Guide to Check Processing Services

Check processing companies provide many services to small business owners, including verifying funds and evaluating the credit worthiness of the customer. Electronic check processing takes place immediately and may work like a debit card transaction depending on the company you use. Carefully review the services offered and the methods used to verify checks before signing an agreement.

With check processing, each company provides different options for service. Some companies combine all your electronic transactions such as credit cards with check verification. Your options include using a check processing company that utilizes your existing software, provides new equipment to install or allows check-by-phone processing.

Check processing saves money for small businesses by:

1. Speeding up cash flow.
2. Reducing the risk of a bad check.
3. Guaranteeing collection on bad checks.

Action Steps
The best contacts and resources to help you get it done

Know how to evaluate check processing services

Doing your homework before you sign up with a company for processing checks helps ensure that you pick a reliable company that's competitive with their rates. Some check processing companies work as third party brokers rather than actual processors. Other companies may do check processing through a bank not located in the United States.

I recommend: Ask 26 questions before signing up with a check processing service.

Install point of sale (POS) check processing equipment

Processing checks using a POS system converts checks to an electronic transaction which eliminates the need for physical deposits at the bank. If a check doesn't clear, you immediately return it to the customer, securing their information, and require another form of payment.

I recommend: Electronic Clearing House (Echo) uses a system designed to work with VeriFone terminals, which most retailers use for credit card processing. Celerant Command Retail offers check verification at the register.

Use the Internet for processing checks electronically

With online check payments, the customer provides no identification such as a driver's license and typically lives in another city, state or country. This makes collecting on a bad check more difficult. An Internet check, or I-check, isn't a physical check, which makes it harder to trace.

I recommend: Safeguard your security by signing up with a service that provides full disclosure of its methods, like Pay by Check. AVPS allows you to accept checks online. Optimal Payments includes an e-check solution that includes check verification.

Tips & Tactics
Helpful advice for making the most of this Guide

• Make sure the check processing company doesn't restrict what you can sell.
• Choose a service that doesn't require your customers to register with the provider.
• Some companies charge a one-time activation fee, a monthly service fee and a fee per transaction.

The official source of Check Processing Services is
the Check Processing Services page at Business.com