The critical issue retailers are facing is the need to upgrade systems in such a way as to amplify customer satisfaction, convenience and service, while still maintaining their own internal controls when it comes to investing capital and handling costs associated with processing. These factors are driving change, yet they're doing so in the context of reducing costs. Supermarket operators are actively looking at upgraded POS terminals and keeping close watch on the myriad changes being spawned by diverse electronic payment options, says Joy Nicholas, director of applied technologies for the Washington, D.C.-based Food Marketing Institute. But she adds that she doesn't expect retailers to begin implementing new hardware and software in earnest for another 18 to 24 months. Checks are also the most expensive form of payment for retailers.
Merchants pay banks for every deposit and every check.
Since it takes from seven days to two weeks for a check to clear, merchants must wait to collect the funds. In cases of check return and check fraud, it is conceivable that merchants could end up writing off 50 percent or more of the value of the check just in processing fees. Check conversion, a relatively new process by which a paper check is converted into an electronic funds transfer right at the merchant's point of sale, is being billed as the solution to reducing check fraud, expediting funds availability, lowering bank fees and simplifying back office procedures. Under the check conversion process, the consumer presents the check to the cashier. At this point the transaction is either approved or denied, and the whole process takes less than a minute.