What about check guarantee and check verification services?
CHECK GUARANTEE SERVICES - GETTING THE FACTS:
For most merchants, check guarantee services and check verification are poor choices. Check guarantee companies often tell merchants "You will never receive a bad check again." Weeks or months later business owners begin to learn the truth.
Check guarantee companies are like an insurance policy. If you accept checks, and you follow all their instructions to the letter, they may very well reimburse you for "bounced checks." Many businesses find that a bounced check does not have some of the required information and the "check guarantee" is null and void. Hundreds if not thousands of business owners have paid for a check guarantee service only to still end up with bounced checks.
Let's say that your business does use a guarantee service and you always put on your checks all the required information. Next month a check bounces and the guarantee service does reimburse you for it. You have probably forgotten about the matter, but the check guarantee service will seek to collect that check plus the state bad check fee. They collect the check and they got their money back from it. Well, if they could, you could too and you could avoid paying the "guarantee fees." Unless most of your checks average several hundred or several thousand dollars, you are better off using a bad check recovery service such as NorthStar.
Only about 2% of your checks should "bounce," and NorthStar can collect most of these in 60 days or less at no cost to you. A check guarantee service knows that about 98% of all your checks will be "good," but requires you to pay an insurance premium on them anyway. Why pay for a service you will not need 98% of the time?! Too, you will also need to rent or lease check guarantee equipment--more wasted money for most businesses.
CHECK VERIFICATON SERVICES - GETTING THE FACTS:
As is the case with check guarantee services, you must buy or lease equipment; this is one more business expense that is unnecessary. Check verification services check information such as a driver's license against one or more databases of bad check writers and reject checks from people whose information is in the database. This has been going on for many years. Back in about 1980 businesses such as major department stores used to receive books that listed bad check writers each week. Cashiers checked the books against the checks tendered by customers. If a person was in the book, the check was rejected. There were times when a person was not in the book, but the check still bounced! This same problem exists today, though electronic databases are now used.
A bad check writer may have just opened a new account and is thus not in the database. Perhaps the check writer is one database, but not the one being used by a business. Check verification can help some businesses screen out bad check writers (especially if a business is doing a lot of business over the Internet), but it is not a good choice for most businesses. A better way is to simply accept checks because only 1-2% of them typically bounce. This small percentage can then be handled by a FREE bad check collection service.
With about 40% of the U.S population actively involved in writing checks, finding a good solution for nsf check collection is important.