Also called: Paper check
What a check is
A check is a written instruction from your customer to their bank to pay a stated amount from a checking account to your business. You receive the paper check, then deposit it or use a check-processing service to convert its details into an electronic payment.
A check is not the same as a card payment. It does not guarantee that your business will receive the money, and it does not provide the real-time fraud detection associated with a card issuer. If the account lacks funds or the check is fraudulent, your bank may return it after you have provided the goods or services.
A check skips card fees, but it does not promise the money will reach your account.
What checks cost your business
A check does not incur card interchange or card-network assessment fees. Your costs instead come from handling, deposit, processing, and risk services. A published estimate put guaranteed-payment services at 48 to 85 cents per check. The same material listed possible transaction charges of about 22 cents, plus setup, monthly service, minimum, and terminal fees. Those figures are undated, so use them as a checklist for quotes, not as current market prices.
Other estimates in the research put check verification at 8 cents per check and check-guarantee fees at 0.92 basis points of volume, based on a July 2010 report. Those old figures are not a current price benchmark. Compare the full service charge with returned-check costs, staff time, and the risk of a sale going unpaid.
Where the risk shows up
When a check is returned for insufficient funds or fraud, you face a payment shortfall and possible returned-check charges. Your other choices have costs too: decline the check and risk losing the sale, or accept it without a guarantee and carry the nonpayment risk yourself.
Paper checks also take longer to handle at the point of sale than card payments. In a grocery-store study cited in the research, debit transactions took about 25 seconds less than checks. Repeated delays add staff time and can lengthen a line.
When to accept checks
Checks make the most sense when customers need or expect to pay this way, including some person-to-person or business transactions. They do not work for an in-person exchange when a customer is absent, such as an online or phone purchase, unless you arrange a separate process to receive the paper check.
An electronic bank payment through ACH is a different payment method from a paper check, even when a service converts check details into an electronic debit. Compare each option’s fees, handling time, and return risk before choosing how to take payment.
What you can actually change
- Price the full service. List per-check, monthly, minimum, terminal, verification, and guarantee charges. The estimates in circulation are undated or based on a 2010 report, so get current written prices.
- Track returned checks. Record unpaid checks, fees, staff time, and lost sales. Use those costs to decide whether a verification or guarantee service earns its price.
- Compare payment options. Compare paper-check handling with card acceptance and ACH payments for your customers and transaction types. Include both processing charges and the cost of delays or nonpayment.
Frequently asked questions
Does accepting a check cost less than accepting a credit card?
A paper check does not incur card interchange or card-network assessment fees, but it is not cost-free. Handling, deposit, verification, guarantee, returned-check, and staff costs affect the total. Compare those expenses with your card-processing costs using your own transaction and return data.
Does a check guarantee that my business will get paid?
No. A check can be returned because the account lacks funds or because of fraud. A check-guarantee service is a separate paid option described in the research, but its coverage and terms depend on the service you select.
Is an electronic check the same as a paper check?
No. A paper check is a physical payment instruction. An electronic check or ACH payment uses an electronic payment process, even when check details are converted electronically. Compare the fees and return procedures for the specific method you accept.