Looking for More Declines?
If you are a reader of The Nilson Report, or read Checks and Checking, you have already noted that two of the nation's largest shared regional ATM/POS systems, Star System and Pulse, have each formed a for profit subsidiary to give regional bank access to checking information.
Why is this news? Well, they will begin to provide real time access to Check Guarantee and Verification providers. In fact Pilot tests have been announced by both ETC/SCAN and TeleCheck.
SCAN will be testing Primary Payment Systems' service (This is Star Systems new for Profit venture), and TeleCheck will be testing Pulse Chek's Service.
It should be noted that while the Pulse Chek's Pilot is new, TeleCheck has been declining checks based on bank information for some time. You will find a TeleCheck Access 1 Authorization procedure sheet in the field that notes Code 47 declines are based on bank information for some time. You will find a TeleCheck Access 1 Authorization procedure sheet in the field that notes Code 47 declines are based on the fact that the Company or Check Writer has a charged-off debt reported by a financial institution
Now, what does this mean to a merchant? Industry watchers report that nearly half of all checks are not good at the time that they are written. This is of course why a Guaranteed check is better than debit, since the debit would be declined, and the approved "Guarantee" check would be appoved, and if money is still not present days later, paid by the Guarantee company.
Now under the test scenario, a check with closed account information and perhaps even in later steps, with less than the necessary balance, would be declined.
Naturally, if you are someone looking for more declines rather than more approvals, you would think that these pilot programs are a good thing for merchants. (We should also note that these particular checks might not be declined, but rather higher pricing might be triggered, based on this new information.)
However, if you think that more approvals, i.e. more sales, are the real value of Guarantee, and everything else is just a pricing issue, then you would be very pleased to see these tests, since it means more declines or higher pricing, and should therefore translate into more "Guarantee" business for those not focused in this way.
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