TABLE OF CONTENTS
- What Is Check Verification and Why Is It Important?
- How Does Check Verification Work?
- Is Live Check Verification Secure?
- How to Prevent Problems When Verifying Checks
- How Merchant Check Verification Services Simplify the Process
- Final Thoughts on Electronic Check Verification
- Verifying Funds on a Check: Frequently Asked Questions (FAQs)
Electronic check verification is an important tool for businesses that accept physical checks and eChecks. According to AFP, checks and ACH debits were the top payment methods impacted by fraud. To protect your business from fraud, you need to be vigilant.
In this article, we are going to look at how to verify a check, the different check verification services available, and why check verification is so important. Let’s get started!
What Is Check Verification and Why Is It Important?
Electronic check verification is a process that allows businesses or individuals to confirm the validity of a customer’s checking account prior to completing a transaction. This service can be used for both in-person and online transactions, and it typically takes just a few seconds to verify the account information. An invaluable tool, check verification helps protect against fraudulent transactions surrounding physical and electronic checks.
How Does Check Verification Work?
Check verification is when a business does its due diligence to make sure the payment from a customer will go through. When paying by check or eCheck, there is often a several-day delay between issuance and clearance. This window of time gives fraudsters an opportunity to ultimately evade payment as they walk (or click) away with the goods/service. Let’s take a look at the process of electronic check verification and go over how to catch check fraud.
How to verify a check
You can verify a physical check through a 5-step process:
- Find the bank that issued the check(s). The bank name should be on the front of the check.
- Do a quick Google search to find the customer service phone number of the bank.
- Tell the customer service agent that you want to verify a check and ask for assistance.
- Provide the routing and account number. Both of these numbers are on the front of a check.
- Give the customer service agent the amount of the check.
*Note: Do not use the phone number listed on the check. Fraudsters can easily print fake customer service phone numbers. We recommend you search the bank yourself, find the bank phone number on their website, and call that number. Taking these extra steps will ensure you are talking to a real customer service agent from the respected bank and not a scammer.
Electronic vs physical check verification
As we touched on, physical check verification is best done through the issuing bank and can take a few days for funds to transfer. If your business runs many transactions a day, you may not have time to call the bank each time. On the other hand, eCheck verification is quicker in facilitating electronic fund transfer (EFT) payments to your bank account. To verify an eCheck, eCheck payment processors use powerful tools to confirm identification information, bank account number, bank account status, and sufficient funds. For merchants, electronic check verification reduces the risks of check fraud.
The most important thing to know is that electronic checks and their verification process are often more secure than physical checks. Electronic checks have built-in encryption. Physical checks, by contrast, are easy to lose or have stolen, which may cause the sensitive information on the check to end up in the wrong hands. An encrypted electronic check is much harder for someone to fraudulently access and exploit for personal gain.
Legitimate sources for check verification
There are several places you can turn to for check verification:
- Your bank
- Your customer’s bank
- Your merchant service provider
- A 3rd-party check verification service
Check with your merchant service provider for check verification services.
Challenges with bank policies
Banks are doing more and more to provide their clients with privacy and safety. This is a good thing. However, this can raise some issues with physical check verification.
Some banks will not verify a check amount with you over the phone. They may only be able to tell you if the check is tied to a legitimate bank account. Some banks won’t even discuss this over the phone, so you’d need to take the check into one of their branches to have the verification done. The process will vary by bank or credit union.
Is Live Check Verification Secure?
Yes, live check verification is very secure. For businesses that accept many forms of payments, having a live check verification service is the best way to verify payment on the spot. This step ensures you don’t have checks bounce or lose sales.
How to Prevent Problems When Verifying Checks
The easiest way to make sure you don’t run into problems when verifying physical checks is by going to the check holder’s bank to cash it. If you cash the check at the bank displayed on the front, you eliminate the risk of the money not clearing due to fraud.
Unfortunately, not every customer’s bank will have a branch near you, you can always deposit or cash the check at a different bank. To protect yourself, it’s best practice to wait until the check has cleared before you spend any of the money that should be coming through. If you spend the money and a check ultimately bounces, you will be responsible for repaying the bank.
How Merchant Check Verification Services Simplify the Process
For businesses, merchant check verification services are a must. Comprehensive merchant accounts that offer verification services allow businesses to accept eChecks and other forms of payment with little to no risk.
Benefits of a merchant account with check verification include:
- Streamlined payment services
- Low fees
- Simplified processing
- Quick response and processing times
Final Thoughts on Electronic Check Verification
Electronic check verification has many benefits for both businesses and their customers. By verifying checks electronically, businesses can reduce the amount of time it takes to process a payment and protect themselves from fraud.
Consider an eCheck payment provider who can pair you with the right eCheck solution for your business!
Verifying Funds on a Check: Frequently Asked Questions (FAQs)
In case we missed anything, we have compiled a list of our most frequently asked questions.
How do I verify a check online?
To do a check verification, you will need to contact the bank shown on the check and speak with customer service. However, it’s worth noting that not all banks will release information over the phone. Some banks require you to speak to a local branch to verify checks. If you find yourself frequently in need of easy check verification, consider opening an account with an electronic check payment processor to accept eCheck payments securely.
How can I verify a cashier’s check?
Verifying a cashier’s check is just like verifying any other check. You will need to contact the issuing bank and provide them with the check number, the amount the check was issued for, and the name of the account holder (the person who issued you the check).
How long does check verification take?
eCheck verification takes a few seconds through an eCheck payment processor. Physical check verification can take anywhere from a few minutes to several hours. Some banks require you to go to a local branch to verify a check, which will take significantly more time.
How do check cashing businesses verify checks?
When a customer brings a check to a check-cashing business, the employees carefully examine the check for any signs of fraud, such as alterations or forged signatures. Then, they will confirm with the issuing bank that the check is backed by sufficient funds. Once they calculate their fees, the check-cashing business will provide you with cash.
Can I verify a check for free?
Yes, you can verify a check for free. To do this, you will need to speak with the bank that issued the check via phone or in person. Unfortunately, there is no free way to verify a check online.
How can I tell if a check is real or fake?
There are a couple of ways to determine if a check is real or fake:
- The bank address. Verify online that the address on the check is, in fact, a bank. A check with a P.O. Box is usually a common sign of fraud.
- Make sure the bank is credible. If you see a bank logo that you do not recognize, do a quick Google search to ensure that the bank is real.
These tips won’t catch everything but they are the most common ways to avoid check fraud.