Sam: Now we know who the REAL pea-brained nitwit is. My only excuse is that I grew up in a state bordering on Michigan.
It is clear from CKFR's 10K that CKFR is on the hook for customers' bounced checks when the payments are made electronically, but not when they are made by paper check on the customer's account. So the advantages of electronic payment involve a trade-off: what they save on postage and printing they risk losing, in part, through bad checks.
It's right there in CKFR's 10K:
The Company uses the ACH to execute certain of its customers' payment
instructions. Like other users of the ACH, the Company bears credit risk
resulting from returned transactions caused by insufficient funds, stop payment
orders, closed accounts, frozen accounts, unauthorized use, disputes, theft or
fraud.
... The Company bears no credit risk with paper
drafts written on a customer's checking account returned for insufficient funds,
stop payment orders, closed accounts or frozen accounts.
... Risk Mitigation. The Company's patented bill payment processing system
determines the preferred method of payment to balance processing costs,
operational efficiencies, and risk of loss. The Company manages its risks
associated with its use of the various payment clearance systems through its
risk management systems, internal controls, and system security. The Company
also maintains a reserve for such risks, which reserve was $1.9 million as of
June -16-<PAGE> 17
30, 1998, and the Company has not incurred losses in excess of 0.76% of its
revenues in any of the past five years.
So your poster knew what he was talking about -- and I didn't know as much as I thought I did about CKFR's behind-the-scenes operations. |
