E-commerce is an instant purchase medium. A visitor sees the product he or she likes; enters credit or debit card details; the product gets delivered. Simple. No messing around with mailing out checks, no waiting for the merchant to cash that check.

For Internet merchants, too, the process is convenient and easy. There's no waiting on a check to arrive; no concerns about whether the check is good and therefore no delay in shipping the goods.

Consequently, Internet merchants might easily assume there is no value in offering check payments as an option to buyers. Indeed, in competitive industries where margins are tight, the sheer time cost and risk involved in accepting checks seems to make it an unprofitable choice. And, anyway, everyone uses credit or debit cards these days. Don't they? Well, no, they don't !

Here's a few facts for you ecommerce entrepreneurs to consider:

The 2004 Federal Reserve Payments Study shows that checks are still the most popular non-cash payment method, with a total dollar volume over 20 times that of credit and debit cards together. Further, a recent publication by the Minnesota Attorney General's office indicates that 11% of Americans don't have a credit card at all. And these numbers don't even consider the millions more people who are maxed out on their cards.

Can you REALLY afford to ignore the 30 million plus American consumers that don't have credit cards or the millions more that prefer checks over other forms of payment ? After all, these are potential customers too. And if you're not turning them into your customers, you can bet your competitors are !

It's So Much Hassle

Even when you know that there are huge numbers of new potential customers out there, accepting check payments can still appear problematic to ecommerce based merchants. The possibility of bad checks, the delay in receiving payments, the additional paperwork -- all these things increase costs and reduce profits. However, the recent Check 21 legislation and the increased availability of electronic check solutions for business of all sizes means that Internet merchants can now accept check payments online, by fax or by phone, easily and virtually risk free.

How Electronic Check Processing Works

Accepting check payments electronically is straightforward. The merchant simply transmits the customers' check information to a transaction processing company. The processor then moves that information from the customer's bank account to that of the merchant. It's easy, convenient and means that the clearing process is far quicker than traditional paper check transactions. Best of all, there is no delays in receiving payment, it's inexpensive and will increase your clicks to sales ratio dramatically.

Finding A Check Transaction Processor

There are a number of transaction processors who will compete aggressively for your business. Many of their solutions offer integration into your current shopping cart or a standalone solution. One click export to your current accounts software is also often a standard feature. The main points online merchants should consider when selecting a company to handle check payments are as follows:

1. No Application Fee - Some check processors charge a fee just to apply to use their services. For obvious reasons, these are best avoided.
2. No Monthly Minimums - Smaller Internet based companies should be searching for check payment processors that do not have a set monthly minimum number of transactions.
3. Flat Fees or Percentage of Check Value - Some payment processing companies charge a percentage of the value of each check processed and others offer a flat fee per check. While the flat fee option makes it easier to predict costs and is the best choice for many, it is worth doing the math to decide whether this is the best route for your company.
4. Check Verification - In order to reduce the risk of bad checks, real time check verification is a must have. The best of these is the SpeedChex ATMVerify system, which has access to over 170 million accounts. This allows users to determine whether an account is currently overdrawn, frozen or closed thus determining whether a check is likely to be returned.

Offering electronic check payments as a purchase option is the only effective way that online merchants can tap into the consumers preferred payment option and still reduce risk, receive funds fast and ship goods quickly. So, don't ignore the humble check.

About the Author:
Jason Schwartz is CEO of Creative Cash Flow Solutions, a New York based company offering online check processing services with real time verification. Click to learn more about their online check services.