One would think so, if you looked at the statement prepared by TeleCheck for Silver City, Inc., Raynham, Massachusetts, for the billing period November 1, 1997 through November 30, 1997. According to the information on this statement, TeleCheck approved 485 check transactions for Silver City and declined 85 checks (said "no"). Simple math tells us that this is a 14.9% decline rate on the checks that Silver City approved with TeleCheck (85 divided by 570).
In addition, the statement reports that the value of the 485 approved checks was $335,870 and the value of the checks declined was $160,358. Dividing these numbers you will see that the value of the declined checks represents 32.3% of potential sales. Now the point of all this information is that the TeleCheck statement notes the 32.3% dollar decline as a "checks declined savings."
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What is the most common reason consumers give for not paying? |
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1997: |
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Forgot |
13% |
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Non-Sufficient Funds |
43% |
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In the Mail |
18% |
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Other |
24% |
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1996: |
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Forgot |
15% |
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Non-Sufficient Funds |
54% |
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In the Mail |
18% |
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Other |
17% |
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Source: Professional Collector |
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Assuming that every time TeleCheck said YES, the check was good and every time that they said NO, the check was bad, then this statement could make sense. This, of course, is not the case, which is why the merchant must mail in bounced checks for reimbursement. All the No's are not bad guys either, perhaps only more risky checks, which is really just a function of price.
So a merchant, as in this case, must decide if they can:
1. Live with loosing more that $3.00 out of every $10.00 approved;
2. Convert these consumers to another payment method when they wanted to pay by check; or
3. Pay slightly more for the service to get more sales.
This is a simple illustration of the competitive Check Guarantee proposition, and we will close this by also noting that for some merchants there may be a fourth option, and that is to have the declined checks guaranteed by someone else. CrossCheck, Inc., has a program they call "Plus Sales" which will guarantee TeleCheck's declines. It is interesting that someone is able to create a business service from something someone else doesn't want.
I guess it just proves once again: one man's trash is another man's treasure.
