Check Verification Guide for Businesses
Ensuring your business receives payments on time from customers is paramount to business operations. Whether your business deals with checks, eChecks or both, verification procedures can confirm that the payment is valid before you accept it. Check fraud is a prevalent problem for both consumers and businesses, resulting in significant losses.
Fortunately, verification procedures or systems can lower the chances that your business will experience payment fraud. Businesses can employ manual verification techniques but using an electronic process can provide automatic confirmation without requiring a time-consuming phone call or bank visit for every check.
What Is Check Verification?
Check verification confirms that a customer’s check and bank account are valid before transaction completion. This process ensures that payments will process as expected without waiting days to see whether funds clear in your account.
Verification procedures cover in-person and online transactions using checks and eChecks. With a developed process in place, you can secure your business profits and potentially prevent fraud.
Why Is Verification Necessary?
Electronic and paper checks comprise a significant portion of payment methods, with checks accounting for 14.5 billion payments and Automated Clearing House (ACH) debits for 16.6 billion. As these payment methods are still common, they are often a target for fraud. It’s recommended that businesses employ verification procedures because they can:
- Protect against losses: Confirmation lets you spot fraud before a customer leaves without paying for your products or services.
- Decrease returned checks: Ensure that customers have enough money in their accounts to cover the costs before you accept payment.
- Prevent payment evasion: With immediate verification, you can confirm whether a check will clear before you deposit it into your account, meaning you can verify payment before giving customers a product or service.
How to Verify a Check
Businesses looking to verify funds on a check may turn to several methods. The most basic way is by calling the customer’s financial institution. This process includes:
- Inspect the check’s front to determine which financial institution issued it.
- Search for the bank’s official website and a customer service number online. Don’t use the customer service number printed on a check, as it could be fraudulent.
- Call the online service number and say you wish to verify a payment received.
- Provide the account and routing numbers listed on the front of the check. These numbers are typically along the bottom, with the routing number first and the account number second.
- Give the dollar amount written on the check.
Once you provide this information, the bank can confirm whether the check is valid. Depending on the bank’s security rules, the customer service representative may only state that the account exists, not the amount in the customer’s account. Other banks may verify a check’s funds, the account number and issuer and whether the account is active.
Some banks deny phone confirmation to protect customer privacy. In these cases, you must visit the nearest bank branch in person. You can also go to your bank, but the customer’s bank will give you a faster answer and more secure information.
Signs of Fraud
While your best course of action is to confirm validity with a bank or online fraud detection service, you can also look for warning signs like:
- Suspicious behavior: Actions like requesting cash for a check often indicate fraud.
- Check’s appearance: Authentic check backs include security features like a complicated pattern and the text “original document.”
- Microprint: Check backs also have tiny words printed in their design that often appear as solid lines or dots when they don’t come from a bank.
Businesses that frequently accept checks should set rules to reduce the chances of payments bouncing or fraud. These regulations might include requiring employees to report signs of fraud or keeping a business record of customers with previously rejected checks.
Electronic checks are created and sent to businesses online. As such, they have a different verification process. Procedures like calling a bank may not be necessary because eChecks process faster than physical checks, usually within 24 to 48 hours. Customers who use eChecks have less time to remove funds from their accounts, which would cause a check to bounce.
eCheck processing services often have built-in securities as well. The processor will verify a check online so you don’t need to. eChecks are also encrypted to keep information safe when sent online. These checks are much more challenging to steal and use fraudulently.
Sources for Check Verification
Sources for verification include:
- Your business bank: Your company’s bank can contact a customer’s bank to confirm the check information.
- A customer’s bank: The bank name is listed on the front of the check.
- Third-party services: These methods usually consist of an online service that confirms information based on check data.
You may verify checks using any of these options or a combination of them, but whichever you use, ensure it is legitimate. For example, don’t use a customer service number printed on a check. Instead, find the correct number on the bank’s website.
If your business uses merchant services, your service provider may include verification services or link you to another party that does. When you work with CSG Forte as your merchant payment processor, you can get merchant payment services from us.
Is Live Check Verification Secure?
As long as you use a legitimate form of live verification, it is very secure. Immediate payment confirmation offers a higher level of security than waiting for checks to clear because you receive approval or denial within minutes.
The CSG Forte Check Verification Process
With CSG Forte payment processing systems, you can choose between three verification methods: Validate, Validate+ and Authenticate. With each of these options, your business can automatically authorize checks and electronic funds transfer (EFT) payments using the routing and account numbers provided. Our Validate+ and Authenticate services offer an added layers of security features.
Things We Look for
Our procedure consults proprietary databases to check for suspicious information, including:
- Bad routing numbers: The routing number is invalid or goes to a different location than it should.
- Invalid checksums: The sum on the check doesn’t match bank records.
This service also verifies that the account exists and is open and valid. Payments that do not receive a definitive response move on to a national negative check database, which includes a comprehensive list of people who have previously written a bad check or one that bounced.
Based on the data received during our information search, the system will send a message indicating whether the payment was accepted. High-risk or insufficient funds checks receive an automatic decline. Others are accepted but may face further verification for your business’s safety. With Validate+, you can configure which results should lead to an approval or decline for added control over payment processing. When using CSG Forte’s Authenticate service, businesses are also able to verify account ownership, reducing the risk of fraud even further.
Choose CSG Forte for Online Check Verification
Online check verification ensures your business gets the promised funds for a product or service. With immediate confirmation, your business gains peace of mind when processing checks and electronic payments. Learn more about how our Validate service from CSG Forte processes all ACH payments, including eChecks, and provides immediate denial or approval to protect your business. Discover how to get started today.