Is Accepting Checks Worth the Risk? What You Need to Know to Responsibly Accept Check Payments
These days, if you're a small business owner, you might be wondering whether or not you should offer checks as a payment option to your customers.
You might think back to times where you were at the grocery store waiting impatiently in the checkout line for the lady in front of you who has laboriously been writing out a check to pay her bill for the past five minutes.
You might think you'd like to eliminate this inconvenience for your own customers.
Well, let's first look at some recent check usage statistics.
According to the Federal Reserve's ongoing studies of non-cash payments: • 17.
9 billion check payments were made in 2009 • The average check payment in 2007 was made for $1,366 • Check volume has been declining over the past few years • In 2006, 31% of total US payment volume was made up of paper check payments • Online bill payment via check/e-payments has increased an average 18.
7% each year for the past four years What does this information tell us? We can make an educated guess that checks are still used most prevalently for bill payment solutions knowing that your average grocery store or retail shop transaction isn't going to be over one thousand dollars.
Checks are being processed electronically over the Internet instead of being exchanged in face-to-face transactions.
Finally, checks are still a major factor when you consider offering payment options to your customers.
If your company focuses mainly on B2B transactions or if a majority of your transactions are for larger dollar amounts, you will almost certainly need to accept checks.
If you do decide to allow your customers to pay by check, here are some things to keep in mind to help keep you and your company's finances safe from fraudulent activities: • Consider looking into a check guarantee service, with optional check conversion, from your merchant account provider.
With this service, checks can be processed almost like credit card transactions.
There is usually a nominal monthly fee attached to this service, but it's worth it if you're processing a high volume of checks.
Think of it like paying for insurance against check fraud.
If a check turns out bad and you have a check guarantee service, you are reimbursed for the amount of the bad check.
Check conversion not only speeds up receiving your check funds, it also saves you from having to cash your checks at your bank.
• Whenever you accept a check, ask to see that customer's photo ID.
If you feel like the check may be fraudulent, ask to see that customer's signature on a separate piece of paper and compare it to the signature on their ID card.
It might seem a little over the top, but it's worth it to avoid a potentially harmful bounced check.
• Evaluate every check you receive carefully.
Look for watermarks, small security text, smudges, lack of perforation on one side of the check, or anything that looks fishy.
Compare the check's information against the customer's ID.
If the check looks inauthentic to you, apologize to your customer and politely decline his/her check payment and explain why you can't accept his check.
• Have your check acceptance policy posted in a visible location near your checkout counter.
If you don't accept checks, make that very clear.
If checks must be accompanied with a photo ID and signature verification, spell that out as well.
Checks are notoriously kind of a pain to process, but by not accepting checks, you're missing out on potential sales.
When you choose to accept them, it pays to be overly safe (literally).
Protecting yourself against bad checks could save you an entire day's worth of sales if a check turns out to be fraudulent.
Reduce the risk of accepting bad checks by looking into a check guarantee service as well as examining each check closely to look for telltale signs of fraud.
Until the numbers on paper check volume decline to less than five percent of all transactions conducted in the US, it makes fiscal sense to offer this payment option to your customers.
© 2011 Lorraine Wolfe
You might think back to times where you were at the grocery store waiting impatiently in the checkout line for the lady in front of you who has laboriously been writing out a check to pay her bill for the past five minutes.
You might think you'd like to eliminate this inconvenience for your own customers.
Well, let's first look at some recent check usage statistics.
According to the Federal Reserve's ongoing studies of non-cash payments: • 17.
9 billion check payments were made in 2009 • The average check payment in 2007 was made for $1,366 • Check volume has been declining over the past few years • In 2006, 31% of total US payment volume was made up of paper check payments • Online bill payment via check/e-payments has increased an average 18.
7% each year for the past four years What does this information tell us? We can make an educated guess that checks are still used most prevalently for bill payment solutions knowing that your average grocery store or retail shop transaction isn't going to be over one thousand dollars.
Checks are being processed electronically over the Internet instead of being exchanged in face-to-face transactions.
Finally, checks are still a major factor when you consider offering payment options to your customers.
If your company focuses mainly on B2B transactions or if a majority of your transactions are for larger dollar amounts, you will almost certainly need to accept checks.
If you do decide to allow your customers to pay by check, here are some things to keep in mind to help keep you and your company's finances safe from fraudulent activities: • Consider looking into a check guarantee service, with optional check conversion, from your merchant account provider.
With this service, checks can be processed almost like credit card transactions.
There is usually a nominal monthly fee attached to this service, but it's worth it if you're processing a high volume of checks.
Think of it like paying for insurance against check fraud.
If a check turns out bad and you have a check guarantee service, you are reimbursed for the amount of the bad check.
Check conversion not only speeds up receiving your check funds, it also saves you from having to cash your checks at your bank.
• Whenever you accept a check, ask to see that customer's photo ID.
If you feel like the check may be fraudulent, ask to see that customer's signature on a separate piece of paper and compare it to the signature on their ID card.
It might seem a little over the top, but it's worth it to avoid a potentially harmful bounced check.
• Evaluate every check you receive carefully.
Look for watermarks, small security text, smudges, lack of perforation on one side of the check, or anything that looks fishy.
Compare the check's information against the customer's ID.
If the check looks inauthentic to you, apologize to your customer and politely decline his/her check payment and explain why you can't accept his check.
• Have your check acceptance policy posted in a visible location near your checkout counter.
If you don't accept checks, make that very clear.
If checks must be accompanied with a photo ID and signature verification, spell that out as well.
Checks are notoriously kind of a pain to process, but by not accepting checks, you're missing out on potential sales.
When you choose to accept them, it pays to be overly safe (literally).
Protecting yourself against bad checks could save you an entire day's worth of sales if a check turns out to be fraudulent.
Reduce the risk of accepting bad checks by looking into a check guarantee service as well as examining each check closely to look for telltale signs of fraud.
Until the numbers on paper check volume decline to less than five percent of all transactions conducted in the US, it makes fiscal sense to offer this payment option to your customers.
© 2011 Lorraine Wolfe
