POS SOFTWARE CUTS BAD-CHECK USE AT SEAWAY

DEENA AMATO-McCOY

MAUMEE, Ohio -- Seaway Food Town here is reducing exposure to bad checks without inconveniencing its best customers through data provided by a point-of-sale check authorization system.

Since implementing the software throughout its 68 stores, Seaway is reporting massive reductions in bad-check acceptance.

"The system has allowed us to eliminate a majority of bad checks," said Bill Borer, director of information systems for Seaway Food Town, indicating that the chain had reduced bad-check acceptance by more than 75%.

"We are more than pleased with the system's success," said Borer.

The system, installed chainwide more than a year ago, is comprised of software and a magnetic ink character reader installed at POS terminals to read a check's MICR data.

When a cashier accepts a customer's check, the reader instantly scans the check's MICR information for verification by a centralized database. The data are relayed back to the POS in real time via a direct link with the database, informing cashiers whether the customer is known at the store and if payment by check is viable.

By instantly alerting a cashier to accept or reject a check when it is presented for payment, the retailer is eliminating the possibility of suffering a payment loss.

"The system keeps track of customer payment patterns based on their previous shopping history with us," said Borer. "If the system catches a repeat customer who used bad checks for a [number of] consecutive visits, the cashier will be alerted at POS to ask for an alternative means of payment."

Another enhancement of this system is that Seaway can set activity limits on check transactions for different customer groups, based on their established shopping and payment patterns.

"Well-known customers are given higher activity limits, while unknown customers with poor payment histories will have lower limits," on the amounts of checks accepted at the stores, said Borer. "The system is flexible enough that it allows the limits to be changed at our discretion. This reduces our exposure to bad checks without inconveniencing our best customers."

Seaway's goal is a zero check-loss rate. "We would like to eliminate bad-check losses completely, and this system supports that," said Borer.

"With the combination of information stored in the centralized database and the real-time transfer of this data, we have a strong hold on our good customers, as well as customers not as well known to us."

In addition, Seaway also accepts electronic check transactions, eliminating the need for customers to write out a paper check.

Customers authorize Seaway to electronically withdraw funds from their checking account to pay for groceries at the time of purchase.

"Customers swipe their Seaway Plus frequent-shopper card in a card reader at point-of-sale, then enter a personal identification number that establishes their identity and allows us to withdraw their funds," Borer explained.

In addition to speeding up the checkout process, electronic check payment enables Seaway to reduce the risk of lost revenue.

"In days gone by we had to verify a customer's signature before accepting a check, and still ran the risk of accepting a bad check if it was not a customer known to us," he said. "Through electronic checks, customers swipe their Plus Card, and within 20 seconds we can verify who the customer is and tender the order."