Verifone Inc. has not gone so far out on the electronic commerce limb that it forgot its roots at the point of sale.

In a way, Verifone's latest retail terminal system, CheckPak, is a deepening of those roots.

The system is Verifone's first to include a check reader, which captures customer account data off the magnetic ink line so that the check itself does not have to be deposited.

Verifone is not the first vendor to sell such a device for truncating checks at the point of sale. In fact, it is responding to demand that can be traced to transaction processing companies' promoting check automation services to retailers. These promoters have included companies owned by Equifax Inc. and First Data Corp., and the California-based entrepreneurial ventures Bankserv and E-Funds.

National Processing Inc., the merchant processing subsidiary of National City Corp. of Cleveland, last month became the first to announce it would buy CheckPak, to be part of its CheckThru program.

This stance by Verifone, the leader by a wide margin in U.S. point of sale market share, is sending a strong signal about the persistence of checks and the potential revenues and cost reductions in converting them to electronic debits.

"Everybody talks about (Internet commerce), but in terms of volume and revenue dependence we are still a nation of shoppers wedded to the check," said Robin Abrams, vice president and general manager of Verifone's Americas group.

One of three key regional executives reporting to Verifone chief executive officer Hatim Tyabji, Ms. Abrams is in no way sour on more futuristic facets of the Hewlett-Packard subsidiary's strategy. For example, she sees an "exponential rate of growth" in smart card systems for closed communities like college campuses and sports stadiums, and she said bankers "no longer talk about if, but when" the technology spills over into mainstream banking and credit.

She also contended that if electronic merchandising via the World Wide Web was slow to take hold last year, it was only because retailers were waiting to get through the holiday rush. This year, she said, will be different because "all along they were working on" electronic commerce.

Ms. Abrams conceded the perception in the year since Hewlett-Packard Co. announced its $1.3 billion acquisition of Verifone that the latter's core business was "in the doldrums." Internet commerce got most of the deal- related attention because HP was particularly drawn to Verifone's pioneering in that area.

"In reality," Ms. Abrams said, "we stepped up new products for the U.S. market" in such areas as electronic benefits transfer, a contactless smart- card-like token called VeriPass, and CheckPak and its software, SoftPay.

Verifone's check truncation product includes a horseshoe-shaped MICR (magnetic ink character recognition) reader called the CR 600 attached to an Omni card authorization device. It arose in part from discussions with the company's customer advisory council. "They point out things to be addressed for Verifone to maintain its leadership role in the industry, and this was one of them," Ms. Abrams said.

If Verifone, based in Santa Clara, Calif., was late to this market, it was because customers were not asking for it until recently, she added.

With U.S. consumers and businesses writing about 63 billion checks a year, accounting for an estimated 72% of noncash transactions, "truncation is seen as a revenue opportunity in the retailers' eyes," she said. "They may have been overlooked, but they are not going away."

Verifone said the electronic debit in place of conventional check clearing improves a retailer's cash management and funds availability, while reducing its check processing and handling fees by up to 50%.

"Having accomplished the automation of their back offices and countertops, the retailers may be seeing check processing and the reduction of NSF (insufficient-fund, or bounced, checks) and fraud as the last frontier. Every one of the majors is getting into this," Ms. Abrams said.

"We're very excited that Verifone is making it easier for merchants to use our CheckThru product," said Tom Wimsett, executive vice president of merchant services at Louisville, Ky.-based National Processing Inc.'s NPC unit. "The industry is relying more and more on electronic check processing, and NPC and Verifone are committed to meeting customer needs."


Hypercom Corp., Verifone's closest rival in the point of sale terminal field, announced a product advance of its own last month in Los Angeles at the retailing industry's Marketechnics show.

Hypercom introduced a version of its ICE-interactive customer equipment- line called ICE Multi-Lane, for supermarkets and mass merchandisers.

In November the Phoenix company unveiled a wireless terminal for restaurant-table authorizations called ICE Portable. The next month it launched ICE Peripheral, which functions as a PIN (personal identification number) pad and signature capture device when attached to a T7 Series terminal.

ICE products are built for conventional credit and debit transactions and can include smart card capabilities as desired.

"Our intent with the ICE family is to provide the most flexible POS platform for all current and anticipated customer-activated payment processing technologies while protecting merchants' investment in existing POS equipment," said John Marshall, senior vice president of sales and marketing.

"Thanks to ICE Multi-Lane," he said, the Hypercom technology "can now be easily integrated with standard IBM electronic cash registers."

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