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Check Businesses Adapt to Changing Industry

With an increasing number of electronic transactions moving through the payments system each year, check businesses are taking notice. Through initial cost cutting, reorganization and new strategies, will they keep stride with the changing face of payments?

According to data from the Federal Reserve, in 2004 electronic payment transactions in the United States exceeded check payments for the first time ("2004 Federal Reserve Payments Study").

In 2003 the Federal Reserve Banks, collectively the nation's largest processor of checks, anticipated the shift by reducing staff, closing offices and consolidating back-office check-processing operations. Check printers including Deluxe Corp. and Harland Financial Solutions, a subsidiary of John H. Harland Co., experienced drops in sales volume and closed some plants, but have also expanded their product lines and diversified their offerings through acquisitions of other companies.

In April 2005, First Data Corp. subsidiary TeleCheck, announced plans to downsize its Houston office, saying it would eliminate 380 jobs. The cuts represent 32% of the company's Houston-area workforce and might be the company's response to the "nationwide trend of fewer people using checks to pay for goods and services," the "Houston Chronicle" reported.

"The check business has changed considerably since we began over 21 years ago, [however], checks aren't going away," said J. David Siembieda, President and Chief Executive Officer of CrossCheck Inc., a check conversion and guarantee provider.

"Instead, they have a significant presence as a major payment method among U.S. consumers. They are taking on new life as electronically converted transactions, truncated images under Check 21, Internet checks, ACH payments and check drafts.

"We're in the check business, that will never change," Siembieda said.

"As checks evolve to meet the needs of our consumer payment system, we'll continue to develop and market new approval and guarantee technologies."

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