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Despite the best efforts of card-industry backers, checks are not going away. Americans wrote 30.6 billion checks for a value of $41.7 trillion in 2006, the most-recent figure from the Federal Reserve's 2007 Payments Study. Though that volume is down 6.4% from the 37.6 billion checks written in 2003, it does not suggest the demise of checks is coming soon.
"Checks are ingrained in the American psyche. People are not going to change that behavior," says Mike McCormack, consultant with Fort Lauderdale, Fla.-based Noblett & Associates LLC. "They're still writing checks." Consumers especially like checks for recurring monthly bills, such as mortgage and utility payments, he says.
What might appeal most to ISOs and agents looking for ways to boost revenue is that the average value of checks increased from $1,104 in 2003 to $1,366 in 2006. ISOs stand to profit more if they receive a percentage of these larger transactions.
selling Checks
When meeting with customers, the agent should ask how many checks the business processes on a daily, weekly or even monthly basis. A merchant who only receives three checks per month does not need a check service. But one that has 30 or more checks can benefit from a check service, says Don Singer, senior vice president of Houston-based EZCheck, a check-processing company.
Even smaller merchants can benefit from check-scanning services that allow them to submit deposits more frequently, Singer says. Instead of combining trips to the bank, they can submit deposits directly from their offices whenever they have time. This makes their money available faster.
Checks submitted electronically clear the banking institution within one to two days, making the money available in
customers' accounts quicker. Traditional check routing can take seven to 10 business days to clear, depending on the bank. Banks may put a hold on funds until the check has cleared.
Avoid The Afterthought
Transactional Services Inc., a Winter Park, Fla.-based ISO, offers check-by-phone, ACH and remote-deposit-capture services, according to Brian Wasserman, president and CEO. The company's sales agents present an entire package to merchants, which can pick and choose what services they want, he says.
"A lot of merchants are interested in the different check services," Wasserman says. "Some just take check services, some take credit card services. Others take both services if they see a need for it."
Selling check services is similar to selling any other product, he adds. It starts with identifying the customer's needs.
"It boils down to listening to the merchant," Wasserman says. "If you're really listening to the merchant, you can identify their needs and present a solution."
Demand does exist for these services, says Andy Pitts, president of Birmingham, Ala.-based ISO MLS Direct Network Inc. "We still think the check arena is a very good market, especially with the economy dipping down," he says.
If ISOs and agents want to seriously pursue the check-services market, they should not sell these services simply as an add-on, McCormack says.
Instead, they should consider leading with their check services in the sales pitch. This will bring check services to the forefront of the discussion, McCormack says. When offered as an afterthought, merchants tend to glide over check services and not take it as seriously, he says.
Still, for some agents, the goal is to get them to consider check services as an important part of the sales pitch. A challenge, however, is moving check services to the forefront of the sales pitch.
