Posted by Tom Lombardo on Fri, May 09, 2014 @ 10:00 AM
Banks offer “remote deposit capture” (RDC) services with their merchant accounts so merchants can deposit checks without going to the bank. But sometimes merchants assume that their bank’s RDC service includes features that it doesn’t, and often when they are needed the most.
“RDC” refers to only one thing: you scan your customer’s check, transmit it to your bank and the digital image is handled almost the same way as a paper check. Bankers like this because it automates the check deposit process, and merchants like it because, it can speed up the transfer of funds and eliminate trips to the bank.
If the check is good.
And that’s where services beyond RDC become critical. Some merchants believe that since they have scanned the check and sent it to their bank electronically that this implies a type of verification and some level of guarantee that the funds are available and will be transferred.
That’s not correct. RDC converts the check into a digital image for processing, and that’s it. Anything having to do with check verification, or check guarantee, will come from a separate service.
As a separate service, check verification lets you accept a check based on a check processing company’s approval system. Verification services that work in real time enable you to do this while the customer waits, giving you a high degree of confidence that the check is good before you decide to accept it.
This service is usually not bundled with RDC and is usually not included with a merchant bank account -- even though 55% of merchants do not feel adequately prepared to detect bad checks. If your bank didn’t provide you with this service, they might make it available to you for an additional fee – or you can begin the process of choosing a check service for your business.
Verification prevents you from accepting most bad checks, but what happens if a verified check bounces anyway? Nothing is full-proof, including check verification. In fact, according to a 2014 Payments Survey done by the Association for Financial Professionals and JP Morgan, sixty percent of businesses experienced attempted fraud last year, and a portion of those attempts involved check transactions.
A check guarantee service may be your best defense. Virtually no banks offer it. A few banks offer a diluted form of check guarantee, which means you pay them additional fees to reserve the right to enter into a dispute should one of their “guaranteed” checks bounce.
But that’s not a guarantee. A guarantee means that if an approved check bounces, you don’t suffer a loss at all. Your account stays whole, while you and your business do not miss a beat. You get paid, and you do not have to spend any time dealing with the bounced check.
Why be one of those merchants who isn’t prepared to deal with unscrupulous check writers? You can see how important check verification and a true check guarantee might be to your financial wellbeing. Learn more today!