In the coming weeks, we are planning a series of posts to provide more insight into check guarantee services, and specifically the services that we offer at NCT. One semi-common misconception is that check guarantee and check verification are the same. This is incorrect and is the subject of today’s post.
Check verification is the process of screening checks against positive and negative databases to ferret out the “bad check writers.” Obviously the risk of accepting a bad check is lessened if you have controls in place that limit your exposure to checks written by people with a checkered history (pun intended) of past check writing. Simply put, if the person trying to pay with a check doesn’t check out (again, pun intended) then you do not accept their check.
The benefits of this process are obvious. However, it is far from perfect. One of the primary ways in which check verification is a useful yet incomplete control is that there is no guarantee. The verification company will tell you something to the effect of “take”, “don’t take”, or “risky”, and then it is up to you to make the decision. If the check bounces, of course, you are on the hook for dealing with it.
Plus, what if the database being used is incomplete and gives you a “false positive?” If you do not accept the check, then you may not be able to generate revenue from the sale. Just because someone has passed along a bad check before does not necessarily mean that the check they are giving you is bad (although, granted, it is a very good indicator). The point is that while check verification is a very worthwhile strategy to employ, it is not ideal.
And this is where check guarantee comes in.
Even if a check clears the verification process, there is no guarantee that it will turn out to be a “good” check. Likewise, as mentioned, just because is someone is not verified as an acceptable check writer does not mean that their check will be “bad.” Check guarantee helps to mitigate this problem by doing what it says: guaranteeing the checks that you accept. Check guarantee providers like NCT still have processes to verify the check writer and ensure the highest probability possible that a check will be good, but the risk is is taken out of the equation for you.
Additionally, companies like NCT that employ “positive databases” as opposed to “negative databases” are able to verify a higher percentage of checks, thus lessening your exposure to lost sales or the uncomfortable position of turning down a potentially honest customer.
So, in conclusion, check verification is very worthwhile but by itself is incomplete. Check guarantee, on the other hand, builds upon on the principles of check verification to truly maximize your sales and revenue while exposing you to as little risk and inconvenience as possible. At NCT, we offer both as part of our suite of payment processing solutions and will help you determine which one is best for you.
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