Do you sometimes write checks hoping for a day or two float? You may soon be out of luck if a local company’s new check processing system takes off. Electronic Clearing House, Inc. of Agoura Hills has developed a check conversion system that electronically transfers funds from a customer’s checking account to a merchant’s bank almost immediately. “This system makes check transactions more efficient and much easier for the merchants,” said Kris Winckler, president of Albuquerque-based Xpresschex, Inc., a subsidiary of Electronic Clearing House, which processes checks for the company. The company, however, would not say how much it spent in developing the system. “We don’t want to give that information to our competitors,” said company spokesman Greg Imlay. The new system has been tested in more than 100 retail and service outlets around the country since January, with about 10 in the Los Angeles and Ventura areas and 20 statewide. “Merchants love the system, but the banks don’t, I imagine, since they make a lot of money from returned check charges,” Winckler explained. Todd Floyd, owner of TR Automotive, an auto repair shop in Ventura, says he’s pleased with the new system because of its efficiency. “Now, I don’t have to go to the bank since it’s processed automatically. I only go now when I have cash, so for me it’s great,” he said, adding that he receives an average of 10 checks a day with almost none being returned for insufficient funds in the past year. Merchants are charged 25 cents per check and a $10 monthly fee per retail outlet to receive a monthly statement of transactions from the company. Under the Clearing House system, a merchant puts a customer’s check through a scanner that records the amount and submits it electronically to the company’s Rocky Mountain Retail Systems check verification center to identify the check writer. If the check is accepted, an authorization slip is printed and given to the check writer to endorse, allowing the check to be immediately processed. While debit cards continue to grow in popularity, check writers also continue to increase in numbers, thus prompting the need for the new technology, Winckler said. “People love to write checks and they are continuing to grow,” he added. According to the American Collectors Association, a group that represents collection agencies, U.S. consumers wrote an estimated 70 billion checks in 2000, up from 68 billion checks in 1999. But of the estimated 70 billion checks written last year, the group says about 675 million checks, or 9.6 percent, were worthless. Although figures for 2000 are unavailable, losses from bounced checks for 1999 totaled $19.9 billion. Cutting bad check losses The system should also cut down on losses and collection costs since check writers can be immediately checked against a national database of bad check writers. “This doesn’t mean checks won’t bounce altogether. It may still happen, but the chances are reduced significantly,” Winckler said. It also gives the merchant the ability to access the customer’s check images on line, providing a record of all check, credit card and debit card transaction activity in one location on the Internet. “This program speeds up the entire deposit process for our customers,” Winckler said. Joel Berry, chief executive officer for Electronic Clearing House, said this is the next step in electronic transactions. “Merchants want to simplify their processing systems and combining all these services on one platform meets that need,” Barry said. “Internet-based image retrieval, collection activity and full transaction reporting will simplify the merchant’s need to stay informed as to the status of his various payment methods.” Eloise Hale, a spokeswoman for Bank of America, said her company is optimistic about its own program to process checks instantly and automatically. “It’s a brand new technology that makes check processing much more efficient,” she said. Electronic Clearing House is already among the top credit-card processing and check verification companies in the country, serving more than 58,000 retail outlets. Electronic Clearing House also designs, develops and integrates software and other electronic equipment for its credit card processing terminals. And it handles debit card processing and cash advance services. It has applied to federal regulators to open an on-line bank. A recent survey by the Electronic Check Council showed most check writers saw little difference in the new system and the old in which the merchant keeps the check and submits it to a bank. The study also showed that 54 percent of those surveyed felt either neutral or positive about the new service. Meanwhile, Electronic Clearing House has agreed to acquire Illinois-based National Check Network, a check processing company that verifies about 3 million check transactions per month for more than 8,200 merchants. That deal should close by the end of the month. In 1999, the company acquired Magic Software Development, an Albuquerque-based check processing company, and last year bought Rocky Mountain Retail Systems, a check verification company in Colorado. Electronic Clearing House was established in 1982 as a credit card processor and has since expanded into processing checks and debit cards.
