Merchant Account Check Guarantee Explained:
What is Check Guarantee? Check guarantee is a service provided by many merchant account providers that allows merchants to receive the funds specified in a bad, bounced, or returned check. This service is usually provided for a monthly cost that is based on a merchant’s average monthly dollar amount of returned check payments.
When a customer pays with a check that is insufficiently funded (NSF) or tied to a nonexistent bank account, or when a customer places a stop payment on a check, the customer’s bank will deny payment of the funds to the merchant who accepted the check. This leaves the merchant without any way of recovering these funds besides legal action. If a merchant pays for a check guarantee service, however, the merchant’s service provider will pay the merchant the full amount of the bad check as long as the merchant followed all required check acceptance procedures at the point of sale. Merchants will want to ensure that they can consistently comply with their provider’s check acceptance guidelines before signing up for check guarantee services.
