Magazine Article | March 1, 2006

Electronic Check Acceptance Solution Cuts Fraud

Source: Innovative Retail Technologies

By interfacing a check processing system with its POS, Verizon Wireless speeds check approvals and reduces risk.

Integrated Solutions For Retailers, March 2006

With some 2,000 cellular telephone sales and services stores spread throughout the United States, Verizon Wireless could not afford to eliminate checks from its roster of customer payment options. At the same time, it needed an efficient means of check acceptance. This led the retailer to implement the Elec Check electronic check acceptance platform from Certegy Inc.

Elec Check simplifies check acceptance at the POS by eliminating the need for the movement of checks through multiple channels, as well as handling by multiple individuals, prior to arrival at the bank. Verizon Wireless sales associates begin the acceptance process by swiping every check written by a consumer through a check reader interfaced with the POS system. An imaging device captures an image of the document.

Information about the check writer (such as driver's license number), along with information pertaining to the transaction, is input into the POS terminal and transmitted to Certegy's server. That data is compared with information contained in the company's "Consumer Library," ascertaining that the customer holds the account against which the check is being written.

A comparison of consumer data to positive and negative account databases is also conducted. In addition, the vendor's risk management tools and artificial intelligence models are used to identify potentially fraudulent transactions, considering factors that range from transaction amount to store location and time of day. As an extra layer of protection, the vendor's staff scrutinizes transactions for unusual check-writing patterns and other indicators of risk.

Once the transaction has been authorized, a message to this effect is returned to the terminal. The system initiates the electronic transfer of funds from the POS to an automated clearinghouse (ACH) and the forwarding of transaction information to the bank for processing. The check is handed back to the consumer, along with one copy of the receipt generated by the terminal; Verizon Wireless retains a second copy for its records.

Check Processing System
Minimizes Acceptance Headaches

Installing the system has enabled Verizon Wireless to increase sales, offer better customer service, and boost customer loyalty because it can accept checks as readily as it does credit cards and other payment vehicles, says Tim Grooms of the merchant's Treasury Operations department. By removing the element of fraud, reducing the cost of check acceptance, and speeding the redeposit and availability of funds, the retailer also does not incur the risks and headaches typically associated with paper checks.

Additionally, funds management is now simpler and bank fees are lower. Returned check notification generally occurs within two days, allowing rapid update of negative files and collections initiation. The final result, Grooms concludes, is maximum processing efficiency and bottom-line savings.


Editor's Note: Fidelity National Financial (FNF) and Certegy Inc. recently announced the merger of Fidelity National Information Services, Inc., a majority-owned subsidiary of FNF, and Certegy Inc. For more information on the union, see the news section.