Most Payment Service Providers (PSP’s) will provide a Cheque processing service. This type of service offers the ability to deposit and clear third party Cheque, money orders and postal orders in a variety of currencies.
The procedure of such as service usually follows the following format:
The cheques and money / postal orders are sent by the Merchant to the PSP on a basis that best suits the Merchant e.g. daily, weekly etc.
A format regarding how the cheques are to be sent to the PSP is agreed prior to the first batch being sent out. This usually involves the cheques being sorted into batches of no more than 300 with each batch being wrapped in a batch analysis sheet which confirms the number and total value of the cheques.
Once the PSP receives the batches of cheques an initial check is carried out on to remove any cheques that may be unsigned, damaged, incorrectly dated etc.
When all the relevant checks have been completed, confirmation is sent to the Merchant advising them of the number and value of the cheques that have been deposited.
Merchants are able to gain access to the funds quickly with the monies being wired directly from the PSP on a weekly basis, alternatively the PSP can maintain a credit balance on the Merchant’s client account.
As well as providing the Merchant with a statement confirming the payment, the PSP will also provide regular reports. These weekly reports will include details of the following:
-Confirmation of when the batch was received and processed
-The monies that are due to the Merchant
-The PSP’s charges
-Details of the rejected cheques, including the reason they were rejected
A PSP will usually base their cheque processing service charge on the currency, volume and value of the cheques that have been processed. PSP’s also usually levy a charge against any rejected cheques that the Merchant may have.
Most PSP’s will have extensive worldwide banking contacts, this combined with the large volumes of checks that are processed allow PSP’s to negotiate remarkably low rates.
In addition to the cheque processing service some PSP’s will also provide a cheque issuing service to national and international suppliers and clients in most of the major currencies.
A cheque issuing service allows the PSP to raise cheques on behalf on the Merchant. The Merchant will advise the PSP of the details of the person to be paid e.g. name, address, cheque amount etc and the PSP will raise the relevant cheque, attach a covering letter and post the cheque out directly to the Merchant’s customer.