Though known as a technology pioneer, Zions Bancorp is offering a service meant to put the paper back into Internet payments.
The unique eValuCheck service it introduced in the second quarter will cut paper "checks" on request for the Internet customers of participating merchants. The Salt Lake City company says the service - for which it has signed only one customer - could help preserve its checking business.
"If you look at the fee income around the checking account, it is a huge piece of what is left of the banking franchise," said Danne Buchanan, Zions' executive vice president of e-business. "You don't want to blow that up. If you blow that up, you've got serious problems on your hands."
Even more promising customers than merchants are colleges and charities, which could avoid credit card fees by accepting checks online, Mr. Buchanan said. "We believe providing another payment option where they get to keep more of that money in their pocket is going to be a pretty interesting opportunity," he said.
The service relies on software from Valutech Inc. of Rancho Santa Margarita, Calif. So far Zions is the only bank to use it; Valutech's e-Commerce Cubed division hopes to sell to other banks as well, said Chet Andrews, the division's chief executive officer.
The company was formed in 1983 to sell check-printing software that enables corporate treasurers to control the production of checks at remote locations, he said.
The eValuCheck service works this way: After signing up with Zions, a corporate customer adds a "pay by check" option to its Web site "checkout." If the user chooses that option, Zions not only credits the payee but also cuts a check on behalf of the user and starts it through the check-processing system. It also batch-prints deposit slips and other paperwork.
Michael L. Campbell, the senior vice president in charge of cash management at Zions' California Bank and Trust, called the software "attractive in its simplicity." Mr. Campbell also manages the parent company's "Center of Excellence for Cash Management," an internal training operation.
Zions talked to Valutech for eight months and did "a considerable amount of due diligence from a legal standpoint" before starting to use eValuCheck, he said. He would not name the service's sole corporate customer but said it is a cash-management client in Nevada. "I don't think there's any significant volume there yet, but they are up and running," Mr. Campbell said.
An effort to preserve paper checks might seem anomalous for Zions, which in the late 1990s made a push to become a major vendor of digital certificate and signature technology. Its Digital Signature Trust division failed to gain traction and was sold to the bank-owned Identrus LLC consortium in March.
The paper check has an additional benefit over credit cards or ACH transfers, the Zions executives said: Customers can present a proof of payment - to claim a tax deduction, for instance - without producing credit card bills or bank statements.
