What Kinds of Electronic Check Conversion Exist?
There are two major types of electronic check conversion – electronic check conversion and electronic check conversion with check guarantee. Before jumping into the key difference though, it’s helpful to spend some time explaining electronic check conversion in general.
Electronic Check Conversion Explained Using Credit Cards
The best way to explain electronic check conversion (and even electronic check conversion with check guarantee) is to point to credit cards. Years ago, instead of swiping credit cards into an electronic reader, merchants had to physically place them into a metal contraption, along with a two-piece carbon form. A heavy roller created an imprint of the credit card. After signing the form, one copy stayed with the store and the other went to the purchaser.
But in the last twenty years shoppers and stores forego using extra paper since everything is stored electronically thanks to the electronic reader. With electronic check conversion an amount is entered and the check is scanned, much like credit cards today. When the transaction is complete the check is given back to the customer since everything is stored electronically. As with current credit card transactions, the business no longer needs to have an ‘extra paper trail’.
Electronic Check Conversion Benefits
Electronic check conversion electronically records the transaction thanks to the check reader attached to the credit card terminal. Also like credit cards electronic check conversion or electronic check conversion with check guarantee, will decline a check if there is a problem with the account.
This helps reduce fraud. Any check a merchant gets is electronically verified against a database of closed accounts or accounts with risky histories. Although the businesses cannot see specifically what the problem might be, it will red flag any negative marks in the last 90 days and declines the check. This could be anything from a closed account to bouncing checks.
If the check passes the negative database, it is then converted to an electronic debit and the funds are deposited into the merchant’s bank account. This happens if the check writer has sufficient funds in his checking account at the time the check is ‘written’.
Electronic check conversion, however, doesn’t automatically cover a check in the event that something is wrong with the account in the here and now. So that’s where electronic check conversion with check guarantee comes into play.
Electronic Check Conversion with Check Guarantee
Electronic check conversion with check guarantee offers more protection to merchants. Businesses that have electronic check conversion with check guarantee don’t have to worry because they still will get paid. Many companies offer both forms – electronic check conversion and electronic check conversion with check guarantee. However, they usually recommend electronic check conversion with check guarantee because this service offers more protection to merchants.
As with electronic check conversion, the check is approved at the time of the transaction. But more importantly, the store is guaranteed funding within 48 hours, even if the check is returned for non-sufficient funds. The same cannot be said for basic electronic check conversion.
Is Electronic Check Conversion With Check Guarantee Right For You?
Every business can benefit from electronic check conversion with check guarantee. The cost of electronic check conversion with guarantee is very similar to the cost of accepting credit cards. However, the discount rate for this feature usually costs less then the discount rate for credit card acceptance.
For a company to decide if electronic check conversion with check guarantee is right for them, they should consider how often they accept checks that become NSF, or become bad for other reasons, such as closed accounts, etc. Not only will electronic check conversion with check guarantee save businesses financial loss because of bad transactions, it also provides them peace of mind that they will receive payment for products or services sold.
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