Preauthorized
Checking Grows
According to a new
report prepared by Harrington Associates, a marketing firm that
conducted research for MICR Data Systems Inc., growing numbers of
small and mid-sized businesses are choosing pre-authorized checking
as a primary means of handling recurring payments. Harrington
Associates surveyed 450 businesses, non-profit organizations, and
individuals across the country who typically make or receive
recurring payments and found that pre-authorized checking is enjoying
a 20 percent annual growth rate.
With preauthorized
checking, a business seeking recurring payments receives a packet of
special checks that the customer has preauthorized for payment. The
business holds the checks, then deposits them into its bank account
on the date the money is due.
According to the report,
more than 10 million preauthorized checks were processed nationally
in 1997. The report stated that much of the growth was driven by a
wave of entrepreneurial companies marketing preauthorized-checking
services through the Internet. The report also stated, "Despite the
proliferation of electronic technology, America still has a love
affair with paper checks."
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