The New eFunds 

W elcome to the new eFunds. The eight-year-old Milwaukee-based company was once known mainly for being a pioneer in RCK (represented check entry), a process used by merchants and collection agencies to collect NSF checks. But needs change and companies grow. This is the case with the people at eFunds, who once again are at the cutting edge of products designed to facilitate merchant’s electronic transactions and simplify check collection.

Who is eFunds? It is a variety of financial service companies that Deluxe Payment Systems has acquired over more than a decade. Most recently, in 1999, Deluxe acquired the smallest of the innovative firms, the one they refer to privately as “little eFunds.”

With the expanded ability to provide RCK technology, the eFunds of today is a company that combines financial service with risk management. The acquisition last year brought together some of the biggest players in electronic debit risk management and electronic transaction processing. On April 5, eFunds filed with the Security and Exchange Commission for an Initial Public Offering.

Companies affiliated with eFunds today include SCAN, one of the nation’s widely accessed check verification networks; ChexSystems, a new accounts verification network; Deluxe Electronic Payment Systems, a new account verification and risk management service; and Debit Bureau, a comprehensive source of debit data.

These days eFunds is focused on providing comprehensive secure payment management solutions that maximize customer relationships, manage risk, and bring payment delivery into the electronic age. Ideal candidates for eFunds services are financial service providers, retailers, networks and gateways, e-commerce providers, and any business that accepts debit payments.

Three examples of eFunds’ newest offerings can be found in their latest products, IntegreatSM, QualiFile, and FraudFinder.

In the world of Internet bank accounts, Integreat is viewed as a solution to new account abandonment: consumers opening checking accounts online but then failing to fund them. In the current system, customers go through the process of filling out the online new account form and are then sending the initial deposit by check. With this method, banks are looking at an approximately 70% abandonment rate, according to industry reports.

With Integreat, new customers can fund new online accounts with money from other financial institutions, by transferring funds electronically in a process that has previously been reserved for the paper check. The process is as simple as doing the “one-click” shopping that has been useful in e-commerce transactions. Integreat could reduce the time needed to open an online account from weeks down to 30 seconds. Bank One Corp., has been trying the eFunds Integreat program during the first quarter of 2000. Integreat and the other related programs are being tested by customers opening new accounts via the BankOne Web site at http://www.bankone.com.

eFunds QualiFile solution works hand-in-hand with Integreat by confirming the validity of the information provided by an applicant by using Debit Bureau data and information from one or more of the three major credit bureaus. The debit and credit reports are used to score the likelihood of the banks needing to close the accounts and to measure an individual applicants level of risk. eFunds FraudFinder then detects potential identity manipulation and, as the name of the product suggests, fraud.

With the Internet version of QualiFile, the bank can market targeted financial products to the consumer. To determine cross-sell offers, QualiFile analyzes demographic and financial product-usage data as well as Debit Bureau data and information from one or more of the three major credit bureaus. For example, an applicant may be presented with a list of offers such as a debit card, an ATM card, a home equity loan, or a credit card.

There are other financial service programs in the works at eFunds as well. Soon, Internet merchants will be able to accept ATM cards and PIN numbers for payment utilizing eFunds “e-Connect” software.

eFunds R-check is electronic check representment, which is the process of converting a returned paper check to an electronic check and representing it for payment through the ACH system. Paper checks can only be presented twice, but once a check goes through this conversion process, it allows for a third time for the check to be presented. In addition, the process of resubmitting the check through this method means that it is more likely to clear, since electronic transactions are processed before paper-based transactions. These benefits allow the business to have a greater likelihood of collection, which improves cash flow.

Due to the IPO, eFunds remains in a quiet period at this time. For more information about eFunds and any of their products, visit their Web site at http://www.efunds.com or call them at (414) 341-5000.

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