As the COVID-19 business restrictions are lifted, many companies that were closed, as well as those essential businesses which remained open, will be looking for more efficient ways to do business. Better management when it comes to handling day-to-day banking needs is likely one process that might be examined. Remote deposit capture and merchant service systems may be worth considering.
A survey done prior to the COVID-19 situation revealed that two-thirds of small-to-mid-sized businesses made branch bank deposits weekly and one-third visited their bank’s branch office daily. These visits are primarily driven by the need to have timely access to the funds available from customer’s checks. When non-essential firms reopen, they may have fewer employees. That means that “sending someone to the bank” may not be practical. These companies, as well as those that have been operating as essential, will hopefully find themselves with significantly increased business as customers return from the COVID-19 hiatus, resulting in the need to find more efficient banking
The replacement for trips to the bank may well be a technology-based deposit process known as Remote Deposit Capture (RDC). In 2013, Congress passed the Check 21 Act allowing banks to clear checks after receiving visual images of them. This enabled interbank check clearing by allowing banks to electronically exchange check images and benefitted companies that regularly receive a large number of checks. Over time, the combination of lower-priced equipment and improved internet technology began to make RDC affordable for small businesses.
A company’s bank can help it implement an RDC system according to Rebecca Diaz, branch vice president of Legacy Bank. “All that is needed is a computer, an internet connection and a check scanner which many banks will install for their customers. An employee can scan each check received. The digital image is transmitted to the bank over the Internet which accepts the visual image of the check and deposits it to the firm’s account.”
During the COVID-19 closedown, many people and businesses found themselves purchasing goods and services at retail stores with a credit or debit card rather than cash, which is more difficult to obtain when confined to your home. As more businesses in multiple categories begin to reopen, it is anticipated that customer traffic and online purchase volumes will increase while customer’s reliance on credit and debit cards will continue. “This may lead more businesses to consider implementing merchant services technology to accept those payments,” says Diaz. Only three things are required: a credit card merchant account, a bank account and a way to process payments.”
To implement merchant services, any business that wishes to accept credit or debit card payments can purchase or lease a processing terminal from their bank that connects to a telephone line or to an internet connection. The customer swipes their credit or debit card or an employee manually enters the card information into the terminal. The data is then sent to the issuing bank to be verified and approved. The terminal prints copies of the receipt for the business to keep and for the customer to sign, unless they have opted for paperless transactions. After a given period of time--a few hours or a few days--the merchant will close the batch of sales by electronically sending it to the bank. Then, in one to two business days, the funds will transfer directly into the merchant’s bank account.
There are other aspects to establishing a merchant services account, such as providing the bank with the firm’s business and financial information. There are also costs involved. The bank being considered can provide the information it requires to set up a merchant services account for your business.
This article is a part of the Forward Thinking Education Series presented by Legacy Bank, the Latino Chamber of Commerce and the Pueblo Chieftain. Webinars further discussing this and other financial topics can be found on the Latino Chamber of Commerce Facebook page at: https://m.facebook.com/PuebloLCC/
Rebecca Diaz is a branch vice president for Legacy Bank. Diaz was top of her class at the Graduate School of Banking at Colorado and has been recognized as the Latino Chamber’s 40 Under 40 award recipient. An avid Pueblo County volunteer, she has spent 12-years primarily in community banking advocating for local businesses and residents.
Article featured in the Pueblo Chieftain: Link to Article