Nashville, TN, February 17, 2012  – Clear Payments, Inc.  (“CPI®”) and Chexar Networks, Inc. (“CHEXAR®”) have developed a comprehensive integrated solution for the seamless processing and clearing of check-to-card remote deposits called Deposit Choice. The new platform enables mobile and remote deposit application providers and their bank, retailer, check casher, and prepaid clients to offer the consumer a choice between loading or depositing a check with delayed provisional availability or with immediate irreversible availability of good funds in a single integrated back end settlement solution.

The new solution has been developed in response to rapid market adoption of reload-able prepaid cards and bank accounts and the resulting mobile banking applications supporting these account products.    One of the hottest trends in this arena is the move to add functionality to offer the remote deposit capture of checks.  Enabling this consumer to snap a picture of any check and deposit it into their account or load it onto a prepaid card using their smartphone is considered by many to be the biggest game changing feature of the prepaid industry.

Drew Edwards, Chexar Founder and CEO explained that “there are many providers of remote deposit capture technologies to enable the capture and deposit of checks from smartphones in the traditional sense where funds are provisionally made available and often with a delay of several days. Lately, Chexar has been covered up with these providers seeking to access our Good Funds NetworkTM to provide for immediate and irreversible funds availability to the underbanked consumer.”

Randy Simoneaux, CPI Founder and Chairman added that “the Deposit Choice solution is a joint and integrated offering with our partners at Chexar to enable the players in the remote deposit capture space to offer their consumer a choice of deposit options at the time of the transaction for two different price points, but with a single back end processing and settlement solution integrated with Chexar’s Good Funds Network.”

Edwards went on to say “CPI has been our partner in the processing and settlement of network transactions for a long time and we turned to them to build this product for the marketplace. Deposit Choice is being made available to all remote deposit capture players in the industry as a back end processing and settlement solution to support their client facing models.”

Richard Pinson, CEO of CPI added that “we are delivering a turnkey dual deposit, dual settlement and returns management API that helps standardize a client’s entire capture network. Because of the compelling cost and efficiency advantages, we anticipate significant early adoption and Deposit Choice becoming an industry standard interface.”

KPMG estimates that there are more than 88 million consumers in the nation considered underbanked, meaning they do not fully utilize traditional banking services, but rather rely upon alternative services such as check cashing and prepaid products. Banks, retailers, alternative financial services providers and consumer companies are rapidly launching product offerings targeting the financial needs of these valuable consumers.

About Clear Payments, Inc.

CPI® is an innovative remote deposit and payments technology company. We specialize in select vertical markets with an emphasis on underserved financial service organizations, prepaid companies, software integrators, large corporate clients and financial institutions. A 100% commitment to these segments has provided CPI a unique opportunity to build proprietary check management applications with segment targeted features and functionality. Consistent performance, proven technology and time tested solutions have allowed the company to grow an impressive list of clients. An emphasis on the underserved check cashing industry has helped CPI develop and lead in the areas of check cashing integration and feature functionality used to support the largest portfolio of underserved clients in the US. For more information, please visit our website www.clearpaymentsinc.com or contact Allison Jones, (615) 656-2510, allison.jones@clearpaymentsinc.com.

About Chexar

CHEXAR® is the national leader for technology and solutions that enable clients to cash, deposit or load any check with immediate funds availability. Chexar’s solutions provide clients with the ability to truly serve the nation’s under-banked population now estimated to be almost 100 million people. The gating factor for these consumers is their need to change all types of checks into cash or value before they can acquire other services including bill pay, money transfers, or prepaid cards.

Chexar’s solutions enable any business to convert ANY type and ANY size of check to cash or to immediate credit onto Prepaid Cards or as fee-based deposits into bank accounts and to mitigate the risk of duplicate deposits on all check transactions.  The company’s one-of-a-kind solutions combine multiple national databases, rules engines, and proprietary technology with redundant 24/7 risk management centers to achieve the industry’s highest automated and overall approval rates on any check.  Chexar’s solutions are deployed across multiple platforms including turnkey point of sale solutions, assisted and self-service kiosk solutions, mobile devices, and full XML integrations.  For more information, please visit www.chexar.com.

