Article

Paper or Plastic?

Mobile Solutions and Risk Protection Can Optimize Your Resources

Jacob Heugly

September 9, 2013

Imagine you’re on a lunch break and choosing between two taco carts for a quick bite.  Would you be more likely to opt for the food at a cart that accepted debit and credit cards? If you’re like millions of other U.S. consumers choosing to pay with cards, you would.

Credit cards have become an everyday tool for people to make purchases. Twenty-five years ago, only about half of Americans could obtain a credit card, and everyone paid high interest rates that were around 18 percent, according to the Government Accountability Office. Today, average interest rates are considerably lower and a 2012 Federal Reserve survey on consumer finance reported that roughly 73 percent of all families have at least one credit card.

Consumer demand is driving medium- and small-size businesses to look for new ways to accept plastic from customers. It not only makes sense to accommodate customers with a convenient way for them to pay, it can also help prevent fraud associated with accepting checks.

Payment on the Go

One innovative solution for collecting credit card payments is through your mobile device. Mobile processing systems function like regular credit card terminals, allowing businesses to accept Visa, MasterCard, Discover, American Express and signature debit cards from the convenience of their iPhone, Android or iPad.

When businesses use mobile credit card processing systems, they can access their funds sooner than they would if they were handling checks, which makes it so they can optimize their time doing what they do best. For example, a homebuilder could meet with a customer at his work site, finalize a contract, and take a deposit without having to wait for his check to clear. He can get started on his job sooner and then advance to the next project. 

In many cases, mobile credit card processing systems are very efficient, reducing client wait-time. Merchants have card readers to swipe cards and receive verification or decline notification within seconds. Plus, some systems allow customers to add on gratuities or tips and receive their receipts through email.

Putting a Lid on Fraud

Smart cash management means that you’re not only taking control of the way your business collects money, you’re managing risk at the same time. It’s important because fraudsters are becoming increasingly sophisticated. So when it comes to mobile payment collection, it makes sense to look into advanced fraud detection with address verification support alerts.

To quote Frank Abagnale, one of the world’s most respected authorities on fraud, “The technology exists to help people today just like the technology exists to hurt people,” which he said during a 2009 Zions Bank customer conference. “Today, white collar crime is a very simple crime to prevent, but you have to arm yourself with the proper tools. You can’t rely on the fleet or the government to protect you. If you make it easy for someone to steal from you, chances are they will. Don’t make it easy, the tools are out there.”

Even as more payments are being made electronically, check fraud continues to be a growing problem for businesses large and small. Organizations in the United States lose about 5 percent of their revenue to fraud, according to the Association of Certified Fraud Examiners. The group also reports that 77 percent of all fraud incidents within a business involve employees, and the average fraud scheme goes undetected for 18 months. Among businesses that have fallen victim to check fraud, the typical financial loss was $20,300, according to the 2013 AFP Payments Fraud and Control Survey.

Businesses are responsible for the checks they deposit, because they know best the origin of the check. Banks are required to make funds available within two business days; however, that does not mean a check has cleared and is not fraudulent. It can take several weeks for a check to clear or be returned as fraudulent.

To manage risk, business owners can seek fraud protection services offered by their bank. In some cases, businesses electronically provide their bank advance notification for checks written, listed by check numbers and amounts. The bank then monitors for any discrepancies in checks issued by the company and immediately notifies the client of a potentially fraudulent check. This way, it can be rejected before it is charged against the business’s checking account. There are also services that offer protection against fraudulent checks presented in person for cashing against your business account.

Taking the right steps to automate fraud protection can save your company time and money. Since the goal of cash management is maximizing resources, your collections strategy should include precautions for managing risk. 


Jacob Heugly is executive vice president of Zions Bank’s Corporate Services division.

 

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