PRICE CHOPPER TO USE CHECK IMAGING

SARAH MULHOLLAND

SCHENECTADY, N.Y. -- Following a two-store test, Price Chopper here now plans a chainwide rollout of an electronic check-conversion system that incorporates a two-color receipt printer/check- imaging device.

The chain, which operates 102 stores, installed the device, model TM-H6000II, from Epson America, Long Beach, Calif., chainwide in May, but used it initially for printing only. After a successful two-store test of the electronic check-conversion and check-imaging process over the summer, Price Chopper began to roll out the system, which is currently in six stores, according to Larry Friedman, e-check project director at Price Chopper. He said all 102 stores should have it within nine months.

In addition to capturing check information and taking a digital image of the check, the Epson device passes the information to check-processing service Certegy, Alpharetta, Ga., which channels it to the appropriate financial institution for settlement. Consumers receive their paper checks back on the spot.

Epson said the device, which is fully integrated into Price Chopper's POS system, is the first to incorporate both printing and check imaging. Price Chopper is the first chain to use the device, according to Epson.

According to the Food Marketing Institute, Washington, 51% of sales and 33% of transactions at the supermarket in 2000 were conducted via paper check, with the average retailer spending as much as $5,000 per month on handling costs. Electronic check conversion reduces these costs by eliminating the paper-handling burden.

While capturing an image of a check is not required to process it electronically -- and some say it complicates the process -- Price Chopper chose to invest in digital imaging as well. The image is stored on the store's server, making it easier to collect on administrative returns while also cutting down on fraud, Friedman said. He said 80% of his administrative returns required an image of the check for full recovery.

"If we had not gone with the imaging, we would have lost more than we could have gained," Friedman said. He anticipates a return on investment in the device in "easily less than one year," though Price Chopper stores do not process a particularly high volume of checks.

Epson said the device costs $1,498 per unit, not including infrastructure and servers to store images.

The implementation process has gone smoothly in all of Price Chopper's stores so far, Friedman said, adding that customers liked it. The electronic process shaves about 20 seconds off the average paper check transaction, he said.

In fact, the electronic process speeds up the turnaround for the entire process, including the collection of funds. "Checks used to sit in the office until they were picked up for deposit. Now, they immediately go through," Friedman explained.

While the system speeds up the availability of funds, customers still have "a few days" of float time, which has been the primary concern on the part of consumers, Friedman said. Price Chopper has stressed to consumers that this is not a direct debit transaction.

While the prevalence of check imaging within the food industry is unclear, one industry source said retailers processing checks electronically are encouraged to use imaging as additional security. According to NACHA,, Herndon, Va., 200 million checks will be cleared electronically this year, or 2.5% of all checks at retail.