Posted by NationalACH on Feb 04, 2014
Check 21 Payment Processing

Reducing E Check Processing Risk

When you accept checks online, you can increase sales up to  29%. Yet some merchants still wonder how safe electronic check processing is.

E checks are the most popular alternative payment method for US shoppers. And are one of the safest ways to process payments.   Enhanced security technology and encryption used by electronic check processors include authentication, public key cryptography, digital signatures, certificate authorities and duplicate detection

The top concern expressed by merchants is that echecks are not processed in “real time” like card payments are.  When a card payment is made, the funds are immediately set aside for that transaction.  With echecks, there is a risk to merchants that funds may not still be in the account when the transaction clears.

Some online merchants with tangible products will wait a day prior to shipping to be sure that a transaction will not be returned.  Digital merchants that offer immediate delivery of products often will simply fulfill the since the cost of goods is significantly lower than with physical products.

There are ways that merchants can reduce risk and increase assurance that transactions will clear.  Verification and authentication are two inexpensive tools that are easy to implement and help ensure safe processing.

Echeck Account Verification  

Check verification services use a variety of data bases to gather information on the account.  Basic verification includes making sure that routing and account numbers are entered correctly and that the account is in good standing.

Verification databases check to see the history of check writing on the account.  The data shows whether or not there is a history of bad check writing on the account, allowing you to eliminate some risk.

Keep in mind that echecks can automatically be resubmitted 2 additional times.  Therefore, if an echeck “bounces” the transaction can be resubmitted..  Most consumers do not mean to bounce a check; they simply make a mistake as to when checks will clear.  Up to 85% of all bounced checks go through when resubmitted again.

Echeck Identity Verification

Merchants selling higher ticket items often find it worthwhile to verify the identity of the consumer before fulfilling the order.  Using a wide variety of public and private databases, the ID verification reduces risk by confirming that the buyer is indeed who he represents himself to be.

ID verification services can match the last 4 numbers of a social security number, driver’s license numbers, birth and death records, phone numbers, addresses, and a wide variety of other public information to the buyer.

Some merchants also will ask a series of questions to elicit information drawn from public records to confirm identity.  These may or may not work well, depending on how accurate the public information actually is.

For most merchants, confirming the last four numbers of social security and driver license information can be enough.  Remember, the more information you ask for at checkout, the greater the chance of shopping cart abandonment.


Check verification and ID verification are inexpensive yet highly effective in reducing processing risk.  

Electronic check verification services confirm that the account is open, is in good standing, has no history of bad checks, and verifies a myriad of other data points. Check verification reduces payment processing expenses by decreasing the number of returned transactions.

Identity verification services confirm that buyers are who they represent themselves to be. Reducing the risk of fraudulent transactions.  

Do you want to reduce processing risk with check verification and ID verification services?  

Contact today.