Check Services

Businesses are often hesitant to accept checks from customers because of the delay in funds and the risk of bad checks and fraud. Check services offer verification and guarantee services enabling businesses to offer an additional payment option to their customers with greater confidence.

What are check services?
The primary function of any check service is electronic check conversion. This is enabled through a card reader attached to the point-of-sale terminal at the business location. The card reader scans the magnetic ink account number on the customer's check and verifies if it has sufficient funds to allow the purchase. If the transaction is successful, the customer signs on a printed receipt and is returned the voided check.

The check is run through the Automated Clearing House (ACH) for clearance. The process takes 48-72 hours, making the funds available to you much quicker than paper checks.

How can check services benefit your business?
Check services are much cheaper than credit card processing services. As check verification is carried out at checkout, it saves time and protects the business from check fraud and returns. Check clearance times are reduced considerably. You also pay less at the bank as the number of paper check deposits is reduced.

Record keeping also becomes easier as check services provide monthly statements and online reports of the electronic check conversion transactions.

What are the types of check services available?
There are two broad categories of check services:

Check verification services: These services verify the name and account details on customer's personal checks by matching them with millions of checking account records of consumers and businesses collected in a huge national database. With instant verification, you can detect suspicious account activities and view credit history of the customer.

Check guarantee services: With a check guarantee service in place, your business can be assured of short reimbursement periods and complete payments. This service reduces check fraud and guarantees payments at the point of sale. Verified checks are sent back to the vendor for processing and collection.

Check service vendors may also offer other services such as:

• online check processing
• verification via a virtual terminal
• an internet connection
• installing card readers
• setting up a verified merchant account
• batch check submission services
• setting up recurring payments and automatic billing processes

Does your business need check services?
Check services can truly benefit a business that receives a lot of check payments. Before considering check services, assess your business needs by asking yourself these questions:

• How many checks or what sum of check payments are received by your business in a month?
• Do you want to make check payments secure and risk-free?
• Will a POS terminal or card reader be suitable for your business?
• What type of check service will be right for your business?
• Do you want to set up recurring payments and automatic billing for your customers?
• What is your budget?

What do check services cost?
The cost of check services depends on the cost of hardware and the type of service.

Hardware cost: Depending on features and functions, card readers can cost between $100 and $1500. Having a card reader at your business location also incurs an application fee..

Check conversion costs: This cost is usually 15-25 cents per transaction. Vendors may charge a monthly minimum of $25-$40 and a cut of the check amount.

Check verification costs: Check verification costs can amount to 15-25 cents per check. The fee is waived for checks that are not accepted due to insufficient funds. Add-ons such as online reports, access and statements can incur a $20-$30 monthly fee. A one-time fee for signing up and programming, varying from $50 to $100, can also be charged.

Check guarantee costs: Accepted checks incur a 2% fee, plus a per item charge of 10-30 cents. Returned checks are not charged.

What should you be aware of about check conversions and services?
Before deciding on accepting check payments and hiring a check service, be aware of the following:

Notify customers: The law mandates that you assure customers of your policy of using bank account information for check verification and conversion purposes only. This notification should be posted on the register or on the sales slip.

Legalities of check conversions in your state: The rules of electronic check conversions vary in different states. Ensure you follow the rules of your local government.

Confirm pricing and frequency of funds transfer: Check services vary and are priced accordingly. Go with a vendor who works within your budget and can schedule payments as per your business needs.

Training of staff: The check service vendor should provide training to your workforce to ensure they understand installed devices and operate them efficiently.

Check services can improve the revenue of your business considerably by improving the in-house process of accepting check payments and reducing the risk of fraud and failed payments.