The Payments 101 series explores Check Guarantee
Check Guarantee is exactly what you might expect based on the name. Simple, right? Acting as a type of insurance for the merchant, Check Guarantee ensures a merchant is paid for all checks – including returned checks – provided certain check verification and acceptance rules have been followed as outlined in the agreement with the processing provider that is guaranteeing the funds. Check Guarantee is designed to take the worry out of check acceptance for the merchant and eliminate collection woes associated with returned checks.
Check Guarantee Process
The guarantee process involves running the check received from the customer through a check reader or scanner for verification and authorization. Obtaining approval requires passing a thorough search for any outstanding unpaid checks associated with the check writer. If there are no bad checks found, the check is deposited as normal and the guarantee processor guarantees payment to the merchant. If the check is returned unpaid, the merchant’s bank forwards the check to the check guarantee company and the merchant is paid-in-full on all qualified checks. This reduces the loss a business would otherwise absorb in uncollected funds associated with a bad check and eliminates check return fees by the processor. Check Guarantee often comes bundled with Check Conversion – which converts the paper check into an electronic payment for faster processing.
How Much Does Check Guarantee Cost?
Like most other services related to check and electronic check processing, Check Guarantee includes a set of standard fees for account and hardware setup. In addition, Check Guarantee typically includes a percentage fee on all checks PLUS a nominal per item fee. In some instances there is also a monthly minimum fee associated with the service.
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