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Chexar reaching underbanked customers

Atlanta Business Chronicle by Doug DeLoach, Contributing Writer

Date: Friday, February 10, 2012, 6:00am EST

Doubling up: Drew Edwards, president and CEO of Roswell-based Chexar Networks Inc., expects to more than double his workforce to 250 employees by the end of the year.

It can be difficult sometimes identifying which came first, the development of a technology that fits a niche or the development of a niche for which a particular technology happens to fit.

Regardless of which scenario better fits the reality, Atlanta-based Chexar Networks Inc. is poised to capitalize on its innovative solutions and service model, which enable banks, prepaid providers, and other clients to serve the nation’s underbanked and unbanked population.

“Historically, the unbanked and underbanked have paid enormous fees for access to traditional banking services,” said Joe Brannen, president and CEO of the Georgia Bankers Association.

The FDIC defines underbanked consumers as individuals who have a checking or savings account but also rely on alternative financial services, such as money orders, check cashing, payday loans, rent-to-own agreements, and pawnshops.

Unbanked refers to individuals who do not currently have a checking or savings account.

Chexar was developed under the auspices of El Banco de Nuestra Comunidad, which was founded in 2001 by company founder and CEO Drew Edwards and partners to serve the Hispanic community.

The Chexar platform enabled El Banco to combine traditional retail banking, including FDIC-insured deposit products and innovative credit products, with nontraditional services such as check cashing services for non-depositors.

“Serving that segment was not a sexy concept back then, but it’s hot now,” Edwards said.

Chexar was designed to “handle the whole wallet,” which means converting not only standard paychecks, but also the myriad checks customers submit from government agencies, insurance companies and second parties.

The converted “good funds” are immediately available to acquire prepaid services, such as topping off a phone card, sending money to family members via Western Union, or using walk-up bill-pay services.

“Chexar has cracked the code in a way that enables banks and other businesses that do business with them to help people get good funds immediately,” Brannen said.

In November 2011, the Center for Financial Services Innovation (CFSI) and Core Innovation Capital released a report stating that underbanked consumers in the United States generated approximately $45 billion in fee and interest revenue for financial services providers in 2010.

The total dollar volume of the underbanked marketplace in 2010 was approximately $455 billion in principal borrowed, dollars transacted and deposits held.

“The need has been around for a long time and Chexar has been around for a long time, which makes Chexar incredibly well-positioned to meet the need,” said Kimberly Garner, vice president of advisory services at CFSI.

In January Chexar began operating a new data and service center in Cordele.

Chexar’s plans include a commitment to adding a total of 500 jobs over the next five years at two facilities in the area.

The Georgia Department of Economic Development (GDEcD) partnered with the Crisp County Industrial Development Council to manage the nearly $2 million expansion project, which was made possible in part by more than $11 million in cash, tax and other incentives. The Cordele facilities join other Chexar operations in Roswell and Atlanta.

“Looking at our growth numbers, we shouldn’t have any problem hiring those 500 people and we have every reason to think we will exceed that number,” Edwards said.

Although Edwards would not discuss specific revenue figures, privately held Chexar has been growing.

“Last year, we shifted toward the bank market, which makes the growth numbers look flat over the [2010-11] period,” Edwards said. “That said, last year, we added 2,000 bank branches [to the list of customers] and that growth alone will result in a nearly 200 percent increase in revenue in 2012.”

In December 2007, Chexar sold its branch banking assets to pursue development of the company’s core technology. Today, Chexar operates as a “bank processor and risk management company.”

Among its customers is El Banco, which serves the Hispanic community as a division of Community and Southern Bank.

“Any check, any size, any ID, two-party checks, handwritten checks — we cash 12 different types of checks and Chexar is the only platform that can do it all, and our losses have been minimal,” said Luz L. Urrutia, director of El Banco de Nuestra Comunidad who was managing director for global services with Wachovia, where she worked for 18 years in various positions.

Chexar currently has 5,000 locations around the country including approximately 1,650 Regions Bank branches. The Chexar platform is operating in retail locations, self-service kiosks and on mobile phones.

