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Yet Another Way to do Electronic Checks |
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Concord
EFS, Inc., and the Food Marketing Institute have announced their intention
to jointly promote the acceptance of pre-authorized debit cards in the
supermarket industry. As you may know, pre-authorized debit cards are
proprietary plastic cards issued by supermarkets that use the automated
clearing house (ACH) system for settlement and funds movement.
“Approximately 18 billion paper checks are
written in retail stores each year, so there’s vast untapped potential
for moving these labor-intensive payments to electronic form, providing
faster check-out and greater security to retailers and consumers alike,”
said Edward A. Labry III, Concord president. “With our large retail
customer base, broad connectivity, and new products like check conversion
and pre-authorized debit, Concord is well-positioned to take advantage of
this huge opportunity.”
One reason “ACH cards,” or pre-authorized
debit cards, are attractive to supermarkets and grocery stores is because
they can be combined with a store’s frequent shopper program, providing
the consumer with a single card for payments and store discounts and
rewards.
“We see pre-authorized debit as the next major
payment alternative on the continuum from paper checks to on-line
debit,” said Tim Hammonds, president and CEO of FMI. “As with check
conversion, pre-authorized debit uses the relatively low-cost ACH system,
while eliminating the handling of paper checks. Because it is
magnetic-striped, it will open up important merchandising opportunities,
such as loyalty marketing programs and proprietary branding for the
retailers, so that they can have important new ways to strengthen customer
relationships.”
Concord EFS’ pre-authorized debit uses a
magnetic-stripe card and requires the customer to enter a personal
identification number to complete the transaction. It is “pre-
authorized” because the customer completes an application that
authorizes ACH transactions for payment from his or her checking account.
There is no hardware conversion or systems development required by the
retailer, because the system uses the “debit” button that already
exists on the store’s POS terminal. The transaction is authorized
against a positive file, and at the end of the merchant’s business day
the transaction is sent to the ACH network for clearing and settlement.
Concord is a vertically integrated electronic
transaction processor. Concord’s primary activities include providing
credit, debit, check authorization, and electronic benefits transfer (EBT)
processing services to supermarket, petroleum, convenience store, and
other retailers; and providing gateway processing, ATM driving, and MAC®
network access to the financial services industry. Concord news releases,
links to SEC filings, and other financial information are available on its
Web site at www.concordefs.com.
Food Marketing Institute (FMI) is a non-profit
association conducting programs in research, education, industry
relations, and public affairs on behalf of its 1,500 members including
their subsidiaries—food retailers and wholesalers around the world.
FMI’s domestic member companies operate approximately 21,000 retail food
stores with a combined annual sales volume of $220 billion—more than
half of all grocery store sales in the nation. FMI’s retail membership
is composed of large multi-store chains, small regional firms, and
independent supermarkets.
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