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. In the tests we've run with grocery merchants, bank fees have been dramatically lowered and the retailers experienced up to a 30 percent reduction in check fraud. Campbell at IVI Checkmate reports that there are about 10,000 merchants using this technology now, although most are smaller independents rather than big chains.
Most users have a stand-alone system right now that processes through a modem line.
It's something they're doing on their own. They claim the cost of the reader is offset by lower fees. Meanwhile, Visa executives claim the on-line processing rate for this card is lower that what merchants pay for other Visa card transactions. Until this is resolved, we've advised retailers to add a key to their POS terminal. The switch would enable that cashier to identify the type of debit and, again, prompt the shopper to enter a PIN, which is the less expensive route.