First Union Corp. has received a patent on a type of card that lets non-account-holders cash payroll checks at the bank quickly and for no fee, and it is trying to market the product to other banks so that they may compete more effectively against check-cashing centers.

The check-cashing card was invented by William T. Morrison, a senior vice president with First Union Florida, who got a patent for it last August and is just starting to peddle the card to other institutions, targeting banks and grocery stores.

Mr. Morrison said the product grew out of a problem he spotted in the early 1990s, when tellers of Charlotte, N.C.-based First Union would ask unbanked customers who presented payroll checks for drivers' licenses as identification. But fraud ran high under that system. Driver licenses are easy to counterfeit, and "there's a big market for them, especially for teenagers who want to get into clubs," he said.

In 1996 the Florida Bankers Association began a thumbprint identification program for non-account-holders cashing payroll checks. It was a tremendous success - it cut fraud by 40% in one year, Mr. Morrison said - but slowed down the teller line.

"It's a very good system and helped us tremendously to curtail fraud, but it didn't facilitate our cashing checks - it made it longer," he said. Moreover, the fingerprinting process felt humiliating to some customers, who said it reminded them of a law enforcement tactic.

Under the system Mr. Morrison developed and that First Union introduced in 1997, people who do not have accounts at First Union can apply for identification cards, giving their name, address, phone number, Social Security number, and place of employment. Once they are approved for a card, they no longer have to give a thumbprint or driver license for future checks (though the bank does requires a thumbprint on the first cashed check). For verification, each cardholder also has a four-digit personal identification number to punch in a terminal when presenting a teller with a payroll check.

Mr. Morrison started the system in Miami, and by the end of 1997 every First Union branch in Florida was using it, he said, and every teller had a terminal that accepted them. He said Miami was a good place to start because it has so many unbanked workers - including construction workers, orange grove workers, and restaurant and hotel workers - but he added that many professionals also cash payroll checks at First Union.

So far First Union has issued 300,000 of the check-cashing cards, and enrollments have reached the rate of 3,000 to 4,000 a week. Mr. Morrison said that an average of 80,000 cards are swiped weekly. First Union plans to introduce the product in New Jersey next and then to roll it out in other states.

After the program got under way, Mr. Morrison and Byron Hodnett, chief executive officer of First Union Florida, thought about submitting the card for a patent. First Union holds the patent, and Mr. Morrison is listed as the inventor.

While customers pay a $1 fee for the thumbprinting, the check-cashing card is free, and that price structure could pose a competitive problem for many check-cashing centers, which usually charge a fee of 2% to 2.25% of the check's face value. In some states where check-cashing centers are unregulated, those fees can run much higher; New York is the most highly regulated in this area and keeps the fee to 1.4%.

Henry F. Shyne, executive director of Financial Service Centers of America Inc., a Hackensack, N.J.-based trade association that represents two-thirds of the storefront check-cashing industry, said First Union's product could take some business away but will not have "a drastic effect."

Check cashing is just one of many services that his constituents provide, and First Union's product does not give its cardholders a one-stop shop for money orders, utility bill payments, traffic fine payments, auto registration payments, and other services, Mr. Shyne said.

Mr. Morrison of First Union said his product has been one of the more exciting developments in his 40-year career with First Union and a bank it acquired. "When you're supposed to be slowing down, I've got a patent," he said.

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