HOUSTON -- A new variation of electronic check payments that involves returning the paper check and an authorization receipt to the customer offers retailers the potential to lower their check-processing charges.
In addition, such a system can provide a transition to electronic forms of payment for customers accustomed to paying for groceries by check.
Nearly one-third of supermarket transactions are check payments, according to a survey conducted by the Food Marketing Institute, Washington. This 1994 survey said checks account for 49.3% of supermarket transactions' value.
Jim's Supermarket, a single-unit operator here, tested this new form of electronic check acceptance late last year, and reported one of the major benefits was reduced bank-handling charges compared with those for processing paper checks.
One or two large chains are considering tests of the system for later this year, according to an industry source who asked not to be named.
The process of electronic check acceptance begins with the customer writing out a check at point-of-sale that is read by a magnetic ink character recognition reader.
Once the check is approved, it is returned to the customer, along with an authorization receipt for the shopper to sign. The cashier and the customer keep a copy of the receipt authorizing the electronic transaction.
Funds from the electronic check acceptance process are available in the same time frame as with a paper check, but no physical check goes through the deposit and clearing process.
George Hood, director of electronic-banking operations at Wegmans Food Markets, Rochester, N.Y., said other processing systems, such as returning the check along with a debit receipt to the customer, have benefits and drawbacks.
"It obviously speeds up the check-processing mechanism," Hood said. "The downside is you're taking additional time on the front end to generate additional receipts. When we cash a check for a customer they effectively don't get a receipt."
Several retailers told SN many people are comfortable with using checks. One source said consumers may defer the decision to switch from paper to electronic transactions because they think they pay more for the latter.
Another source said consumers may use checks to avoid automatic teller machine charges for withdrawal.
Jim's shoppers, mostly older people, took some time to warm up to the process, said Carolyn Jones, co-owner. Once they did, they quickly became comfortable with it.
Besides improving customer service, cashiers saved at least one minute per check transaction by eliminating the time cashiers spent writing information on the check for manual approval. Jones estimated the store saved 30 minutes per day on check approval at the courtesy booth, as well as other tasks related to processing checks.
Telecheck, Houston, handled the authorization process for the electronic check-acceptance test at Jim's Supermarket.