Buoyed by the emergence of digital payment channels, checks have enjoyed a resurgence of late. This meeting of an old-fashioned payment device with new technology will continue as checks are adapted to smart phones, devices that are driving the new payments frontier. A product called EZVerify, from check services firm EZCheck, is helping to spearhead this latest phase in check acceptance.
EZVerify is a web-based check authenticator that runs on Internet-enabled mobile phones. Mobile merchants can use the service to verify the authenticity of a check and secure a guarantee of payment.
"It runs on basically any phone that can access the Internet," said EZCheck Senior Vice President Don Singer. "The nice thing about using it on the iPhone in particular is you can set your little icon so you can click directly on it, enter your pass-code and breeze into the system."
Users of the service still need to deposit a paper check as they would normally, but with EZVerify they needn't worry so much about whether it might clear. The service validates a check based on several determinants, including the existence of an active bank account and the check payment history of the purchaser (a history of bounced checks can preclude the guarantee).
Checks that are approved receive a guarantee stamp from EZCheck, which will pay the cost of any guaranteed check in the event that it's rejected for insufficient funds or some other reason.
"We check a couple of different databases to verify there are no bounced checks [in the purchaser's banking history], that it's a legitimate check, that it's an open account, and then based on that, we approve it and take the risk on ourselves," Singer said. "If we're wrong, [the merchant] sends that to us and we reimburse them.
"To the user, what they care about, if the guy's a plumber at somebody's house and they want to give him a $400 check, what he gets out of the deal is he knows he's going to get paid - if not by the customer, then by us."
Users of EZVerify sign into EZCheck's merchant web portal with a username and password. The program requires that they enter at minimum two pieces of information: the check amount and the check's Magnetic Ink Character Recognition number, which contains the purchaser's bank account and routing numbers. Singer said the service gives merchants the option of requesting additional information as well.
"There are a few other fields merchants can use but that don't have to be used," Singer said. "We may request a driver's license number, or they may want to input a work order number or something like that."
Once the information has been entered and submitted, the back-end authorization process takes less than a second, Singer said. If the check is verified, an authorization number appears on the screen for the merchant's records.
Singer said EZVerify can be run in conjunction with EZCheck's other online check services, allowing merchants to maintain and view comprehensive payment acceptance records within a single web portal. "This is for paper check authorization, but the portal is the same portal we use for checks by phone and for recurring [automated clearing house] transactions," he said. "The portal is more robust and has online reporting all built into it."
EZCheck Chief Executive Officer Randy Rutledge added that check guarantee is particularly helpful for mobile merchants since cell phones mostly lack the risk-mitigating remote deposit capture capabilities of conventional POS networks.
"With a PC you have ports where you can plug in peripherals," Rutledge said. "You can plug in a check reader or a scanner, and with those two devices now you can read the check electronically, which is required by [NACHA - The Electronic Payments Association] to actually convert that and move funds electronically.
"They haven't invented the smart phone yet that's able to support the necessary peripherals to read the magnetic ink ... So you are constantly looking for additional markets, and this is another way to tap into the [mobile merchant] markets - like the tradespeople, working routes, working out of their truck - or at the flea market where you don't have access to landlines and whatever else."
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