Customer A stopped payment on a business check payable to Customer B. Should the bank accept the check when Customer B tries to deposit it or refuse the deposit because there is a stop payment? Do we need to run it through and return as Stop Payment?

Does Customer B bank with your bank as well? if so, you could refuse at point of deposit (assuming it is over the counter and not via RDC or night drop, in other words, in person where it could be halted) and explian a stop is in place and refuse it. if deposited by another means, then you need to return as stop, but would likley be mailing them notice of stop and non-acceptance of the item.

I agree with HG, but that only works if your teller routine is to check on-us checks being deposited. As I understand it, some banks do that (they may have a policy of checking for on-us items in deposits of fewer than X checks, for example). If that's what your bank does, it's a nice service for the customer attempting to deposit the check, since they get notice of the stop sooner (if the issuer hasn't already informed them).

But if your bank doesn't check at the teller line for on-us checks being deposited, you won't be able to prevent the deposit, so you will first be able to notify the depositor the next banking day. That notice won't be in person in 99 percent of the cases, so you'll notify the depositor with the charge-back notice or whatever other notice method you provide in such situations. If I were the depositor, I'd really appreciate a text or phone call if you had not caught the stopped check before I deposited it.

Also, in some cases where the teller does catch a stopped check in a deposit, the customer will want the check processed so that they get a formal notice of the stop payment as a matter of record.