Over 50 percent of checking account holders (both business and personal) purchase their checks through their financial institutions. They will do so even if going with an outside supplier allows them to purchase cheap checks.
Some banks even discourage customers from purchasing cheap checks from a supplier. They usually cite security as the reason. However, they are not necessarily less secure.
Customers who purchased theirs from a printer in past decades (before the Internet) usually did so in person. Competition wasn't strong, so prices weren't competitive with the bank's prices. Customers typically chose this option only for the greater design flexibility, not for better prices.
The Internet changed this market considerably. The banking public now had instant access to suppliers/printers online. Competition drove prices down, and customers began looking to the Web for cheap options.
Despite this, the idea still prevails with many consumers that checks must be purchased at a financial institution. Conventional "wisdom" states that cheap checks can't be good ones.
Two major myths exist that seem to back up this "wisdom":
1) They are illegal. It's a common misconception that any that are purchased outside of the bank cannot be legally accepted.
However, the legal definition of "check" states that one is simply a written order by an account holder. The order must contain certain legal language, including the phrase "pay to the order of." It must also contain pertinent banking information, including the holder's account number and the bank's name and branch number.
Technically speaking, any piece of paper can be used as legal tender. It needs only to contain all of the required legal information and wording.
Financial institutions introduced printed forms as a means of standardizing and streamlining the pay order process. Standardized versions are simply easier for banks to verify and process. Standardized forms are also harder to forge than a hand-written order.
However, financial institutions then cornered the market on the selling of the product. This was largely done by perpetuating the myth that purchasing them anywhere else was risky.
2) They are less secure. It's true that a hand-written order to take money out of one's account is subject to risk. Such a note can easily be forged and is difficult for a financial institution to authenticate.
Standardized, printed versions, though, must be legally accepted everywhere. They cannot be rejected by the receiver or by a financial institution solely on the basis of their origin.
They must, however, contain the information dictated in the legal definition of a check. They must also contain a MICR code (Magnetic Ink Character Recognition).
This code is found on the bottom of every slip, usually on the left side. It looks a little bit like a retail bar code, but also contains a series of numbers.
The characters and numbers contain information about the bank, branch and account holder. It is able to be scanned and read by a financial institution's computer system.
This code helps banks identify the account holder and authenticate the pay order. Even so-called "cheap checks" are printed with a MICR code and are, therefore, legal tender.
Purchasing them online requires you to obtain a MICR Specification Sheet from your financial institution. Banks are obligated to provide this, and doing so usually takes just a few minutes. Simply supply this sheet to your supplier, and they will be able to print your documents with the appropriate codes.
Cheap checks can now be purchased online. Web competition has made this an economical purchasing alternative. It is also one that is legal, safe and secure.
Learn how to save money with cheap checks and business checks here.