Tech Bytes: Payment Solution Network Tests a Bad-Check Service

Payment Solution Network Inc., Dallas, has completed a 30- day test of an early-warning service for return items.

The pilot served two purposes: to gather statistics on check fraud and to demonstrate the feasibility of a national fraud prevention system.

Payment Solution officials said the service could help customers reduce check fraud losses by identifying exception items early in the check collection process. Check fraud saps banks of billions of dollars annually.

The pilot program's participants were Hibernia Corp., New Orleans; Premier Bancorp, Baton Rouge, La.; Deposit Guaranty Bank, Jackson, Miss.; and Commercial National Bancorp., Shreveport, La.

During the pilot, banks electronically shared checking account information during the check collection process. Banks both contributed to and requested information from PSN's central data base, which is maintained by Visa U.S.A.

Banks then tapped the data base for information about closed or restricted accounts and stop payment requests.

If the data base found potential exception items, banks then delved deeper into the incident, placed further holds on the account, and notified depositors of the questionable items.