In January, the company announced the release of Dupex, a patent-pending duplicate check risk management database. Using Dupex, a bank teller can “ping” the database in real time to determine whether a check has already been deposited using the Chexar “picture capture” mobile feature.

“You don’t stop fraud; you contain it — and that’s why the consumer pays for the service, because there is real risk involved,” Edwards said.

In the future, traditional paper checks are almost certainly destined to become discarded relics of a past generation — an eventuality which does not overly concern Chexar’s CEO.

“Someday, checks may disappear altogether, but last year, checks made out to consumers totaled a little more than 8 billion and they are expected to decline to around 7.2 billion by 2016,” Edwards said. “For the underbanked population, that process will move even slower.”

In striving to address a niche market, Edwards and Chexar are changing the way check cashing shops, banks and other financial enterprises conduct business while simultaneously opening up the mainstream banking world to a relatively untapped market.

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Regions Financial Corp., the biggest bank in the Nashville market, has started TV and print advertising in Middle Tennessee aimed at capturing a share of business from customers who don’t keep checking or savings accounts.

“Banks are having trouble meeting their growth targets, so under-banked households are becoming the new focus,” said Greg McBride, a financial analyst at Bankrate.com. “There’s a recognition that not everyone will transition into a bank customer. But this is the year banks will try to make non-customers profitable.”

Buffeted by new regulations and weak loan demand, Regions is among banks that have begun to offer a platter of new services focused on people without longstanding banking relationships.

These “under-banked” or “unbanked” customers — as the financial industry calls them — can now cash third-party checks, buy reloadable credit cards and make fast bill payments through Western Union.

At Regions, such products come with fees that the banks touts as modest or well below rates charged by payday lenders and other stores that cater to clients without bank accounts.

Customers can cash checks with a fee of 1 percent to 3 percent, and cash money orders with a 5 percent fee, Regions’ ads say. Bill-paying starts at $5 a transfer. Prepaid cards have a $5 monthly fee.

It amounts to the latest in what analysts are calling the industry’s quest for new revenue streams as loan demand remains sluggish and quarterly profits are less than stellar.

The Birmingham, Ala.-based bank started the new services — under the name Now Banking — about six months ago in select markets. It began running print and television advertisements for the program this month in Middle Tennessee, where all 65 local branches are participating.

“If you’re in this industry and not looking for ways to expand your customer base right now, you’re missing the boat,” said Jim Schmitz, the bank’s regional president, adding that the programs are a response to improved anti-fraud processing technology and consumer demand.

$602 million loss

Regions on Tuesday reported a fourth-quarter loss of $602 million, compared a net profit of $36 million a year earlier.

The bank has been surveying customers to maintain ties with them, while seeking unique ways to make money.

Regions last spring began offering direct-deposit loans in which customers borrow against their next directly deposited paycheck. Credit analysts called the program “payday loans disguised with a different name,” while the bank contends it is a response to customer needs.

Shortly after introducing a $4-a-month fee for debit card purchases, Regions and a slate of other banks, abandoned plans to institute monthly fees, reacting to customers who mobilized to close their accounts and take their business elsewhere.

According to a Regions internal report, nearly 30 percent of customers polled said they already use at least one type of “under-served banking services,” such as bill pay, money orders and payday loans.

Regions says its fees are around one-third of those charged by liquor stores, payday lenders and pawnshops.

If Regions’ new products yield significant profits in the coming quarters, McBride thinks other banks will take notice. Much it boils down to whether the so-called under-banked population, mostly low-income and minority customers, will switch its banking habits.

“The banks, particularly the large banks, have a ton of scale, so they can compete with prices,” McBride said, “and as more large and regional banks get into these services, they will be watching to see how customers respond.”

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I love December.  Christmas.  Good tidings to you and all of your friends.  And, for the second year in a row, the Consumer Desperation Index falls.  It does my heart good to see less fraud going on, as far a check cashing goes, during the holidays. Perhaps it has to do with the typical uptick in consumer spending and therefore jobs for people who want to work.  Or maybe it is just the Christmas spirit?

