There is a lot of interest in a new area of check acceptance/check collection called "check conversion." The process is as follows:
- Slide check through a check reader
- Stamp VOID on the check and give back to customer
- Have customer sign a slip authorizing an electronic transaction for the check amount
The advantage mentioned most often is the quick availability of funds and not having to go to the bank with a deposit. As is mentioned below, quick availability of funds is not an advantage. As for the deposit, you have to deposit your cash anyway. There are many negatives discussed below.
We do offer check conversion. We do not think you will like it, but some just really want to try it.
We recommend an alternative, or hybrid process, as seen below. Unlike conversion, this is a great process in the right areas. Many areas do not need it, but in weaker areas, it can improve collections as much as 35%.
ChekXpress is our hybrid check conversion process. You receive a self-inking stamp with the following statement:
"I agree that my account will be debited electronically for
both face amount and returned check fees if returned unpaid. Initials ______"
There is a one-time cost of $15 for the set-up and the self-inking stamp.
The advantages of ChekXpress over check conversion:
- No actual conversion. Check conversion is inundated with problems concerning
the actual conversion process. Many credit unions use large banks to clear
checks and, in the electronic world, a large percentage of those are being
returned as unrecognized. In best case scenarios, the conversion company prints
a manual check and deposits it instead of using the electronic process.
- ChekXpress maintains the advantage of conversion because of
the ability to electronically retrieve funds.
- The most pronounced advantage is the nature of a return. With check conversion,
all you can do is present it again. If there are no funds when represented,
or if the account has been closed, your options are extremely limited. With
ChekXpress, in many states, a returned check is a Class "B"
or Class "C" misdemeanor. These checks can be filed with the District/County
Attorney in many states.
- You have the actual check with all the contact information on them so that
you can still attempt a collection if the funds aren't in the bank at the
time you electronically represent it, or if the account has been closed. In
our conversion process, we use imaging equipment to help with this problem,
but it's very expensive.
- You do not have a lot of explaining to do to a confused consumer when you
hand the check back.
Are there advantages with check conversion? Not that we can determine. The
most common argument is that you receive your money faster. The following is
a quote from the The Green Sheet, an industry periodical, November 1, 1999:
"The differences between converting checks to the ACH system and depositing
them at the bank are really very minor. In both cases, the use of funds will
likely be the same, provided the merchant goes to the bank each day. The
cost per item deposited may even be greater with ACH..."
As mentioned earlier, this program is not appropriate or necessary for some
areas and types of businesses (e.g. a drive-up or formal dining where the customer
leaves a check at the table). ChekXpress is a valuable tool for
case-specific clients.
If we can answer any questions, or you would like to discuss the possibility
of adopting the above program, please contact
us.