n the universe of check acceptance and processing, everything's big - from the number of checks written, mailed and processed to the volume of dollars it all adds up to. For example, Americans write more checks than any other country in the world.

Even though we're increasingly using electronic alternatives such as debit cards, paper checks remain the most popular method of non-cash payment in this country.

The Federal Reserve estimates Americans wrote 42.5 billion checks in 2000. By comparison, retail electronic payments, such as credit and debit cards and retail ACH transactions, totaled 28.9 billion ("Driving the Migration from Paper to Electronic Payments," The Green Sheet, October 28, 2002, issue 02:10:02).

Another big number is merchant losses to fraud each year - around $10 billion ("Check Electronification at the Beginning of the 21st Century," The Green Sheet, April 29, 2002, issue 02:04:02). Experts agree that amount would be greatly reduced if electronic check conversion (ECC) becomes more widely accepted and used.

E-Chex headquartered in Irving, Texas, focuses exclusively on moving people away from the paper check to electronic check processing. Proponents say that not only does processing check transactions electronically - at the point-of-sale - cut down on administrative costs by reducing the handling, it greatly reduces the potential for fraud.

"The key thing is that the merchant understands the value of ECC," said Micah Hobart, Vice President of Sales for E-Chex.

Since ECC is all they do, the people at E-Chex can concentrate on making it all as understandable and as easy as possible. The foundation of E-Chex is a unique system featuring a proprietary back-end host, ACH software and terminal applications that it has built from scratch. The company was founded in 1998 by George Reich, who had 10 years of experience in payment processing and was the founder and CEO of First American Payment Systems.

According to Hobart, Reich is a visionary who became involved in early ECC discussions with NACHA back in 1997; E-Chex was formed out of those talks. "George sold his stock in First American and started this company to focus exclusively on one product," Hobart said. "We're executing our operation from his vision."

E-Chex's goal is to raise awareness of ECC among consumers, businesses and Merchant Level Salespersons. Hobart said the E-Chex system gives MLS's a product they can present to everyone in order to process checks electronically.

"Some of our competitors also process debit and credit transactions. But sales agents already have several credit card processing relationships. They don't want us to compete with them. Their confidence in us is with our single focus on electronic checks," Hobart said. "All we do is check conversion, and everything we do is electronic. We don't accept paper-based check guarantee merchants."

The company has created materials that clearly spell out every aspect of ECC for sales agents and merchants and their staffs.

"Our business comes from several channels, one of which is Merchant Level Salespeople," Hobart said. "We can assist the MLS market with our services through collateral we have designed. It helps them explain the value of our product to retail merchants. We help them understand ECC - what it is, what it's not, how it works. The sales presentations are available on CD, and we can provide training to store personnel."

Hobart said E-Chex customers include "thousands of merchants in all sizes, shapes and forms, from chains to mom-and-pops, in all 50 states."

E-Chex provides three ways for merchants to accept checks - Check Verification, Electronic Check Conversion and Guaranteed Electronic Check Conversion - which give businesses new ways to increase sales, make employees' jobs easier and improve customer service.

E-Chex has developed proprietary software applications for these processing options and the E-Chex back-end host gives the company access to 94% of all checking accounts in the U.S. It also has a database of negative check files accumulated from millions of its own transactions plus access to 15 million records of bad check writers, and it accesses positive information through a variety of other sources. E-Chex also does its own image archiving. This suite of products, processing options and decision-making data is not found anywhere outside of publicly traded corporations.

ECC is very similar to credit card processing - paper checks are converted into an electronic transaction at the point-of-sale. Transaction information is routed through the Automated Clearing House (ACH); the transaction is both automatically debited from the check writer's account and credited to the merchant account.

At the cash register, the checks are run through a terminal that reads and verifies the imprinted magnetic information (MICR lines, which include ABA routing, account and check numbers) and transmits that along with the amount of the check and the driver's license number of the check writer to the E-Chex database to be compared against check histories stored there.

Check approval is sent back to the terminal, where an authorization slip is printed out for the customer's signature (E-Chex requires a signature in order to process the check electronically). Customers receive a copy of the slip as well as their check, now stamped "Void."

The transaction information is stored in the E-Chex back-end host and released for settlement when the merchant batches out at the end of the business day. It then is processed by the Federal Reserve (interchange) overnight.

"We developed a check-transaction product that looks like a bankcard transaction," he said. "Our proprietary application software loads into the same terminals; all we do is add a check reader. We have the same pricing structure, which really simplifies the sale."

Hobart said E-Chex believes strongly in the "integrity of the check" and its continued dominance as the preferred payment method of choice. Because of that, E-Chex has developed both PC and Web-based entry points for "Accounts Receviable Conversion" or "Lock Box" applications.

ARC transactions are entered into its Web site via a MICR reader, speeding up data entry while reducing errors. Part of the Web entry includes EFT scheduling and RCK management. E-Chex has the solution for virtually all check-processing opportunities.

"As much as people think checks are going away, they're not," Hobart said.

For more information on how you can add this product to your service offerings, contact Micah Hobart. Phone 972-409-9100 or send e-mail to mhobart@neccorp.com.