August 27, 1999
Check this out!
A study conducted by The Green Sheet, a financial services industry
newsletter, shows that consumers still like good, old-fashioned checks,
despite the rise of debit cards and other EFT payment methods.
The Green Sheet estimates that more than 68 billion checks are written
each year, 37 billion by individuals. According to the study, Americans
write an average of 25 checks each month. Checks remain the most popular
payment method with 45 percent of the survey's 1,000 respondents,
followed by cash (29 percent), credit cards (13 percent) and debit cards
(9 percent).
With checks here to stay -- at least for the time being -- some
deployers are expanding check-related services at the ATM.
Several companies, including Oceanside, Calif.-based Check Central, San
Franciso based InnoVentry and Dallas-based Affiliated Computer Services,
deploy machines that offer check cashing along with more traditional ATM
functions. While initially targeted toward consumers without bank
accounts, the machines are proving popular with a more diverse audience.
Lee Swanson, president of Check Central, said that preliminary surveys
at the company's beta sites show that about half of their customers have
bank accounts, but “they don't have half an hour to wait in line at the
bank to cash a check.” Those customers are willing to pay a 2 percent
service fee to cash payroll and government checks. Check Central, a
subsidiary of the Greenland Corporation, plans to begin cashing
third-party checks soon.
Check Central just installed one of its SmartCash ATMs, which also
dispenses cash and money orders, at a Texaco/Star Mart store in
California. Five more machines will be deployed next week, and the
company anticipates a major rollout in September.
Every picture tells a story
PNC Bank has installed check scanners on about 150 of its ATMs in the
Philadelphia and Pittsburgh areas. They allow customers to deposit their
checks or cash them to the penny. They also can display images of checks
after they are inserted into the machine.
James S. Walker, manager of self-service banking, said PNC customers
appreciate the ability to cash a check, make a deposit and get cash
back, all in one transaction. An added convenience to the customer is
that no deposit slips or envelopes are required.
Eliminating the extra paper also helps the bank process checks quicker
and more efficiently. “A lot of time and effort goes into processing
envelopes, whereas a stack of checks is much easier to deal with,”
Walker said, noting that it takes a teller about a minute to process a
check in an envelope compared to 10-15 seconds for a check only.
After a customer's account information is printed directly onto a check
at the machine, “it becomes part of a check's history,” Walker said.
That reduces the hassle if a check gets separated from an envelope or
slip.
PNC can't begin the collection process until it has a check in hand, but
Walker said reading a check's microline at the ATM allows the bank to
make a more informed decision on whether or not to cash it.
“If it's a PNC check, obviously we can see if there's any money there,”
he said, and PNC keeps a list of companies for whom it cashes payroll
checks.
Perhaps the biggest advantage of ATMs with advanced check functions,
Walker said, is their power to promote customer migration. “Machines
with these capabilities can do a much higher percentage of the
transactions a customer wants to do.”
Anderson Imaging, an Orange County, Calif.-based company that produces a
variety of imaging products, makes a check scanner that is designed for
ATMs. Anderson scanners are used in NCR machines, among others. Shane
Kirk, Anderson's marketing manager, said his company's product differs
from others that are modified for ATMs. “Some companies just remove the
casing and try to make it fit into the machine.”
Kirk said the company originally believed that the scanners would be
used in kiosks at bank branches. But with the advent of check-cashing
ATMs, “we've seen new markets opening up,” he said.
”If you have a machine that does it in two or three minutes, versus
waiting 20 minutes at the bank, why not use it?”
Shane Kirk of Anderson Imaging
Like Check Central's Swanson, Kirk thinks there is a mainstream market
for check cashing at the ATM. “If you have a machine that does it in two
or three minutes, versus waiting 20 minutes at the bank, why not use
it?”
In fact, Anderson is getting into the ATM manufacturing business. Kirk
said the company produces a low-cost cash dispenser, two higher-end ATMs
with check scanners and two models with both scanners and checkbook
dispensers, which print new checks for customers while they wait.
One checkbook dispenser prints 10 to 20 checks, while a slightly more
expensive version prints 25 to 30. The machines can be programmed to
handle tasks like address verification so, for example, a customer who
has moved can update his or her address.
U.S. certification of Anderson's machines is pending, although the
company is selling machines in Europe.
NCR's PersonaS ATMs are equipped with a document image scanner that can
take a digital photo of a customer's check, front and back, and displays
it on the screen. The machines also can be programmed to print a photo
on the receipt, which may alleviate some customers' concerns about
feeding their hard-earned money into a box.
Paper chase
Joe Kniceley, vice president of marketing and product management for
NCR's Payment Solutions Group, said that 35 percent of ATMs in the U.S.
accept deposits. “According to our calculations, each of those ATMs
processes an average of 25 deposits a day and that number is growing,”
he said.
While more deposits at the ATM frees up tellers on the retail side of a
bank's business, it creates more work for the operations side. A
proliferation of mergers has scattered networks across a wider
geographic area, which makes it more difficult just to collect deposits.
“Many major banks process as little as 20 percent of their deposits the
same day,” Kniceley said. Yet funds deposited at an ATM before 2 p.m.
must be available to customers the next day, per federal regulations.
Without a check in hand, back office personnel often make decisions
based on transaction data from the switch. That's a potential fraud
problem, Kniceley said. “They don't really know if there's anything in
that envelope or not.”
The document image scanner can compress the image of a check at the ATM
after a deposit is made and send it over a TCP/IP network to an
image-based processing system such as NCR's ImageMark POD. Then,
Kniceley said, “The people responsible for check processing have all the
information they need to begin.”
Kniceley believes the earlier paper can be removed from the transaction
process, the better.
“When that paper is in transit in some courier truck, it's a dead item,”
he said. “With our approach, after you've captured the images, you can
be doing data completion in the back office before the check even shows
up. When a check does show up, all we have to do is power encode it and
we're done.”
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