How Checks Get Processed

After you use a paper check to pay for goods or services, there are many processes that have to be completed before payment is made against the check.

If you as a customer, and the vendor use the same bank – then things are a lot more simple than if you both use different banks. If you both use the same bank, then the check is processed by your bank and payment is made relatively quickly.

In the case of customer and vendor using different banks, then both institutions normally make use of an intermediary bank or clearing house to facilitate the settlement process. The checks are flown to the processing center of the intermediary where a payment request and verification request is sent to the issuing parties bank.

There the signatures are compared with specimens and the check number is verified against the list of stolen or fraudulent checks in circulation. Should the check be cleared against the blacklist, then the payment request is accepted and the bearer is one step closer to receiving their funds.

The bank will then receive the check, also by airmail and if they are happy that everything is in order, they will make payment to the intermediary, who will in turn pay the depositors bank the funds. After the funds have cleared between the two banks then the vendor who deposited the check into their account is finally paid.

Most every checking account promotion or savings account bonus will offer the account holder the facility of a check card. A check card is basically an electronic check that is connected to the central banking network. Once you swipe your check card and your identity has been verified with a pin code, the request for payment is immediately sent to the customers bank for payment.

Availability of funds, is immediately confirmed and the transaction is facilitated on the spot.

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