Guest Article: Checks via Fax - What's the Scoop?

By Sandra Needham

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With the aid of fax machines and checks-via-fax software, businesses are currently able to receive check payments over the phone lines. Businesses can now accommodate the multitudes of consumers who do not use credit cards. Market studies reveal that between 70 and 75 million American consumers do not have credit cards, yet have personal checking accounts. Not given the option to pay for goods and services by phone, fax, or e-mail, these consumers are forced to make payments by mail with checks or cash.

Millions of other consumers who have credit cards simply prefer to make only check payments. Some have reached their credit limits; others are reluctant to pay high rates of interest incurred by credit card use. With so many consumers not using credit cards, the availability of checks-via-fax boosts sales and saves time for businesses and consumers alike.

LEGAL?
Sending and depositing checks-via-fax are legal activities regulated by the Federal Trade Commission. Service bureaus have been processing checks-by-fax for over ten years, but private businesses have only been allowed to do their own processing for a couple of years. Businesses that previously paid service bureaus to process checks now save thousands of dollars doing the work themselves. Businesses are no longer burdened by service bureau set-up fees, monthly maintenance fees, per-check fees, or printing charges.

HOW DOES IT WORK?
For consumers, placing an order is fast and simple. Instead of bringing out an envelope and stamp, the consumer merely faxes a check to its desired destination. The check provides the recipient with the consumer's checking account information and bank routing number. After the payment is received by the business, information on the check is inputted into a computer housing the checks-via-fax software. This software enables the computer to examine the information for validity and recreate a new check. Once the information is approved, a new check is printed out within minutes.

The recipient of the payment can immediately deposit the new check. Under the American Banker's Association Laws, signatures are not required as long as the depositor has authorization from the customer. According to the 1996 Federal Trade Commission mandate, the depositor must either have written authorization through mail or fax, or a recorded verbal authorization. If checks-via-fax meet all Federal Reserve and ABA regulations, banks must accept them.

WHAT YOU NEED
To receive check payments by fax you need: a fax machine, checks-via-fax software, check paper and a high resolution printer.

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