Telecheck Services Inc. has joined with the Pulse and Star regional electronic banking networks to create a service for merchants to approve checks.
Though no contracts have been signed, the three organizations have put together a pilot that includes large national merchants as well as smaller, one-location retailers.
Star is also testing a similar service with another check acceptance firm.
Such services let regional networks such as California's Star System Inc. and Texas' Pulse EFT Association parlay their data bases of information and their expertise in processing transactions into additional fee-based services for their bank members.
The National Retail Federation estimates that bad checks cost retailers $4.9 billion annually.
"We want to bring more value to the services we provide our members, and by providing this much-needed, much-wanted information to the merchants, we are fulfilling our goal," said Stan Paur, president of Houston-based Pulse.
"We are providing a new revenue stream, while providing our members with the information they need to reduce losses from check fraud," Leslie Michelassi, senior vice president of Star System. "So we're achieving savings and income on the same product."
Telecheck estimates that Americans will write more 180 million checks a day this year, a 12.5% increase over 1993. Despite the many plastic alternatives, checks still account for 54% of all transactions at the point of sale, according to The Nilson Report, an Oxnard, Calif.-based industry newsletter.
The alliance and test being conducted by Telecheck, Star, and Pulse aims to stem losses from bad checks.
Last year Pulse formed a for-profit subsidiary dedicated to preventing check fraud against its member institutions. The unit, called Pulse Check Service Corp., created a checking account data base that participating institutions update every day.
Using the data base, participants can investigate deposited checks to determine the account status.
Star, from whom Pulse licensed the technology to create its data base, developed the original system in 1992 and this year formed a company called Primary Payment Systems Inc., with which it hopes to market the technology nationally.
"We got together with Telecheck because it already has the distribution channel in place," said Leslie McManis, executive vice president of Pulse Chek. "Telecheck has the capability to handle all the customer servicing, and already has an on-line system to their merchants."
Although the pilot program includes only a small selection of Telecheck's merchants - including Stop n' Go, a chain of convenience stores, and Circuit City, a consumer electronics chain - the program may be rolled out to all of Telecheck's 150,000 retail clients.
"Any retailer you ever talk to says they would love to have knowledge of whether a check is going to be good," said Randy Templeton, senior vice president of Telecheck. "Now that is still not 100% possible, but this alliance with Pulse and Primary Payment Systems gets us a lot closer."