A check processor plays an integral role in the day-to-day operations of a money service business owner. The check processor drives the check cashing cycle by analyzing checks, coding sensitive financial data, and aiding in the transfer of money between accounts.
Sometimes called proofing, check processing is an essential service for money service businesses and check cashers. Without a reliable check processor, your MSB won’t be able to cash checks in order to serve your community members.
National Check and Currency has a proven system for processing checks, which utilizes advanced technology, compliance expertise, and redundant banking partners. NCC clients enjoy access to a reliable check processor and industry leaders.
Read below for a deeper look into what check processors do, the check cashing process, check processor fraud, check cashing banks, and insight into how NCC serves the check cashing industry.
What is a Check Processor?
Check processors perform several essential tasks, including coding of sensitive financial information, transmitting information to participating financial institutions, and proofing checks for errors. Ultimately, the check processor sends a check to the financial institution which will debit money from one account and credit another to fulfill the check cashing cycle.
Check processors help money service businesses cash checks and serve their clients. The check clearing process refers to the cycle where a debit is drawn from the issuing bank account and a credit is deposited into the receiving bank. Essentially, a check processor electronically aids in the transfer of cleared funds from the issuing account (debit) into the recipient account (credit).
For MSB owners and check cashers, this turns a check issued to your customer into the cash you hand back to them across the counter. The check presented for cashing is vetted, cleared, and processed according to a standard and regulated process.
Even though check processors move checks through the financial system, they can’t always eliminate lengthy hold times. Despite the advent of electronic check processing, long hold times still plague consumers. Congress enacted the Expedited Funds Availability Act in 1987 to standardize hold periods on deposits made to commercial banks and to regulate the use of holds by financial institutions.
This act is known known as Regulation CC after the Federal Reserve and regulation that enforces it. Depending on the check amount and when the funds are needed, check processing times and methods vary. Keep reading to learn how NCC speeds up the delivery of funds and rotation of working capital for their check cashing clients.
Check Cashing Process
The check cashing process starts when a customer walks into your check cashing business and sets up an account. Once the MSB or check casher sets up a customer account, the customer can cash a check through the business. When a customer presents a check for cashing, the check is scanned, inspected, and held up to numerous databases to identify any red flags. If the check is deemed legitimate and legal, the check processor helps clear the funds and cash is delivered to the money service business in one of three ways.
NCC delivers cash to money service business clients through automated clearing house (ACH), wire transfer, or armored courier. These three options used by NCC help check cashers and MSBs increase their cash flow and efficiently serve their customers. NCC works with MSB friendly banks to provide these services to their clients.
RDC, ACH, armored cash transportation, wire transfer, and other supported MSB services ensure that the check cashing process runs smoothly for check cashers and their customers. Let’s look at the core supported MSB services individually.
Remote Deposit Capture (RDC) scans and stores checks in an electronic database. These images are cross-checked for issues and red flags. At any moment, check cashing banks can drill down within a transaction and pull the actual check image. This brings transparency and open communication to check processing.
An Automated Clearing House (ACH) is one of three methods employed for the actual debiting and crediting of bank accounts. NCC’s network of financial partners provides wire transfer services as the second method for returning cleared check funds. Armored couriers are the third option for returning cleared funds, whereby the cash is physically delivered by a secure truck.
Armored cash transportation enables “day of delivery” credits and debits to save money service businesses the fees that are often associated with bank “day of order” charges. NCC uses a professional network of of armored transportation service providers.
Wire transfers are facilitated by NCC’s financial partners. The ability to send and receive domestic and international wire transfers gives NCC’s clients more options to meet their needs. Based upon the amount of a check and how quickly the funds are needed, NCC’s money service business clients can choose the MSB banking services that are right for them.
Check Processor Fraud and Check Cashing Banks
Check cashing banks are increasingly difficult to find. Banks continue to engage in covert derisking, shutting down MSB bank accounts without warning or explanation. The money service business industry has been battling a negative regulatory perception since Operation Choke Point, the list of “risky” businesses published by FinCEN in 2013.
Since a check cashing bank is essential to check processing, money service businesses are scrambling to find a solution. Unfortunately, some check processors engage in fraudulent activities and add to the negative reputation of the industry as a whole.
Check processor fraud occurs when a check processor knowingly processes fraudulent checks. Canadian payments processor PacNet was recently busted for cashing thousands of checks for illegal mail-in schemes. While their behavior is not indicative of the majority of check and payment processors, it is problematic for the entire industry.
NCC works with compliant check cashers to fight fraudulent behavior. NCC’s MSB compliance team includes former Federal Agents with working experience prosecuting financial criminals and crafting Federal regulation. Their in depth experience writing and enforcing Federal regulation makes them a powerful ally for check cashers who want to run compliant and profitable businesses.
NCC Offers Robust Solutions for Check Cashers
NCC’s compliance experts work with diligent check cashers to keep them ahead of Federal regulation and away from fraud. NCC provides redundant check cashing banks for their MSB clients. A real MSB bank account from a reliable and redundant banking network gives MSB owners and check cashers peace of mind that is not available anywhere else.
NCC provides all clients with a reliable check processor, a real MSB bank account, and a dedicated team of MSB compliance experts. Your hunt for a check cashing bank is over. Call 877-327-4249 or fill out an Open An Account form on the homepage today.
