Check Verification - Fraud Library

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Check Verification is a process that screens checks and check writers to assess the risk associated with taking it. These services typically will check to make sure the account is open, determine if the account has had bounced checks before and it will check a "negative database" of "bad check writers".

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Reduces costs, but not fraud ...

Check Verification is a process that screens checks and check writers to assess the risk of the check being bad. These services typically will check to make sure the account is open, determine if the account has had bounced checks before and it will check a "negative database" of "bad check writers".

How Good Is It? 

Check verification is a good way to verify that the account information provided is valid, no typos, and it can help reduce your overall costs by reducing your NSF returns. Check verification is not a good fraud check. These services don't verify the name or address information on the account. With ACH and electronic checks, the cost associated with a NSF return are typically double the cost of processing the original transaction.

Typical information check verification can provide:

• Account Closed
• Stop Payment
• The account is currently in an NSF balance
• Non DDA Account
• Invalid Account Number
• Invalid Routing Number
• The account doesn’t exist
• Stolen/Forged/Fraud

Considerations When Implementing or Buying This Functionality   

• When accepting checks and debit cards a verification service should be all that you need. Check guarantee services, in addition to using a verification service can actually cost you more money to process. Unless you yield a high sales volume each month to cover the extra cost for using a guarantee service, just stick with verification.
• Check Verification with Conversion means that not on is the check Verified but it is also "converted" into electronic funds, this means that you do not have to deposit the check into your checking account; the funds will be deposited into your checking account for you automatically.

Estimated Costs –Verification transactions usually cost around $0.15 - $0.35/per item. There may be a sign up/application fee. There IS often times a Monthly Minimum fee and always a Statement Fee, especially when dealing with retail check processing accounts.

Alternative Solutions – Check guarantees.

Vendors – BetterCheck, National Cash Management Systems (NCMS), TeleCheck.

How Does it Work? 

This service is performed using a real-time internet process to access the account information and compare the new transaction against the list. If the customer has a history of bad checks, the transaction will be declined. If they are not in the database for bounced checks, they are approved.

How Do I Use the Results? 

Building This In-House 

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