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 with virtual check processing. Returned checks cost 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 that leverage digital payment technologies, including paper and virtual checks.
Businesses need to adapt as more customers turn to computers and mobile devices to conduct business and pay for services, products, and recurring charges. 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.
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Benefits of Electronic Checks
An electronic check, or eCheck, represents the digital version of the traditional paper check in virtual check processing. 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 than credit cards. As customers and clients embrace convenience at every turn with virtual online payment solutions, time-saving eChecks add an advantageous option for making payments for businesses to accept.
Check Verification—and Why Your Business Needs It
A critical piece to check acceptance is the verification process itself. Regardless of the payment channel, validating customer bank account information in real-time reduces acceptance risks. By identifying both positive and negative account information and 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 with virtual check processing.
Many businesses take advantage of real-time check verification services to salvage sales when issued a negative account alert. 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 disrupting online payment processing.
Types of Check Verification Processes
If your business accepts eChecks regularly, contacting the bank each time a transaction process 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 processing 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
- Near real-time inquiries into account status and account balance inquiries
Companies like iCheckGateway.com (iCG) offer the full scope of options for major public and private industry categories that rely on this service for virtual check processing.
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.
Instant Check Verification and Security
The news presents data breaches as regular events, but they can be catastrophic when it happens to your business. Recent economic shifts have created new opportunities for fraudsters, including check fraud. Get protection against this criminal activity by having the proper protection at all data points managing your customer’s transactions, especially when they initiate their payments.
According to the American Bankers Association, check fraud accounted for 47% of deposit account losses in 2018 and 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 before accepting any form of check as payment, secure solutions protect merchants against fraudulent activity.
Robust tools in virtual check processing, instant check verification, and fraud mitigation procedures reduce nonpayment incidents and collection fees incurred.
Conclusion: Select the Right Payment Provider
When selecting a third-party provider, your checklist should include features that meet present and future needs. An eCheck processing and instant check verification program gives your business customers and clients more choices and 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, companies 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.
iCG business clients instantly match user-provided account and routing information with what is on file at the bank. This virtual check tool 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.
Date Originally Published: January 11, 2021
Date Updated: August 1, 2022
MORE TAGS:ACH Technology, Ecommerce, Payment Processing, Financial, PCI Compliance