n 2002, a total of 8.94 billion payments worth more than $24.4 trillion were processed through the ACH network. As more merchants and their customers transition from paper checks to electronic payments, the companies that provide them with ACH services, according to NACHA, are poised for growth.

National Cash Flow Systems (NCFS), a provider of electronic payment processing services to merchants, specializes in automated payment technology-technology that the banking, insurance and health club industries have been using for more than 30 years to process their monthly payments and accounts receivable.

But NCFS also offers payment services such as ACH/EFT, credit cards, NSF check recovery, ARC/back office electronic check conversion, Internet check, telephone check and call center capabilities.

"We consider ourselves a one-stop shop for payment processing," said Mark Allyn, CEO and co-founder of NCFS.

The company was founded in 1997, and started out offering only one payment service, which was automated payment. "We offered this through what I would call the 'antiquated' paper draft system," he said. "But we realized early on that to stay competitive, we should provide a range of different automated payment services." Since then, NCFS has been growing rapidly. For the past five consecutive years, NCFS has realized a 40% annual growth rate, according to Allyn. In 2002, the company acquired PayTech Solutions, which specialized in ACH payments. PayTech's CEO, Thomas Stafslien, is now the President of NCFS. Stafslien earned an AAP certification from NACHA in 2003.

"The two industries that started the need for automated payments are the health club industry and the insurance industry," Allyn said. "Health clubs are a prime example-because they are a pure recurring payment. Customers sign up, give a voided check and every month a payment is deducted from their checking account. They are now one of the strongest industries in the marketplace."

Health clubs are just one example of the kinds of businesses that depend on recurring payments. NCFS works with merchants of all types and sizes. In addition to health clubs and gyms, it has clients in the medical/dental, Internet-based, telecommunications, public utilities, stored value, non-profit and debt consolidation industries.

"Any company that wants to collect their receivables electronically and reliably is a prospect for our services," Allyn said.

NCFS positions itself as a 'broker' of payment processing services, meaning that the company seeks out and finds its customers the best fit for their processing needs-meaning price, underwriting, transaction costs and the right type of service for them.

"We're one of the first payment companies to position ourselves as a broker," he said.

Allyn said NCFS is continually seeking 'best of breed' payment solutions and the latest services for merchants of all sizes and in all industries. The company does its own processing, but also has formed strategic alliances with multiple processors offering the best processing services at cost effective rates.

For example, for a health club, usually considered a low risk merchant, NCFS would research a few different processors to determine which one offers the most cost effective rate for that merchant.

But for a pre-paid phone card merchant, which is considered higher risk, NCFS would seek out a processor that typically works with high-risk customers, ultimately giving them the best pricing and the most efficient underwriting requirements.

Allyn compared this service for ACH and payment processing to what Geico Direct does for car insurance: shops around for the best deals for their customers. "We do the same thing. We will take merchants' information and based on it, we are able to determine from our processors with whom they should be placed."

In addition to automated recurring payments, some of NCFS' electronic payment processing products and services include ACH Checks By Phone, where a merchant can accept customers' checks over the phone and fax or by e-mail. The process uses bank routing and account numbers, which are printed at the bottom of every check. This information gets entered into NCFS' software and then is transmitted via the Federal Reserve's Automated Clearing House (ACH) network.

NCFS' Virtual Terminal solution, or payment gateway, is used for obtaining authorizations, settlement and/or funding and provides transaction reporting via the Internet. Electronic debits/credits from either a checking or savings account, electronic credits to both checking or savings accounts, credit cards and check services can be processed-and in several different ways-including real-time, batch mode and recurring (weekly, bi-monthly, monthly, quarterly).

The company's e-Recovery solution allows merchants to recover non-sufficient funds (NSF) checks without having to deal with their customers directly in potentially awkward situations. "We take that out of their hands so they don't have to worry about ill will or bad customer service, especially if they are dealing with people that they've had very long-standing relationships with," Allyn said.

"When the returned check comes in, we work with the merchant's bank and turn it into an electronic transaction. We automatically resubmit and attempt collection on those funds, and when we've received the funds through our service, we give the merchant the full amount of the check back, plus part of our collection fee."

Allyn said NCFS' e-Recovery system is a zero-cost service to merchants. There are no statement fees, no annual fees or equipment or setup fees. The RCK system pays them a portion of the fees it collects. When the funds are settled, merchants receive 100% face value of the check plus a percentage of the processing fee, paid on collected and released funds.

"NCFS' electronic payment product and service offerings are targeted toward improving a company's bottom line," Allyn said. "Expanding electronic payment options substantially increases sales, and converting customers from credit card to ACH electronic check payments substantially cuts payment-processing costs."

"We improve the amount of time it takes for merchants to get their money, because the time value of money is really important," he said.

"A lot of companies would improve their bottom line if they knew what was coming in.

"For instance, if I knew that I had 1,000 payments coming in at one time as opposed to being scattered throughout the month, I could set budgets, I could set advertising limits, I could explore new product offerings."

NCFS provides telephone support to its merchants from 6 a.m. to 7 p.m. In addition, the company has a 24-hour number customers can call.

"We have e-mail as well," Allyn said. "We will respond no later than within 24 hours maximum. Customers have access to leave us their messages 24 hours a day."

In terms of selling its solution, NCFS does a little bit of inside sales, but the majority of the company's sales are made through its ISO/MLS network.

"They are very quick in underwriting, and they do a great job as far as servicing the client," said Ed Cornia, CEO of Electronic Bank Data, an ISO based in Salt Lake City. Cornia said his company sells NCFS' services to merchants ranging from karate studios to dental and medical offices.

NCFS uses buy rates, provides ongoing recurring revenue sharing and residual income. It also gives its ISO/MLS partners a detailed breakdown of each of their individual customers' performance on a monthly basis. ISOs/MLSs will then be paid based on their customers' volume in a timely manner.

The company provides on-site training, and the Document Central page of its Web site offers applications, manuals and marketing materials available to be downloaded. NCFS is also working on making available software, demos and video tutorials for its sales partners.

"We will go to a credit card organization and train their sales people so they have the best tools possible to sell our product," Allyn said.

"If they aren't trained on it, they are not going to be effective; they aren't going to make money, and we aren't going to make money.

"Everybody that sells our products can get ahold of myself or one of the other principals of the company 24 hours a day," Allyn said. "They can call us anytime. We want them to be successful-that's our primary focus."