Checks by Phone

    July 31, 2003

“Hold the Phone: Checks by Phone Serves as a Gateway to Business Savings”

Though it has not been considered state-of-the art technology since the days of Alexander Graham Bell, a sizable segment of the business population has grasped the concept that the telephone may serve as a “technically advanced” tool – a vehicle which not only functions as a profit generator but a profit retainer.

We are accustomed to company service representatives who happily (or begrudgingly) take our orders. Business enterprises have mastered the concept that telephone orders are quicker, more efficient and profitable than obtaining them via the mail – especially in today’s climate. However, the typical representative’s mantra: “What credit card will you be using?” negates the possibility that other payment options may be more suitable and ultimately more cost-effective.

Consider a business whose average ticket sale is $200. Typically, a business allocates at least 2% of the ticket price to Visa/Mastercard expenses. In the aforementioned scenario, that business must forgo $4 of profit for the privilege of processing with credit cards. Think of the cumulative effect of minus $4 when the frequency of orders becomes rather great. Very large companies may have to bid farewell to hundreds of thousands of dollars due to credit card processing expenditures. In contrast, a checks by phone system may only cost a low flat rate per transaction, saving a bundle for that business.

Checks by phone is a burgeoning phenomenon – an increasingly popular payment option designed to lower a business’ operational expenses and keep the profits from escaping. The customer simply authorizes payment for goods or services and then provides his/her bank routing and account numbers instead of credit card information. The data is forwarded to an electronic phone checks processing center where the deposit is transferred from the customer’s account to the business’ account within four to five days.

Credit card enthusiasts need not be overly concerned that plastic will be replaced. However, checks by phone may start to get “equal billing” and deservedly so – especially when comparing the pros and cons.

The advantages of checks by phone are impressive, aside from cost savings. Indeed, a checks by phone system increases an owner’s potential pool of clients. People with active checking accounts greatly outnumber those who possess major credit cards. Ordering via phone is ideal for those who do not have credit card capabilities. Moreover, paying by phone captures impulse buyers as the time-consuming mailing process is taken out of the equation. (On a more somber note, it also is an effective way to collect on past due accounts.) Finally, an arrangement of checks by phone is easy to implement and reduces in-house paperwork.

The primary disadvantage with checks by phone arises from the business owner’s fear that a check may be NSF. There exists checks by phone systems that help rectify this matter by including verification to the technology (ensuring that the customer is not on a list of known bad check-writers). Such systems may also offer an auto collect feature (designed to collect any NSF check electronically with up to two additional attempts at the customer’s bank account).

All things considered, the ease, convenience and benefits of checks by phone lights a business owner’s path to top profits. Even Alexander Graham Bell would be pleased at that notion!

Author, William Hamilton, owns a payment processing company, IntelliCollect, and their services are listed at: His company offers tremendous assistance to new and veteran business owners who need an effective solution to accept credit cards and checks.