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Veritably valuable added services

By Dee Karawadra ment. It delivers a streamlined check-acceptance
Impact PaySystem LLC program for merchants. The program requires that
the customer writing the check sign a printed receipt
authorizing the electronic transaction.
Editor's note: The following is excerpted from Dee Karawadra's Street
Smarts column published in The Green Sheet June 25, 2007, issue A copy is given to the customer (just like a credit
SM
07:06:02. It was a time when value-added products and services were card or ATM receipt). And the individual's bank
typically ancillary to payment processing. Today, technology is enabling statement subsequently displays the merchant name,
merchant level salespeople to offer additional, powerful business man- amount of the transaction and settlement date. ECT
agement services; some have become more central to the sales equa- transactions are authorized and settled similarly to
tion than payment processing. To read the full article, please visit http:// credit card transactions.
www.greensheet.com/emagazine.php?story_id=153&search_ • Check guarantee: Check guarantee is done right at
string=. the POS. The salesclerk simply enters the customer's
alue-added products are getting more atten- information into the POS terminal or cash register.
tion as the credit card processing market Within seconds, the processor authorizes (or denies)
approaches saturation. They enhance a port- the check from its database. This quick process helps
V folio's worth considerably, bring more flavor prevent merchants from losing customers whose
to the product-offering table and provide an additional checks are approved or from delaying them at the
source of revenue to ISOs and merchant level salespeople POS. The processor basically purchases the check
(MLSs). for its full amount. If it does not clear, the proces-
sor will do the running around to collect the funds.
Additional obvious benefits to agents who offer these Merchants gain guaranteed payment after approval
products include lower merchant attrition and increased per guidelines and can us it in conjunction with ECT
margins due to packaged pricing. There is a wide selection or verification.
available of value-added products and services, which are • Recurring payments: This service enables mer-
also known as value-added reseller (VAR) products. chants to process customer payments by automati-
cally initiating a charge to their checking account or
I have picked some of the more popular ones to discuss credit card each time a payment is due. This allows
in this article. In order to sell these, MLSs need to have merchants to control the timing of customer pay-
a fundamental knowledge of the benefits the products ments. It also enables them to schedule payments in
bring to merchants. advance, according to their cash-flow needs.
Check services ATM services

Check service offerings have existed for a long time, but Many may not consider the ATM arena to be value-added,
those who are new to the payments industry may need an but it definitely is. The market for this involves fewer
explanation to better understand this product. There are merchants, primarily bars, hotels and convenience stores.
several different aspects to check services: Residual revenue comes from two avenues: 1) the surcharge
• Check verification: This service compares informa- added to each transaction by the merchant – usually $1.50
tion on checks that merchants receive at the POS to $ 3; and 2) revenue from the debit networks. Residuals
against a central database, which verifies that there are usually paid to the processor, which passes them on to
is no negative information pertaining to the accounts the ISO after deducting the cost of the transactions.
concerned.
• Electronic check transfer: The electronic check ATMs may be placed at merchant locations in several
ways. Merchants can buy or lease them, refill the money, as
transfer (ECT) program converts paper checks into needed, and keep 100 percent of the surcharge. Merchants
electronic items at the POS. The electronic item is can also own ATMs but have an ATM service company
then processed through the automated clearing refill the money. In this case, the surcharge revenue is
house. Funds are automatically deposited into the usually split.
merchant's bank account, which cuts paperwork and
improves cash flow. Another common option is for ISOs or MLSs to own ATMs
ECT combines the benefits of paper checks with the for which merchants refill money, as needed. Surcharge
speed, safety and ease of electronic money move- revenue is generally split in this type of arrangement.

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