Lockbox processing is a service offered by third-party vendors and financial institutions to simplify and automate the handling of customer mailed-in payments. Lockbox processing is also known as remittance processing service or payment processing service.

Lockbox processing services route and handle mailed-in payments for reconciliation to a client’s host system and prepare them for deposit. This service eliminates the need for companies to process their own payments. Lockbox processing also reduces operating costs associated with maintaining and running an in-house remittance processing operation. This service is beneficial for retail organizations that need to manage checks and stubs as well as wholetail companies that encounter larger documents, agreements, and invoices.

What Services Do Lockbox Processors Provide?
A Lockbox Processor will:

  • Collect or retrieve physical payments from a customer-specific PO Box (mail forwarding may be required)
  • Transport payments to a dedicated processing facility
  • Process payments including extracting, scanning, and validating funds
  • Prepare payments for client traditional or electronic deposit
  • Provide data reports for clients to update CMS or billing systems

Lockbox processing service providers vary in ability to process payments depending on complexity and management of exception or list payments. Different providers charge fees based on payment type and classification. Most lockbox processing services support clients across all industries, although some may specialize in extra services that benefit a particular customer set.

What Are the Benefits of Outsourcing Payment Processing?

Outsourcing payment processing eliminates the challenges that come with higher volume, high tech processing including equipment maintenance and upgrades, software systems, staff salaries and benefits, and other overhead costs. Third-party payment processors manage the operational aspects of ensuring payments are verified and managed securely and efficiently. They are able to implement redundancies that eliminate risk of downed systems, hardware issues, vendor management, or staffing that can slow processing and affect your bottom line.

With a secure lockbox processor in place, clients can be assured that payments are processed in a timely and accurate manner. This also frees up internal resources and funds for other operational needs.

What Should You Look for in a Lockbox Processing Provider?

Lockbox processing service providers vary on their service-level offerings. Being clear on your business priorities before engaging with a vendor will help you make the best decision. When evaluating potential lockbox service providers, make sure to choose a company that best addresses your unique business needs and corporate policies. Your processor should be an extension of your business, allowing you to make decisions on your payments and procedures as much (or as little) as you prefer.

Sample Client Use Cases – Different Lockbox Processing Priorities

Every client brings a different combination of requirements, preferences, and procedures when it comes to choosing the right lockbox processing provider. Here are some examples of how distinctive clients can benefit from choosing the right service.

  • Accelerated access to funds through timely deposits is the most critical need, and the specifics regarding how a provider achieves this are less important.
  • Visibility, access, and ability to make decisions on their payments is crucial to proper payment processing, as is the capability to manage the level of client involvement.
  • Transparency into provider operations on a daily basis is essential since it gives the client peace of mind that they can set the level of visibility and engagement in their processing operation.
  • Supervisor or internal staff access to verify exception payments is required, and options for reviewing these either physically in the office (mailed back) or online (scanned/OCR) are critical to processing a blend of single check/single stub payments, payments with customer love letters, and multi check-list payments.
  • Access to make supervisory decisions on payments that require client attention is vital, and the right provider will enable secure, online notifications and immediate access to eliminate potential delays and mail back costs.

Additional Considerations: Choosing a Full-Service Lockbox Processor

If you are considering outsourcing your payment processing, be sure to evaluate each provider for cost, security, and service. While these may seem secondary to your core need, they can have a direct effect on your business and your relationship with a lockbox processing provider.


Be sure to compare the cost to outsource your payment processing against the cost of using in-house systems or resources. Understanding current overhead costs will help you determine the return on investment for using an external vendor. When gathering price quotes, double check that the estimates reflect applicable set up costs, recurring fees, and pricing as well as handling details for exceptions and unique scenarios that could affect your processing operation.


Review your current security policies and determine whether there are any confidential matters that would prohibit you from utilizing an third-party provider. Define your requirements for contracting with an external vendor that will have access to sensitive information. A full-service lockbox processor should be able to provide you with security documentation of their own for payment handling, employment verification, and data processing and storage.


Ask third-party providers for customer references and a listing of their key customer base. This will help you determine whether they are a fit for your industry or needs. Chatting with other clients who have already been through the process of vetting and onboarding the full-service lockbox processing provider can also give you valuable insight into the experience.

If you have more complex requirements, you want to make sure your service provider can properly support them. All lockbox processing providers will offer the same fundamental services: open, scan, process, deposit. But selecting a provider that has a strong account management team can make you a partner, not just a customer. The best providers can be those that offer excellent support, making issue resolution less troublesome.

RTL understands each client has unique payment processing requirements that need to fit with existing systems and procedures. For more information on RTL lockbox processing services, review our available Solutions or request a consultation today.