiscal year ended September 30, 2004.

November 4, 2004   On November 10, 2004, the Registrant filed a Current Report on Form 8-K with respect to a press
                   release announcing the appointment of Steven Smith as the Company's Chief Information Officer.



                                       24

                                   SIGNATURES

     Pursuant  to  the  requirements 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.
                         ----------------------------------
                                (Registrant)




Date:  February  14,  2005              By:  /s/  Alice  Cheung
                                             --------------------
                                        Alice  Cheung,  Treasurer  and
                                        Chief  Financial  Officer


                                       25