CHECK PROCESSING

CHECK PROCESSING

The more payment options you can provide to your customers, the more competitive your website. Some of your customers will prefer to pay by check, but accepting a check online can be problematic. Purchasing products/services by check negates the instantaneous nature of e-commerce — if you wait for a check to clear before shipping. To speed things along, some businesses will ship on the receipt of a check, at least until they are burned once too often by a bounced check.

When you process a check online you aren’t required to have a signed instrument from the customer, all that’s required is the information that’s on the customer’s regular check. There are a number of ways to accept checks online; some allow you to provide speedy order fulfillment, others require that a prudent e-commerce operator wait several days to ensure the check clears before shipping the order.

Let’s first examine the do-it-yourself method. This method requires that you have a program to print out a hard copy of your customers’ checks before depositing them into your bank account. (The ensuing process is the same as a traditional business that accepts customers’ checks, i.e. to prevent fraud, you shouldn’t ship the merchandise until the check clears.) If you are interested in going this route, check out vendors such as CheckMAN (www.checkman.com), Intell-A-Check (www.icheck.com), and Vcheck (http://softwaresolutions.net/vcheck).

To help you better understand these check processing programs, let’s take a quick look at how the Intell-A-Check 6.0 application suite facilitates the processing of checks. When your customers pay by check, they provide information about their checking account by filling out a form on the website. Intell-A-Check uses this information to automatically create a check or automated clearinghouse transfer that can be deposited immediately into your bank account and immediately credited against a customer’s account. You don’t need to worry about not being paid because Equifax, the leading provider of consumer information in the U.S., guarantees Intell-A-Check checks. Another benefit of Intell-A-Check — the customer and the website avoid credit card fees.

NOTE
Most check programs require that you purchase specific “check paper” for printing the customers’ checks. But, in many cases, these programs do not require that you use any special, expensive magnetic-type ink for printing the checks — generally printing the checks on your Inkjet or laser printer is satisfactory. This is because most banks now use optical, rather than magnetic, devices to process checks. However, to be safe, contact your local bank and make sure they will be able to accept checks that you print from your computer before investing in check acceptance software.

Now let’s look at the method that will allow speedy shipment of ordered products. This method requires that you use a transaction service, which will verify that the information on the online check is complete. These transaction companies charge a setup-up fee in addition to a per-check and/or a percentage fee. Many of these services will, for an extra fee, also guarantee the check. The extra fee may be well worth it since the transaction service must reimburse you if the check doesn’t clear. Of course, there are specific conditions that must be met for this scenario to play out.

Caveats:

  • Most of the transaction companies in business today only process U.S. checks.
  • If you decide to use an online check transaction service, be sure that the service can perform check verification in real-time.
  • There is not much involved in processing a check online, so don’t sign with a service that changes a high transaction fee, and don’t pay a discount (percentage) rate on check transactions — unless the checks are guaranteed.

Finally, be aware of fund holds on check transactions, and know when funds will be available.

NOTE
Some readers may also want to investigate the feasibility of using a Secure Gateway Companies’ Virtual Terminal. Some virtual terminals can accept check transactions (e.g. AuthorizeNet) by running a check verification against a national database of bad check writers, thereby reducing the incidence of returned checks. Some Secure Gateway Companies’ that provide virtual terminals will even re-submit returned checks automatically.