Retail check cashing: How automation expedites reconciliation and reduces check float time

Nearly 6 million Americans don't have access to traditional banking services. That reality may be surprising in a world where mobile cash apps and frictionless payment methods continue to increase.

Without these traditional banking services, these consumers often depend on their favorite retailers to cash their payroll checks.¹ However, this creates several challenges for the retailer, such as costly check float time, payment reconciliation, and fraud risks.

Can automation conquer these concerns?

Yes. Let's look at how.

Why do retailers offer check cashing to customers?

Supermarkets, grocery stores, big box stores, and convenience retailers provide check cashing services to create a convenient one-stop shopping experience, which can lead to additional purchases.

However, check cashing services come with challenges. One of the big ones facing retailers is known as check float.

What is check float time?

Check float time is the time between when the check is written and submitted and when the individual’s bank receives instructions to move the funds from the account. This check float time can take days.

Additional challenges retailers face with traditional check cashing or processing:

• It’s labor-intensive and time-consuming.

• It’s prone to manual or human error.

• It’s risky – possible check fraud or insufficient funds.

• It’s complicated – retailers often use multiple banks.

What are the benefits of automation with retail check cashing?

A manual process with paper documents, especially checks, creates significant security risks by exposing account numbers, routing numbers, and signatures. By automating the check cashing process, retailers can save time, minimize risk and human error, and reduce check float time from ten days to just 24-48 hours.

Automation expedites and secures the entire process, ensures a reduction of processing errors, and can save retailers millions of dollars. Reducing that check float time can lead to significant savings if the retailer has 3,000 stores and cashes hundreds of checks per week.

An automated system provides rich data on check usage, allowing retailers to make better-informed decisions on accepting and processing checks. Additionally, retailers will reduce fraud and gain greater insight into where bad checks originate.

What’s more, automated check cashing supports individual stores’ abilities to reconcile profit and loss at the end of the day.

What is Check 21?

Check Clearing for the 21st Century Act, also known as Check 21, is a federal law passed on Oct. 28, 2005. It allows banks to handle checks electronically, making check processing faster and more efficient.

Without it, retailers cashing checks must physically move original paper checks to a vault where they’re transformed from paper to digital and can then be transferred to the bank. Although most banks are already processing checks electronically and depositing them into secured Image Cash Letters (ICL) portals, retailers continue to be challenged by lengthy float times.

How Ricoh can reduce payment reconciliation float time

Ricoh offers easy-to-implement, complete on-site or off-site check processing and managed services. In addition to checks, all coupons and invoices can be opened, batched, scanned front and back, and transmitted to a secure Ricoh Processing Center either by the retailers or by our on-site or off-site services. Ask your Ricoh representative for details about this solution.