'm not one to be concerned with the fallout over addressing controversial subjects, so I thought it was a good time to test the decibel meter to measure the furor over this topic. I've straddled the fence when it comes to creating hard and fast rules regarding the use of imagers.

As a means of aiding in the decision, let's first look at the relatively short-term history of the imager marketplace, as well as the pricing evolution of the "traditional" MICR reader.

For those old enough to remember, the first check readers were large, bulky, had a big footprint and price tags of around $800. Naturally, they didn't sell very well. About fifteen years ago Checkmate (now Ingenico), Soricon, Welch-Allyn and MagTek first released their small readers, many of which are still in use today.

Merchants can pick up one of these older, refurbished units for approximately $50 to $75 from any one of a number of resellers; there is really no reason to not have a check reader in this day and age of expedited checkout.

It's safe to say that as time marches on, given the inherent "dog eat dog" nature of competition, imager pricing will go the way of reader pricing: down, as more manufacturers enter the playing field.

The market once dominated by RDM Corp. is today populated with models supplied by Ingenico, MagTek, and VeriFone. Epson is now marketing an integrated printer/imager compatible with PC registers, where Axiohm had been successfully marketing an integrated, non-imaging reader/printer.

TeleCheck has also marketed their proprietary Eclipse integrated imager terminal for several years now. Recently, both RDM and 4Access Communications have been trying their best to bring to market a stand-alone imager/terminal.

The icing on the cake is that franking has become commonplace in most of these units as well. As a result, we can expect to see continually declining prices, improved technology, smaller footprints, faster modems, IP connectivity, wireless connectivity and integrated keypads. Maybe an armrest, rear-view mirror or integrated DVD player will be next!

Simply stated, you will see improved form and function at reduced cost per unit. Five hundred dollars becomes $400 becomes $350 becomes $295 and so on and so on.

Let's go back to the question of image vs. non-image in a conversion environment. This is simply a matter of economics. To demonstrate this easily, if you envision a two-by-two array, you can then measure value based on comparing risk and average ticket. If you separate both risk and average ticket into subsections of 'low' and 'high,' you can then "fill in the blanks" yourself.

Do you need an image in a low risk/low average ticket merchant? You need to determine if imaging is necessary in every segment. On the other hand, you only have to collect an additional $10 per month over 48 months to pay for an imager.

Do you need an image in high risk/high average ticket merchant locations? Collecting a service charge on 50% of all the return items means a 100% collection rate on half the items.

It only takes one large uncollected check to contradict the theory that imaging has no place in today's menu of hardware alternatives.

Low risk, high-ticket industry segments can escape the additional imaging cost, despite the relatively small price difference between a new "traditional" MICR reader and a new imager. In today's environment, we are looking at a spread of roughly $200.

Over 48 months (if leased) we're not looking at a very substantial number, and it seems almost foolhardy to pass on the advantages of having an imager on premises. For the already installed base of non-imaging MICR readers, the risk reward described earlier should dictate the eventual hardware selection.

In the absence of an image what are you left with? If the merchant is sold verification (not guarantee), then it makes little difference to the check companies if an imager is used. What the heck ... the lack of an image and subsequent reduction in collection income becomes the merchant's problem!

Capturing a phone number in a check transaction is not an option most check companies have offered. This eliminates the ability to use online reverse/crisscross phone directories to help in the collection process.

Capturing phone numbers in a terminal program results in substantial operating leverage and positive file cross-referencing capabilities.

Conducting secondary and tertiary risk analysis on unlisted numbers requires additional database searches that can sometimes be costly per item as well as chew up valuable point-of-sale time (even if for only a second).

While there may be no magic formula for determining if an imager is necessary, it is safe to say that the likelihood of greater collections will always be on the side of the merchant with an imager.

Where the average ticket is greater than $30 to $40, I would always recommend the imager because the long-term benefit outweighs the incremental monthly lease cost.

If the reader is already installed, the yield is simply the benefit as measured against the cost of the imager spread over the life of the lease (or its useful life if less than the lease term). If the lease is not marked up by an egregious amount, the expense should turn out to be around $10 per month, again, well worth the investment from my perspective (Over the last 25 years, I've dealt with risk on hundreds of billions of dollars in guarantee authorizations and with hundreds of millions of dollars in bounced checks).

The additional advantages that imaging offers, like providing a signed customer receipt and the ability to cross-reference that secondary image to the primary check image, creates a compelling argument for eliminating the merchant retrieval requests on "not authorized" bank returns.

So, to image or not to image? The hands-down answer is 'yes.' If I want to maximize the collection rate, earn a reasonable return and ultimately minimize the merchant's discount rate, I would image on 80% of the merchants our sales agents bring to us.

If you decide to include alternative uses of imagers at the point of sale, such as those for non-check related transactions, then the decision becomes even easier.

Lin Fellerman is founder, President and CEO of San Diego-based Secure Payment Systems, a national provider of electronic check and gift card processing services. Prior to founding SPS in 1996, Lin was formerly a 20-year employee and 10-year President of Telecredit/Equifax Check Services (now Certegy Check Services).

To learn more about SPS visit www.securepaymentsystems.com, or you can send an e-mail to Lin at lfellerman@securepaymentsystems.com .