Is accepting checks worth the risk? Ways you can prevent check fraud

Payment options for businesses run the gamut, from cash to credit cards and paper checks. Because of this kind of payment diversity, businesses use online bill payment services to manage and verify their payment accounting systems.

While cash is still a popular form of payment, customers generally prefer credit cards or checks for the extra safeguards and record tracking that they provide. Vendors usually opt to accept checks that are either mailed in or submitted electronically through an online bill payment company. There are, however, some considerations for business owners when it comes to accepting checks as a form of payment.

Check Payment Statistics

According to the Federal Reserve, most check transactions do not exceed much over one thousand dollars. In Federal Reserve non-cash payment studies, the volume of check payments has steadily declined. In 2006, for example, only 31% of U.S. transactions were paid using checks.

In contrast, online bill payment through check e-payment services has risen on average by approximately 18.7% annually over the last four years. The average check payment was at approximately $1,366 in 2007. It is estimated that in 2009, over 17.9 billion check payment transactions were completed.

Avoiding Check Fraud

Companies that decide to include check payment as an option for customers should consider the following safety measures to prevent fraudulent transactions from occurring.

• Post your company’s check acceptance policy visibly at the checkout location. Use clear language to describe whether they are not accepted, or that a form of photo ID and signature verification is required.

• Evaluate checks carefully and examine them for watermarks, text, and smudges and torn sides—all of which can be a red flag. Always compare check information with the customer ID, including the signature. If you suspect any form unauthenticity, you can politely decline to accept the check.

• Enlist the services of a check guarantee service which could be considered a form of “check insurance.” Online bill payment services often include check verification as part of their portfolio of services.

• Ensure that the online bill payment service includes optional check conversion for the merchant account. This allows for checks to be processed almost in the same way as credit card transactions are handled. The nominal fees are minimal compared to the losses attached to check fraud. Check conversion not only protects against fraud, but transactions should be faster and time will be saved by eliminating visits to the bank.

If you’re interested in learning more about our check verification services and other ways CheckCare helps to prevent fraud, check out our website or contact us today.