According to the Financial Crime Enforcement Network, financial institutions filed over 680,000 reports of suspicious potential check fraud in 2022, double from 2021, where 350,000 reports were filed. This surge is due to the increase in the number of cybercriminals and cases of identity theft.
To avoid making losses from bounced checks, most organizations in different sectors are looking for ways to detect and prevent bad checks, especially with the rise of digital payments. Small banks and credit unions that work with commercial customers in the utility sector are implementing measures like check verification to boost service delivery.
As a bank, you need to work closely with a payment processor with cutting-edge technologies. These partnerships will be helpful if you want to outsmart cybercriminals. This blog post will examine why check verification is essential in the utility sector and what financial institutions can do to provide these critical services.
Check Verification involves authenticating the validity of a check before accepting it as a form of payment. This service is essential for businesses because it helps identify fraudulent transactions before incurring financial losses.
But why is check verification necessary for the utility sector? Here’s why:
If you accept bad checks, your utility business will have unpaid bills, affecting your bottom line. Bounced checks negatively affect your cash flow, primarily if your business relies on that revenue to keep operating.
However, with check verification services you can confirm funds are available before processing a check. This way, the utility company can stay afloat with proper cash flow management.
In this day of digital payments, a Federal Trade Commission study reported about 2.8 million fraud reports in 2021 alone. Instances of check fraud can cause heavy losses; therefore, you need to get the right technologies to stop fraudulent transactions during utility bill payments.
Following up with bounced checks can take up a lot of time. However, when a utility company has check verification services integrated into the company system it becomes easier to automate business processes. Staff can focus on other areas that need attention, such as customer service.
Small banks and credit unions that work with commercial customers, like utility companies, have an opportunity to provide check verification services to reduce losses. Here’s how to achieve this:
To provide better services to your commercial customers, you must understand the different check verifications available to the utility sector. They include:
This process allows you to validate a check by verifying key items, like the routing number, watermarks, and magnetic ink character recognition encoding. You need to implement comprehensive checks to prevent any problems for utility companies when they receive bill payments for electricity or water.
A check guarantee protects the utility company from financial losses due to bounced or returned checks. This service ensures that the guarantor will step in and pay if the check bounces. This service helps to keep bill payments consistent.
An electronic check conversion scans the details on the check and makes the conversion to an electronic payment. Utility companies can review the check at the office, and the money will be immediately deducted from the corresponding bank account.
Your bank must boost check acceptance in real time to help with bill payments. Remote deposit capture is ideal for utility customers because the bank can accept scanned copies of the check using electronic images instead of paper checks.
When choosing a partner for check verification services, here are some of the things to look out for:
A majority of companies in the utility sector have implemented check verification services to prevent cases of fraud. Since most of them receive digital payments, it’s become evermore crucial to adopt these payment solutions like iCG-Verify.
One example of this implentation comes from payment processor Mitek Systems which works with multiple banks, credit unions, and other financial institutions to offer mobile remote dispute capture (RDC) and Check Fraud Defender. These partnerships are essential because bank customers can electronically send the check details by scanning the image.
Before choosing a check verification provider, you must confirm whether or not they suit your business. Here’s what to check for:
Adopting check verification can help reduce losses for commercial clients due to bounced checks, improve operational efficiency, and increase customer satisfaction. If you need to provide these services to utility companies, check out iCG and learn more about our check verification service, iCG-Verify.