Expertly electronified
Some long-time ISOs and merchant level salespeople (MLSs) fondly recall the early 1980s as the good old days. Back then, merchants were eager to get on board with credit card processing, and POS terminals were snazzy new gizmos, not the commodity they've since become. And competition was not nearly as tight as it is today.
But some industry veterans believe the current remote deposit capture (RDC) opportunity rivals the promise of the early days. RDC became possible when the U.S. Congress passed the Check Clearing for the 21st Century Act in 2004. Dubbed Check 21, the act made it legal for a scanned image of a check to be processed in place of the original paper check.
Unlike electronic check conversion (ECC), which can only be implemented for consumer checks, RDC can be used on all types of checks, including business checks, money orders, cashiers checks and travelers checks.
According to the 2007 Federal Reserve Payments Study, more than 33 billion checks were written in the United States in 2006. However, research and consulting firm Celent LLC recently found that just 2 percent of U.S. businesses are using RDC. Those statistics, combined with the right RDC solutions, make an appetizing recipe for the feet on the street.
"This is a huge market opportunity," said Caroline Marino, ITMS National Sales Manager for RDM Corp., a recognized developer of specialized software and hardware products for electronic payment processing. (ITMS is short for RDM's Image and Transaction Management System product.)
"I believe it is a similar opportunity that we saw in the '80s with the introduction of electronic draft capture," she added.
With the advent of Check 21, RDM found that the quality assurance technology it had developed for check printers and readers could provide additional benefits to the U.S. payments sphere.
Pioneering conversions
The multifaceted company, which was formed in 1987 and went public in 1993, is headquartered in Waterloo, Ontario, and trades on the Toronto Stock Exchange. However, the RDM RDC solutions enjoying success in the United States aren't even available in Canada yet.
Mike Murphy, RDM's Vice President of Marketing, said the company hopes Check 21 will migrate to Canada by the end of 2009.
RDM considers itself a pioneer in electronic check conversion systems and Web-based image and transaction management services for banks, retailers, payment processors and government agencies, as well as a trusted provider of print quality control and image quality systems for a variety of global customers.
It has offered the industry check processing solutions for 19 years and check electronification solutions for six years.
RDM has substantial experience with magnetic ink character recognition (MICR). In 1998, the United States Department of the Treasury selected RDM as its partner to design, build and install its ECC platform.
The solution, called Paper Check Conversion, has since been successfully rolled out at over 1,000 U.S. government agency locations around the world.
"We have the highest MICR read rates in the industry and product reliability on hardware [scanners] and the most fully featured suite of RDC software products," Marino said.
RDM previously focused solely on banks. "We have been very fortunate in that we signed quite a few of the top 50 banks," Murphy said. "Two to three years ago, going through banks was the way to go. Working with trusted financial institutions made sense and still makes sense today."
Going to the street
However, now that RDC technology is better known and understood, business people are no longer wondering if the technology will last and are interested in learning about its capabilities. In August 2007, Marino was brought on board to develop the ISO market for RDM.
She is charged with attracting ISOs and MLSs to resell the company's hardware and RDC services, specifically its ITMS.
The company describes ITMS as a powerful, secure application service provider-based check electronification platform designed for quick implementation, so clients can "immediately realize the benefits of check electronification without the upfront capital investment required by most other solutions."
According to RDM, ITMS enables the capture and processing of all types of check payments and supports ECC for POS and accounts receivable payment types, as well as for Check 21 and image exchange initiatives, thereby reducing paperwork and trips to the bank.
In addition, RDM designed ITMS with extensible architecture to facilitate integration with best-of-breed applications, so that businesses, including retailers, can leverage the benefits of check electronification quickly and cost-effectively. In April 2008, the company debuted an updated version of its ISO channel product: ITMS WebClient is a browser-based payment processing platform that requires no software to install and facilitates the electronic deposit and settlement of payments received by paper check.
WebClient incorporates the latest risk management tools and was designed for businesses that have many points of remote or distributed collection for check payments. It is also appropriate for those that have large central processing centers, RDM noted.
Also in April, the company debuted another offering for the ISO market, Simply Deposit.
It is a Web-based RDC product geared specifically for the small-business market. It includes both hardware and software built to meet the needs of small enterprises and community banks.
RDM pointed out that Simply Deposit can work in conjunction with a check guarantee or verification product, so ISOs and MLSs can leverage existing relationships to provide their merchant customers increased services.
Compensating ISOs
RDM is in the process of rolling out a bank referral program for ISOs and MLSs. The company will pay a portion of revenue generated when an ISO brings in a partner bank or provides RDM an introduction as an RDC provider.
In addition, ISOs and MLSs can opt to be what RDC calls "true resellers." Those who go this route can private-brand RDM products or retain the RDM name.
"Our product offers the ability for the ISO to brand it as their own through our private-label options," Marino said. The choice depends on the risk agents want to assume and how involved they prefer to be in deployment and follow up.
A variety of companies including Bluepay Inc., First National Merchant Solutions, National Check Network and Global Payments Inc. have partnered with RDM to offer private-label versions of its products.
There is another option for ISOs and MLSs: They can choose to be compensated "per click." This program is hardware-based and deals with transactions individually. In this case, RDM bills agents, and agents bill merchants per transaction.
New technologies bring new revenue streams. And ISOs and MLSs who act on emerging opportunities come out on top. As the saying goes, luck is what happens when preparation meets opportunity.
Are you prepared for RDC?
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