Have you ever closed a sale as a business owner, only to learn later that the check had bounced? For the roughly 40 percent of companies that currently accept paper checks, bad checks may be par for the course, but it does not have to be that way. Returned checks costs you unnecessary negative takings when factoring in bank fees, revenue losses, and relationship damages.
Some merchants take extreme measures to prevent bad checks, adopting policies not to accept any form of a check. Others take a more measured approach, accepting multiple payment methods, including paper and virtual checks, that leverage digital payment technologies.
As more customers turn to computers and mobile devices to conduct business and pay for services, products, and recurring charges, businesses need to adapt. Future-proof your business and optimize operations by offering convenient payment options online, by phone, and at the point of sale (POS) that mesh virtual, contact, and contactless methods.
An electronic check, or eCheck, represents the digital version of the traditional paper check. eCheck funds transfer from the payer’s bank account to the merchant account via the Federal Reserve Bank’s ACH Network.
To accept eChecks, businesses must first set up a merchant account, separate from the business bank account, preferably through a reputable merchant services provider or aggregator. Processing an eCheck requires customer-provided bank account information.
Considered safer, faster, and more convenient than paper checks, eChecks are part of a growing ACH payment trend. Since the launch of Same Day ACH in 2016, consumer, business, and government ACH direct bank transfers have risen sharply.
According to the National Automated Clearing House (Nacha), the trustee for the ACH Network that links U.S. financial institutions, over 24.7 billion payments valued at $55.8 trillion were processed through the network in 2019.
For businesses, eChecks offer public-key cryptography and digital signature security features such as clear insight into cash flow, payment tracking, and recurring payment activities. This ACH payment processing option usually offers faster processing times and low-cost, fixed-rate processing fees compared to credit cards. As customers and clients embrace convenience at every turn, time-saving eChecks add an advantageous option for making payments for businesses to accept.
A critical piece to check acceptance is the verification process itself. Regardless of payment channel, validating customer bank account information in real-time reduces acceptance risks. By identifying both positive and negative account information, as well as check level status, an experienced payment gateway triggers alerts to the merchant for fraudulent activity and insufficient funds before they become an issue.
Instant check verification services protect merchants in any size business or industry. While eChecks provide more security than paper checks, this service lets your business know instantly when a transaction will not go so that you may react before the process completes.
Many businesses take advantage of real-time check verification services to salvage sales when a negative account alert has been issued. Customers or clients may not realize their bank account sits in a negative account status when the paper or eCheck processes at the time of sale. This immediate alert allows them to remedy the problem by transferring funds into their account or selecting an alternative form of payment to complete the transaction without disruption.
If your business accepts eChecks regularly, contacting the bank each time a transaction processes places an impractical burden on personnel. Time-consuming calls to the bank to confirm that a bank account remains open and in good standing can be eliminated with automated check verification through a reputable and knowledgeable payment services provider.
Verification options vary in scope, functionally dependent upon variables within transaction environments. Government-to-contractor, business-to-business, and business-to-consumer transactions, for example, require different verification filters to comply with established Know Your Customer (KYC) and data security protocols. Discuss your unique business needs with a qualified payment services provider before setting up any new system.
Verification options typically include negative databases, automated routing number checks, and near real-time inquiries into account status and account balance inquiries before loading information into billing engines. Companies like iCheckGateway.com (ICG) offer the full scope of options for major public and private industry categories that rely on this service.
At a deeper level, ICG’s check verification coverage includes invalid routing, account, and check numbers; accounts blocked; routing number correct when an account cannot be found or is closed; ACH items only; variables in PBCL details values; recent stop payments, insufficient funds, high debits or returns activities; non-reporting bank detection; fraud or stolen check reports; and other harmful data detected during verification.
The news presents data breaches as a regular event, but it can be catastrophic when it happens to your business. Recent economic shifts have created new opportunities for fraudsters, including check fraud. Get protected against this financial criminal activity having the right protection at all data points managing your customer’s transactions, especially upfront when they initiate their payments.
According to the American Bankers Association, check fraud accounted for 47 percent of deposit account losses in 2018, which has fueled incremental increases in electronic routing evident in Nacha statistical data today.
Check verification mitigates acceptance risks by streamlining front-end verification with tools that authenticate customer identity and validate account information. By verifying customer bank and account information prior to accepting any form of check as payment, secure solutions protect merchants against fraudulent activity. Instant check verification fraud mitigation procedures show to reduce the number and frequency of nonpayment incidents and collection fees incurred.
When selecting a third-party provider, your checklist should include features that will meet both present and future needs. An eCheck processing and instant check verification program gives your business customers and clients more choices, and it offers the best protection against unscrupulous fraudsters.
With ICG-Verify, businesses can combine five cutting-edge technologies for ACH check verification as a complete suite or standalone services. Through ICG’s virtual terminal, businesses can instantly authenticate accounts from 11,500 U.S. banks and credit unions; and retrieve account and routing numbers when users connect their check or savings account using bank credentials.
In partnership with Plaid, ICG business clients can instantly match user-provided account and routing information with what is on file at the bank. This includes usernames, phone numbers, mailing, and email addresses for individual and joint accounts to complement existing KYC business procedures.
Contact ICG for check verification services and more ways to protect your merchant account.