Scan, a check-loss prevention service heretofore available only to large retailers, is expanding into the smaller-store market thanks to First National Bank of Omaha.

The Nebraska bank, a leader on the merchant side of the credit card business, has agreed to act as a remarketer for Electronic Transaction Corp., the provider of Scan.

Under the agreement, retailers with annual sales of up to $50 million gain their first access to Scan -- formally the Shared Check Authorization Network.

The alliance was announced last month at the American Bankers Association's bank card conference. First of Omaha has pilots in place and is close to the formal launch of its marketing to smaller retailers.

Before Electronic Transaction Corp., a subsidiary of Deluxe Corp., set out to widen Scan's distribution through resellers, the service was delivered only through such members of the retailing elite as Wal-Mart, Sears, Target, K mart, Nordstrom, and J.C. Penney.

As the first Scan remarketer, First of Omaha will be selling what is touted as the nation's largest such system for preventing and recovering check losses.

In volume of checks verified, Electronic Transaction Corp. ranks first with 68% of the market, according to The Nilson Report. Telecheck Services, a unit of First Financial Management Corp. of Atlanta, is a distant second at 9%.

In another measure of the check assurance market -- according to value of checks guaranteed -- Telecheck ranks first at 32%, followed by Equifax Check Services at 29%, according to a March 1994 edition of the Nilson newsletter.

Scan, to which retailers can connect through Deluxe Data Systems or another third-party processor, can enhance a point of sale package that also includes credit and debit card acceptance. Checking account or drivers license numbers are compared against a data base, and transactions are approved within seconds as long as the check writer has no unpaid checks or an account "closed for cause."

Retailers have the option of inputting the check data automatically through a reading device called the Cheq'r, manufactured by Direct Data Inc. of Hartland, Wis.

When turned down, check writers can choose another means of payment and are given a toll-free number with which to contact Scan.

When accepted checks bounce, collections are handled by a Scan certified agent

and the retailer gets the entire mount recovered.

The remarketing by First of Omaha, and potentially other Institutions, "reaches a market that has never had a check-loss prevention program," said Judy R. Smith, director of Scan remarketing services for Electronic Transaction Corp., which is based in Bothell, Wash.

"Banks and retailers are really working together for the first time to prevent fraud and other check losses," she added. "For pennies per transaction -- in the 20- to 25-cent range -- the retailer gets access to the Scan files and no longer has to worry about handling bad checks."

She called Scan "a very attractive addition to a bank's business-service portfolio," because it will help retain and attract merchant customers while generating fee income.

Ms. Smith said she was especially pleased to be linking up with First of Omaha, one of the top 10 credit card merchant banks, with about 40,000 cardaccepting customers and a reputation for innovation in specialized sectors of the business, such as teleshopping and independent service organizations.

The bank is initially offering Scan to existing customers of its merchant processing unit, and then intends to solicit new customers.

"Through this program, our customers' returned-check information will be contributed to Scan, which means bad-check writers who go from town to town, store to store, or bank to bank will no longer be able to pass checks until their debt is paid," said Donald M. Gerhard, vice president of operations in First of Omaha's merchant division.

The bank also expects to find synergies when collections become necessary. It owns Collection Corporation of America, and will provide the recovery service to its Scan subscribers at no additional cost.

The remarketing program is the latest mutual benefit of the Deluxe-Scan connection. Deluxe Corp., the check and forms printer based in St. Paul, Minn., acquired Electronic Transaction Corp. about four years ago, complementing its move into electronic transaction processing through Deluxe Data Systems of Milwaukee.

"The bonding process has been relatively recent," James McGowan, Deluxe Data's chief executive officer, said in an interview when the Scan remarketing deal was announced. "The chemistry between ETC and Deluxe has improved, we are working together at the highest levels, and we are finding significant synergies."

Deluxe Corp. also owns ChexSystems, which many banks use to verify that people opening checking accounts have not had other accounts "closed for cause."

The Scan and ChexSystems data bases are positioned as a one-two punch against the growing problem of check fraud.

Electronic Transaction Corp. was founded in 1985. Chief executive officer and cofounder Denis duNann is a former vice president and national sales manager of Verifone Inc., the leading manufacturer of point of sale authorization terminals.

Scan was established to pool the bad-check prevention resources of major merchandise retailers, supermarkets, and other mass-market outlets. The system's effectiveness improves with retailer membership, which is why smaller stores' participation, encouraged by financial institutions like First of Omaha, will be welcome.

The Scan system records 1.2 billion transactions a year, worth $81 billion. Electronic Transaction Corp. also offers a turnkey collections service and a Check Management System, which automates a returnedcheck operation.

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