ECC (electronic check conversion) is the latest technology to be integrated at the POS via receipt printers. It's proving its ROI in grocery. Can it save you money, too?
Five years ago, a receipt printer was simply a necessary peripheral a retailer had to have. The printer had a sole duty: to crank out a bland, black-and-white receipt that validated a consumer's purchase. But by working together to address customer service and business issues, the vendor and retail communities have helped the receipt printer evolve from a high maintenance, consumable-burning piece of hardware into an integral, problem-solving element of the POS.
The most recent evolutionary leap forward for the receipt printer is integrated ECC (electronic check conversion), which follows closely on the heels of the color receipt printing revolution. While color and graphics add value by strengthening CRM (customer relationship management), loyalty, and branding initiatives, it's ECC that gives a receipt printer vendor an ROI metric it can hang its hat on.
"With ECC, retailers can reduce the cost of check processing themselves," says Barry Wise, senior marketing consultant with the Epson SD Group. "Traditionally, it costs an average of 50 cents to process a check. ECC cuts that cost nearly in half." Considering that grocery giant Albertson's took in 234 million checks in 2001, that adds up to sizeable savings. "Additionally, ECC allows you to reduce your float from five to seven days to less than two days. That obviously helps cash flow," says Wise.
Digital Decreases The Delay
In the traditional scenario, tender accepted at the POS is picked up once or twice a shift, then balanced in the store, then deposited. All the checks that are accepted are bundled and sent to the bank. Once the cash reaches the bank it is counted, validated, deposited, and made available for the retailer to transfer back to its main account. Checks, on the other hand, go to a central processing area within the bank. There, they are unbundled, processed through a machine, and micro-encoded with the amount of the check in the bottom right-hand corner, at the end of the check's existing MICR (magnetic ink character recognition) line. Then they are processed through a machine that reads the MICR line and makes a microfiche of the check itself. The checks are then re-bundled and sent to the Federal Reserve, typically by airplane. The Federal Reserve processes the checks by breaking apart the bundles, re-bundling them by bank, and sending them back to their originating banks. The originating banks then process them and charge their consumers' accounts. Depending on geography, this can take five to seven days. In the meantime, the consumer has no access to that money, the check is handled by many different entities, pictured, bundled, encoded, and shipped many times over. This method is understandably expensive.
ECC, on the other hand, makes processing a check much like a credit card transaction. The processing of the information on the check is done electronically, and the check itself is handed back to the customer. This dramatically reduces the overall handling of that check.
"ECC is the easiest of any feature we've ever had to qualify and quantify," says Wise. "It's an initiative that's been supported strongly by the industry, the FMI [Food Marketing Institute] payments committee, and other retail organizations in terms of supporting NACHA [National Automated Clearing House Association] and the Federal Reserve," he says.
Imaging Goes ECC One Further
Digital check imaging, which is not to be confused with ECC, simply takes the electronic processing of checks one step further. "In addition to being able to process the checks electronically through ECC, some receipt printers have built-in scanners which take a physical scan of the check in as little as 12 seconds," says Steve Bergeron, director of sales at Axiohm. "At that point, the image is maintained in the printer for a certain period of time, it can be transported back to the in-store host, or, in many cases, it's sent back to the corporate headquarters or a third party provider for storage." The value of having the check image becomes apparent when problems arise - be it insufficient funds, fraudulent use of the check, or incorrectly read micro encoding. "With the image on hand, the retailer can resolve issues that can't otherwise be resolved without a physical image," says Bergeron.
Digital check imaging and ECC are strongly accepted in supermarkets and mass merchandisers. The FMI's most recent payment study says the percentage of checks taken in a retail supermarket is about 42% of all payments. That's a lot of money. The experts say appliance stores and utilities are also hot markets for ECC. Could your stores benefit as well?
Color, Graphics, Connectivity
A discussion about retail receipt printers can't be had without making mention of color, graphics, and connectivity. These are the three main selling points that appeal to retailers in any vertical. Many vendors are incorporating color in all of their new POS models, anticipating its adoption on a larger scale as end users are educated on its benefits. CRM and branding are two focus areas for receipt printer vendors as they pitch the color and graphic ability of their products.
The ability to print graphics goes beyond branding images, however. Another example of the receipt printer's evolution to a retail problem solver can be found in machines that print bar codes. "If a customer needs to return something, the associate can pull up the record of that transaction by scanning the receipt," says Brandt Smith, product engineer at Star Micronics. This makes the associate more efficient at processing returns and improves customer service.
"Integration is less an issue than it has ever been," says Smith. Serial, parallel, USB (universal serial bus), Ethernet, and even wireless connectivity, he says, make integration with any platform possible. "Today, we can connect with Windows, Macintosh, Linux, OPOS [OLE [object linking and embedding] for point of sale], JavaPOS, you name it," he says.
Receipt printers that offer loads of features are all over the market. Many retailers, however, aren't taking advantage of the tools at their disposal. Smith says he thinks the biggest obstacle to the adoption of these functions is a lack of educated integrators and end users. "I see our printers with logo capability being used all over the place, but most retailers aren't printing logos with them," he says. Star is targeting its resellers and integrators and trying to educate them on the features offered by modern machines.
As vendors continue to educate the market on printer features that have existed for some time, ECC will be cutting its teeth on the grocery vertical. Keep an eye on this trend as more grocers turn to it. As for color, if you've got it, why not flaunt it?