Check Services Buyer's Guide

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Check services are a series of verification and guarantee processes to take the risk out of accepting personal checks from your customers. Using check services to validate and guarantee personal checks can cost less than the fees to process credit cards and offers an additional payment option to your customers.

The main component of check services is electronic check conversion. Check conversion allows you to get your money in as little as 48 to 72 hours. Consumers must have the funds available immediately to use a personal check. You get monthly statements and online reporting for all check conversion transactions.

Check conversion basics
Check conversion is an electronic process that determines if a specific account has sufficient funds for a purchase. To do so, a small check reader attached to your POS terminal reads the account information from the magnetic ink account numbers on the bottom of the customer's check. An electronic transaction compares the amount of the sale with the amount of money in the account, and if the transaction is accepted, the customer signs a printed receipt and receives the voided check.

The check is later run through the ACH (Automated Clearing House) system - the central hub for handling credit and debit card transactions from around the world. This gets the funds to you quicker than the standard check clearing process.

Electronic check conversion helps you avoid the high fees of credit card processing and various costs of check fraud. It works with most POS terminals and provides improved checkout speed and security. Your bank fees are also lowered - since you have fewer physical checks to present, you pay lower bank fees when making business deposits.

Primary check services options
There are two main types of check services.

Check verification services establish criteria for allowing customers to use personal checks in places of business for immediate purchases. You match the name and account information with a nationwide database of checking accounts for millions of consumers and thousands of businesses. Real-time verification pulls up negative data and suspicious activity and can even look into a customer's credit history. Electronic check verification services allow you to easily keep track of all activity with detailed and reliable recordkeeping.

Check guarantee services warrant the release of the full amount of the check following a short reimbursement period. This helps improve accuracy of transactions and allows you to feel comfortable accepting checks. Check guarantee services also limit check fraud and ensure you receive payment. You get verified and guaranteed payments at the point of sale and the checks go back to the vendor for processing and collection.

Check services vendors can also offer other services such as online check processing and verification using a virtual terminal, which allows you to electronically convert checks using a computer, an Internet connection, a card reader, and a verified merchant account. Batch services allow you to submit several checks at once for additional savings. They can also help your business to set up recurring payments and automatic billing processes for your clients.

Check services checklist
Here are some of the things to keep in mind before deciding on check services for your business:

• Would I like to accept checks with the same confidence as credit cards?
• Will I be responsible for fees if a check isn't valid?
• What check services will I require?
• Do I need a POS terminal or check imager/reader?
• How many checks do I think I will accept in a month?
• Will I need to set up recurring payments and automatic billing for my clients?

Check services pricing
You can get a check reader for $100 to $1,500. Higher-end devices can not only read and store check data but can also print text on the front and back of checks to be used with a POS terminal. You also pay a $50 application fee to have one in your place of business.

Basic check conversion costs 15 to 25 cents per transaction. Vendors may require a monthly minimum charge of $25 to $40 as well as a nominal percentage of the check value.

Check verification pricing can vary. Expect to pay 15 to 25 cents per check, but most vendors will only charge you if the check is accepted as having sufficient funds. You may also pay a monthly fee of $20-$30 for statements, reporting, and access to the service. One-time sign-up and programming fees of $50 to $100 might also apply.

Check guarantee services can usually be used with your existing POS terminal. You will pay a 2% charge on checks that are accepted with an additional per item charge of 10 to 30 cents. Like check verification, there is no charge for returned checks. However, other fees might apply so confer with your check services vendor before agreeing to any services.

Check services tips
Prove it. You are required by law to provide notice at the point of purchase that you access customer bank account information solely for the purposes of check conversion and verification. You can either post a sign at the register or have a written notice on the sales slip you require customers to sign.

Different legal limits. The rules for your state for electronic check conversion may vary. Check with your local government to ensure you are conducting business legally.

Payment frequency. If you need to get funds from check services more often that once or twice per month, go with a vendor that can schedule more frequent payments.

Training. Make sure the vendor provides adequate training for you and your staff to properly use any check service devices.