How do you take an old, tried-and-true payment format (the paper check) and create something new and meaningful in today’s electronic world? Well there are some options that are finding increasing levels of acceptance and implementation.
Check conversion is the means by which a paper check is submitted in payment (or donation) and the receiving organization converts it to a format that may be submitted electronically. This requires a check reader to read the pertinent information on the check and to create an electronic image of the check. When all payments are processed, the file is electronically submitted to the financial institution for processing.
The advantage of check conversion is the speed at which checks can be processed and the savings that some banks will provide for electronic transactions vs paper transactions. There are some specific requirements for implementing check conversion. More information can be found here.
Despite the growth in electronic transactions such as credit/debit cards or online billpay, paper checks will not disappear any time soon. The need for enhanced processing of paper checks is evident in the growth of check conversion. According to electronicpayments.org:
In 2004 the number of checks converted to ACH increased nearly six-fold over 2003 with total transactions at more than 1.25 billion payments.
Charities should check with their bank to verify that they will facilitate this time and cost saving measure for you.
Direct Deposit/Online Checks
By now, many of us are familiar with online billpay services and in fact I would guess that many readers make use of the services provided by their bank or credit union to make payments directly out of their checking accounts. The concept of Online Checks takes this one step further by providing the option on the non-profit’s internet giving page. With the right service provider, a charity can accept contributions from either a credit card or a designated checking account on the contribution or “give now” page. For those charities who are “debt adverse” (i.e. the perception of encouraging credit card debt to make a contribution) the opportunity to provide a mechanism to give directly from a checking account can be a great advantage. Providers like The CashLINQ Group are a great resource for this option. Here is a demo of their online giving form.
Also, charities should make sure to allow donors to establish a regular draft from their checking (or credit card) account. This will help to ensure that they don’t forget to make their regular contribution and the cash flow can become significant.
Some thoughts for the day.