Check Payment Services: Are they Necessary in the Credit Age?

Most Americans have a love-hate relationship with credit cards, and it’s easy to see why. If you’re wealthy, you essentially don’t need them. But if you aren’t wealthy, credit cards let you spend as if you were—at least until you’re smothered in debt. In lieu of credit cards, consumers have three payment options: pay by cash, debit card, or check. Despite the perception that checking is dead, thousands of merchants include electronic checking in their account services, and for good reason.

The current reality of credit

With trillions of credit payments occurring per quarter, credit is still king. But its reign isn’t as powerful as you might think. A 2009 quarterly analysis by TransUnion—one of the nation’s top three credit reporting agencies—revealed that over 70 millions Americans don’t have a general credit account. Consider also that the average cash purchase is only $9, and that 90% of Americans have a checking account, and the writing is on the wall: lots of people use checks.

In a 2007 study of non-cash payments, the Federal Reserve found that 62.7 billion electronic check transactions were completed for the year 2006. In the wake of the recent recession—after many people declared bankruptcy, or had their credit compromised in other ways—that number is surely larger.

Old checks vs. new checks

The Federal Reserve study reveals an important fact about check payments: people aren’t filling out paper checks and mailing them off the way their parents and grandparents did. Instead, they’re picking up the phone or accessing an online payment gateway. Paper checking is still common, but it isn’t the future of check payment; electronic checking is. For business merchants, this means accepting checks online and over the telephone via ACH (automated clearing house). Payment is critical to maximizing revenue, especially at a time when—following a recession—consumers are sensitive about debt.

Electronic check payment services are similar to other account services: payment information is received by a merchant’s processing bank, is sent to an ACH operator, and arrives at the customer’s bank. Then the funds are transferred to a merchant’s processing bank. The process usually takes about 24 hours, less time than it takes for paper checks to reach a business’ mailroom.

The benefits of check payments for merchants


An ACH payment has at least three benefits for merchants: it supplies customers with another payment option, it reduces fraud associated with paper checks, and ACH transaction fees are lower than credit transaction fees. Three benefits that ACH payment offers customers are: elimination of lost or stolen checks, fast removal of funds from checking account, and the security of receiver authorized payments.

At AVP solutions, we have years of experience providing services that support revenue growth. Unbeknownst to some businesses, one such service is electronic check payment. If your business is declining checks, it is essentially declining revenue. Contact us today to learn more about how electronic checking can help your business flourish.