Merchants and entrepreneurs now have another option to check guarantee services that doesn’t cost the vendor a dime. Called NSF eCollect, it is a new electronic check recovery service with an 80 percent success rate.
“Colorado Springs is a transient city,” said Daniel Rogers, Director of Strategic Alliances for Merchant Services Plus Inc. “It has a higher degree of check penetration than other cities. This is an alternative. If you’re the service provider, say, a plumber … then you have nothing to lose because you’re probably not using anything anyway.”
Typically, when a merchant deposits a check that does not clear, the bank changes a fee to the merchant and the person who bounced the check. The banks typically run the check through again within a short period of time. If it bounces again, the fees increase. This system continues this process until the bank sends it back to the merchant.
With this new system now available to UMB Ban, called NSF eCollect, users and independent business owners, all checks are sent from UMB Bank to SurePay eCollect Inc. (www.ecollectinc.com) based in Kansas City after the check bounces at the bank once. SurePay scans all checks and creates a debit against the payee’s account. SurePay then electronically sends the debit request to the payee’s bank about two days later for collection. If the money is collected, then a separate non-sufficient funds fee by SurePay is changed to the payee, typically about $25 in Colorado. SurePay keeps tabs on the payee’s account via a timing system and call center and sends the request for payment through the payee’s bank when sufficient funds exist. At that point, the merchant or entrepreneur receives the funds with no fee attached. The merchant pays the assessment fee only once (from the bank) and the payee is charged the bank’s fee as well. Use of this system can eliminate the cost of check guarantee services, typically between one and one-and-one-half percent of the check total. Due to the National Clearing House Association, business customers can re-clear checks twice electronically through the system.
This system was established for the benefit of the merchant and any commercial depositor, said Rogers. Rather than the merchant paying multiple assessment fees, it pays only one – the banks. And the hassle of dealing with a bounced check is out of the hands of the merchant. eCollect is a free service and non-UMB customers can use the service by contacting Rogers’ department.
The pay cycle to merchants, said Rogers, is every seven days, and every step is done electronically. UMB bank does not need to purchase a software program; they simply have the merchant fill out a form. Other local banks with existing proposals include People Bank, Cheyenne Mountain Bank and First National Bank of Colorado Springs.
There are approximately 25 banks across the country that use the system, said Rogers, with about 38,000 merchants signed up. Businesses typically do not collect between two percent to five percent of checks they take in. In business for two-and-one-half years, SurePay’s collection rate is about 80 percent. Banks, at best, are able to collect about 65 percent,” said Rogers. If SurePay does not collect the merchant’s money, the merchant is not charged a fee and the checks can be returned to the merchant or remain with SurePay and sent to its collection department.
UMB has been looking at the system since last December and signed a contract last May. UMB chose this service because it offered a more inclusive solution with a high success rate, said David Fuller, UMB’s director of treasury management.
UMB Bank, headquartered in Kansas City, Missouri, operates 170 banking centers in six states including Missouri, Illinois, Kansas, Colorado, Oklahoma and Nebraska. It has five banking centers in Colorado Springs with 61 employees and six additional ATM locations.
Merchants Services Plus Inc., a branch of ACH Systems, has an office in Denver with five employees and a satellite office with one employee at 1610 S. Tejon St. in Colorado Springs.