TeleCheck Is A Member Service For Merchants
Similar To How Chexsystems Is For Banks
Chexsystems is a company that maintains the names of people which banks have to sent them. Then, other banks who are members of Chexsystems, will run a check on a new perspective customer to see if that individual has had: frequent account overdrafts… bounce checks… did something banks consider as an “act of fraud” or otherwise have an unpaid balance owed to another bank on a closed account.
If your name comes back from that ChexSystems inquiry, it is very likely that bank will deny you from opening a new account with them.
TeleCheck operates sort of similar to Chexsystems but instead of being a service for banks, it is a membership service for merchants, stores, and business. Basically any business that sells things, has cash registers and accept checks can sign up to be members of TeleCheck.
If a business is a member of TeleCheck and someone uses a check for a perspective purchase the member can quickly run you check identification information like name, address, social, or account number, etc and TeleCheck will return a notification if this person has previously bounced a check with any other TeleCheck member anywhere in the country.
The purpose of the service is to attempt to protect merchants from monetary loses and bad checks from consumers. As far as you the consumer are concern the main difference between Chexsystems and TeleCheck is that one is for banks and the other is for businesses.
Just because you owe another bank money does not mean you will do the same with the new bank you are attempting to get an account with. However if you have a Chexsystems report then it is a very good chance you will be denied. Likewise just because TeleCheck reports a bounce check a year ago at a Kmart in California does not mean your check to the Walmart in Florida will bounce. But it is very unlikely that Walmart is going to accept your check.
Another thing that makes the two services different is that Tele-Check will actually try to predict when a consumer might present a bad check for payment. It does not have access to your banking account, nor does it have an actual record of any bad check that you may have written in the past. The company will not actually reveal the computation methods they use to predict whether one person’s check is a risk and another is not. But says as long as you have no negative check writing incidents then there is nothing to be concerned about.
It makes sense that any potential problems with Telecheck can be completely avoided by not using checks. Less and less people have already moved away from using actual paper checks. If you use a debit ATM card that is linked to your checking account it is processed completely different. It is swiped and a simple inquiry is done to see if your balance meets, or exceeds, the amount of purchase. If it does than the purchase is approved and the amount is immediately deducted from your bank account.