The ability to prevent check fraud is
critical for businesses of all sizes
and across all sectors. After all, checks are still the predominant method
of payment for goods in the United
States. Fortunately, new technologies
are making the process of safeguarding
against check fraud simpler and more
cost-efficient.
“There are billions of checks written in
the United States every year with over 30
billion projected in 2008,” says Regina
Calhoun, manager of national check
sales for Comerica Merchant Services.
“Protection against check fraud and its
associated losses becomes paramount to
a business’s financial vitality.”
Smart Business spoke with Calhoun
about how checking solutions have
advanced, the advantages of accepting
checks and what kind of fraud protection and security measures are available.
How have checking solutions advanced in
recent years?
Checks are converted electronically
now at the point of sale. Checks are
taken for COD (cash on delivery) for catalog merchants or any type of mail order
merchant. Anybody that is shipping
goods and products can take checks via
the Internet. Also, the consumer can
mail a check into the merchant and have
the funds guaranteed.
Advanced checking solutions available
through banks make the process of
check acceptance simple. Merchants
just need to check their customers’ IDs
and get a phone number that they write
on the check. The merchants can then
convert the check, deposit the check
into their bank, or use back office conversion, which is ideal for merchants
who have locations throughout the
country and want their accounting centralized. Back office conversion allows
each individual branch to scan their
checks through a machine so they don’t
have to physically take them to the bank
every night.
How does the cost of check acceptance
compare to credit card acceptance?
There is an incredible difference. All of
the regulations pertaining to credit cards
are consumer driven. Most of the issuing
banks allow a consumer to dispute a
charge for up to 180 days. Check guarantees, which include stop payment coverage, eliminate the risk of charge-backs
for businesses. Let’s say I write a check
to a merchant and then become unhappy
with that merchant. Even if I put a stop
payment on the check, the merchant will
still be covered on those funds.
How do delayed payment programs work?
A delayed payment program allows
merchants the ability to provide customers with a flexible payment option
that helps increase the probability of
closing a sale. This service allows the
customer to delay check settlement for
up to 30 days while the merchant
receives full funding within 48 hours.
Furniture companies, auto dealerships
and those in the medical field often take
advantage of delayed payment programs
because they get their money upfront.
Everyone is happy because the customers gets their product and the merchant is funded within 48 hours.
What kinds of fraud protection and security
measures are available with checks?
Checks operate off of databases with
assigned risks and parameters. It’s like
when you use a credit card to make a
very large purchase that falls outside of
your normal spending parameters; your
credit card company will be on the
phone with you. In the checking world
the merchant receives a response called
‘call center.’ The merchant calls its bank
who speaks with the writer of the check
to confirm his or her identity and make
sure the transaction is not fraudulent.
When accepting a check you want to
make sure it is not a check printed off of
someone’s computer. There is a specific
type of magnetic ink on legitimate
checks. One of the easiest things to do is
to rub your fingers along the MICR line
that contains the routing and account
numbers. If the ink rubs, it is a fraudulent check.
How should a company go about selecting a
financial institution that will meet its check
processing needs?
Research, research, research. There
are several Web sites out there, including the Better Business Bureau’s, that
have extremely good information. After
you’ve conducted your initial research,
put together the criteria you’re looking
for, go out for bids and have people
come in and present their products.
Ultimately, it’s important to pick a financial institution that will be the best fit for
your business.
REGINA CALHOUN is manager of national check sales for Comerica Merchant Services. Reach her at (713) 898-1584 or
[email protected].
