A substantial number of companies have stopped accepting personal checks. Most business owners feel that cash payments and electronic transactions are safer and more economical. They also reduce waiting times, enhance cash flow management and require less effort to deposit. There are at least six major reasons not to accept personal checks:
1. Cashiers can’t determine if a customer’s account contains enough money. Many firms are forced to provide products and services for free because people use bad checks to pay for them. This isn’t a problem when companies utilize credit card processing and merchant accounts.
2. Banks add insult to injury by fining businesses that deposit checks from customers with insufficient funds. The fee is usually about $10. If a store or restaurant receives an average of one bad check every three to four days, these fines will exceed $1,000 per year.
3. It takes longer to prepare and deposit personal checks. A business owner has to sign them, fill out deposit slips and send them to a bank. An alternative is to scan both sides of each check. After the checks reach a bank, it can take several days for them to clear.
4. Check payments make it more difficult for businesses to maintain budgets and plan ahead. It’s often hard to predict when they will clear, bounced checks can cause unexpected money shortages, and bad check fees may be deducted from bank accounts at any time.
5. Personal checks slow down the checkout line, resulting in longer waiting times for everyone. Compared to using a debit card or paying with cash, it often takes significantly longer to fill out and sign a check. It also takes time for the customer to show an ID card.
6. People can easily make mistakes when they write out checks. A shopper might enter mismatched amounts of money or accidentally use the company’s former name. This is more likely to happen when people feel pressured because other customers are waiting to be served.
Although checks remain desirable for some types of high-value transactions, they have largely fallen out of favor in retail businesses. However, it’s vital for stores, eateries and most service providers to accept at least one alternative to cash. Most firms gain access to debit and credit card processing services by setting up merchant accounts.