hen merchants accept personal checks for payment, whether as a courtesy for customers or because it makes sense for their business, returned checks are often part of the equation. Unfortunately, with returned checks comes the unpleasantness of handling collections and possible loss of funds.

Oxnard, Calif.-based "transmodus" offers help in the overall process of handing returned personal checks and automated clearing house (ACH) transactions.

Through its namesake Web-based system, transmodus.net, the company aids its customers in loss prevention, electronic recovery and automation of secondary collections processing.

The system efficiently sorts and processes all returned checks and ACH debits to deliver the best financial return possible. It can handle any checks that businesses might send to a collection agency. It also offers online customer service and reporting.

Part of the Internet's magic is what takes place behind a Web site's pages. Users of transmodus have no software to download and install, and no need to upgrade or maintain software. There is no cost of ownership; all they need is an account (which they can create instantly), a login name and a password.

This gives clients instant access to real time, on-demand applications with a wealth of functionality and flexibility to accommodate nearly any size client with a variety of needs.

More Than Just Checks

The company was founded in November 2001 as JUSTCHEX LLC. Its founders recently changed the name to transmodus Corp. because "Our services have evolved, and the name 'transmodus' removes any limits" associated with the brand, said Richard McShirley, transmodus' Chief Marketing Officer.

If you're wondering, what's behind the company's name? What does "transmodus" mean exactly?

"We like Latin, and 'transmodus' is 'transaction method' in Latin," McShirley said. "We provide a transaction method."

To develop the Web-based systems and applications, the principals of the company leveraged their strong technology backgrounds. Jay McShirley, Chief Executive Officer, handles the business's operations. Before transmodus, he served in various top-level management roles for public companies in the technology sector.

Chief Technology Officer Michael Shirman is leading the technical initiatives of the company, and is a chief architect of all online transactional systems. He was on the forefront of building early Internet transactional solutions. One such venture was the first online auction for AOL. Richard McShirley oversees the company's establishment of a multiple-sector client base. In the past few years, he has expanded transmodus' presence in the foodservice, utilities and retail markets.

The transmodus solution is highly secure; it applies high security standards and best-of-breed technologies and processes. The systems are designed and implemented based on open architecture. This simplifies a client's integration with business and accounting applications.

The company has also implemented into its system the compliance rules of NACHA - The Electronic Payments Association.

The transmodus system is highly configurable and flexible. It is scalable to the point that it can accommodate customers who receive only one or two returned checks a month and use the system themselves, as well as large companies with locations across the country that hire transmodus to automate or outsource the entire process.

"We can go from the smallest client to the largest client, and we can still deliver the level of service that they need," McShirley said.

The company's market reach extends across the country, targeting any type of business that accepts checks for payment. Transmodus will work directly with customers, or target them through resellers, including ISOs and merchant level salespeople (MLSs). Other users of its system include collections agencies.

For retail merchants, transmodus works with many different types of businesses, including small to mid-size supermarkets, Weight Watchers franchises and other subscriber-based fitness model businesses, hair and tanning salons and book stores. The company also works with large enterprises.

McShirley said transmodus is very strong with businesses that are "decentralized." He cited the example of its wireless phone company customer that not only has a home office, but also hundreds of retail stores around the country.

"When we roll out to a business like that, we can provide them with a common interface across the whole company," he said. "We are an excellent fit for companies that want to be able to quickly automate their returned check processing and collections process, as well as have a system that can easily interface with their existing billing systems."

Transmodus offers "on demand" processing, which means that customers use the service only when they need to (24/7), and they are only billed when they use it. All of the system's functionality remains available for use at any time.

Whether using the technology in a "do it yourself" manner or having the system completely automated, users take advantage of any or all of transmodus' services, including funds verification, automated data entry and transport (through the use of check scanning devices), electronic recovery and both automated and traditional secondary collections.

Automated secondary collections is a transmodus "exclusive" that was released in June. It provides merchants with system-driven phone calls and letters that cost as little as $1 per collection. This patent-pending process gives merchants a much higher payout than traditional secondary collections. Any outstanding collections can be forwarded to a collections agency for final processing. Users can input check data into the system in a number of different ways. McShirley said transmodus is set up to generally import and export data using encryption methods and secure FTP protocol. Businesses with high return volumes can also use high-speed scanning hardware to scan checks into the system, such as with products offered by MagTek, TellerScan and NCR Corp.

A Solution for Mobile Merchants

One unique new product from transmodus is the "chexmessaging" mobile check verification service. Mobile merchants, such as plumbers, can use their mobile phone or other device capable of sending text messages to verify checks. To do this, they must register their phone number with transmodus on its Web site to access its verification database, which actually includes several sources of consumer check data.

The verification takes place in real time, and begins in transmodus' local check writer database. If no records are found, the system proceeds to a series of national check writer history databases, and then finally to the ATM networks to verify funds and the open/closed status of the account.

Calling All Resellers

Although transmodus initially developed the bulk of its client base through its own internal sales efforts, the company is now looking for ISOs/MLSs with which to partner.

"I personally did the door-to-door thing to start the business, so I had a real first-hand experience of what is required and needed" to sell the product, McShirley said.

He believes a great deal of opportunity exists for salespeople in this area. Offering the solution is very similar to selling bankcard: No major investment is required. ISOs/MLSs also use the system.

"Normally, to acquire a client in the check business is an arduous process," McShirley said. "With our system, however, the ISO sends the customer an e-mail with a URL to register. The customer clicks on the link, which takes them to a registration/activation page.

This action then captures them as the ISO's client. This process is revolutionary. I challenge you to find a site in this business where you can register online and the system gets delivered in real time."

Transmodus provides salespeople with the necessary education and tools to earn recurring revenue on the transactions processed by the merchants they acquire. The site also provides secure client tracking and commission reporting. Many resellers haven't pursued the check recovery business because they have a hard time keeping tabs on with what's going on with their clients and their transactions. McShirley said the transmodus system is transparent, from ISO to customer, so the ISO can stay on top of what's important.

"We have changed the way [ISOs] can approach and deliver returned check and ACH transaction processing solutions to their merchants and corporate clients," McShirley said.

"They can acquire an account, set the business model, initiate service, and align their automated payment of commissions, all online in less than five minutes.

When ISOs log in to the site, they can access pages and pages of resources and training material. "It's a whole site within a site to make sure resellers have all the information and advantages to go from selling credit card services to adding this as a supplemental sale.

"We think our model will be very attractive to resellers, and we're already getting a strong response in the reseller community," McShirley said.