In the age of technology, you may think that checks have gone by way of the dinosaur giving way to debit cards, credit cards, and other electronic transactions. However, that is not the case. Checks have simply transitioned with the times and a new element of ‘electronic’ checks has entered the marketplace. So then what is the difference between a traditional check and an electronic check? The way they are processed and the additional security that an electronic check offers.
The traditional way of check processing has tended to take several days to complete the transaction; the merchant first had to compile a deposit and then take it to the bank, wait for the bank to process it and submit it to the issuing bank, who would then transfer the money to the recipient’s account. This method of commerce left many gaps for theft, loss, and error to occur.
Merchants have begun transitioning to accepting electronic checks, because it is much quicker and safer for them to collect their money than the traditional check processing method. Below are a few ways in which accepting electronic checks is both more convenient and efficient than traditional checks:
Electronic Checks are similar to debit card transactions. The customer writes the check, it is scanned through a reader at the register, just like a debit card is, and then the reader processes the check as if it were a debit transaction, voids the check and it is returned to the customer. The process is no more complicated for the customer than writing a check, and the merchant receives their money typically within 1 to 2 business days versus a week or more, without having to make out a deposit or go to the bank.
Electronic checks typically do not have bank holds like traditional checks over $200 can have.
Merchants with more than one location can also have all funds from multiple locations automatically sent to one account, without multiple hand made deposits.
Fewer NSF (insufficient funds) to deal with. By, using an electronic check provider, the merchant passes the NSF issue on to the electronic check provider (depending on the agreement between the merchant and the provider). Typically the provider acts as a middleman accepting electronic checks and handling the processing side of things for the merchant, and fronting the merchant the money due, for a nominal fee. This makes it the provider’s responsibility to catch NSF’s up front so that the merchant can refuse the check if appropriate, or the provider will have to collect on the back end from the customer if an NSF transaction is not caught on the front end.
Many businesses and government agencies have already transitioned over to accepting electronic checks seamlessly, without the customer even being aware of the change. For companies and agencies that receive most of their payments by mail, they do not even have to return the voided check; it simply goes in the customer’s file or gets shredded.
To find out more about how accepting electronic checks can benefit your business contact Secure Painless Systems today