This month, I’d like to take a different tack on Desperation.  We typically speak about the people so desperate for money that they commit a crime.  There is a different kind of desperation that the unbanked feel and that is finding a place to respect their financial transactions.  They are hardworking people who get their one or two paychecks a month and pick up a job on the side.  They have their places to go to cash those checks. Wal-Mart, the local gas station or maybe the liquor store.  Then, suddenly, their aunt dies and leaves them $17,000.  Now what?

You might say, “Go to a bank and open a bank account”.  Well, what if their financial situation doesn’t let them pass muster with the bank?  You and I may not understand this, but it is a common issue.

You might say, “Go to a bank and cash it”.  Sorry.  Unless there is a local branch for the bank that the check is written on, this is also not an option.  Banks will require a wait time, which requires an account, which says we are back to square one.

That is why I love what we are doing at Chexar, because we’ve built a system to handle any check, any size.  We enable a Chexar-supported location to be that everyday financial services center for those people desperate to be respected in their financial needs.

We recently had a customer visit one of our clients with a check for over $200,000.  It was a settlement check from the state.  He had been wrongly jailed and served his sentence, passing over parole opportunities because as part of getting parole, he would have had to admit guilt.  After getting out, he successfully sued the state for wrongful imprisonment.  It took years.  But he had already given years in prison.  The day he got his check, he wanted to celebrate.  He wasn’t as concerned about the money as he was the justice, and he was going to buy a car that day for his mom.

Of course, anywhere he went, a bank wanted a five day hold.  He knew Wal-Mart wasn’t handling that $200,000 check.  Instead he found a Chexar-supported location.  We did the due diligence, approved the check, and he was able to deliver the victory gift that day, the day of his settlement proving him right.  Did he pay a fee to cash the check?  Yes, a big one.  He knew the fee.  He accepted the fee, and he was pleased as punch that he found a place willing to handle his financial matters.

The gentleman ended up depositing most of the check into a newly created bank account at our Chexar client.  The Chexar client had serviced the customer AND created a new banking relationship.

We love helping desperate honest people.

The “Consumer Desperation Index

Each month, Chexar validates hundreds of thousands of check transactions across the country. A certain percentage of these are stopped because Chexar has deemed them as “DO NOT CASH” transactions. This means Chexar risk specialists have discovered that the check is fraudulent, the account is closed, there are non-sufficient funds, or the activity in the maker’s account is suspicious. By comparing the percentage in the current month to the percentage in March of 2010, an index is created, with March 2010 as a baseline at 100.We have named it the “Consumer Desperation Index” because consumers have to be really desperate to resort to check fraud. In most cases, the check conversion location has their picture, a copy of their ID, their signature, and often a fingerprint. They are just hoping they chose a retail location that doesn’t know how to control fraud. Ultimately these culprits will be locked out of the financial system by way of their negative record with Chexar.

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They are 30 million consumers, representing a quarter of U.S. households, who earn a collective $1.3 trillion a year. But banks don’t want to serve them, because they lose money. And the nonfinancial institutions who do serve them may not be offering them much value in the long term.

Welcome to the world of the unbanked and underbanked, who in a weird twist may have fewer banking options after Congress passed legislation aimed at protecting them from high bank fees. So who will serve these consumers, who either use no mainstream financial services or have a checking or savings account but also utilize nonbank financial services such as check cashers, payday lenders, and pawnbrokers? A huge opportunity awaits someone.

In the good old days, banks would have stepped in. They received substantial revenue from interchange and overdraft fees, which essentially subsidized checking and savings accounts. But financial reform passed by Congress in 2010 brought the so-called Durbin amendment, which slashed banks’ profits on debit card transactions, and Regulation E, which severely limited the overdraft fees that banks could charge.

In response, many banks have instigated high fees that effectively discourage low-income customers from opening (or keeping) accounts. It’s not by accident. To get a sense of why banks aren’t terribly interested in serving low-income customers, take a look at the following example. Imagine it’s 2007, pre-crisis and pre-regulation.

Let’s assume each deposit account costs the bank $250 a year to maintain regardless of the balance of the account. Adam deposits $10,000 into his bank account, while Brenda deposits $100. The bank loans out that money at 7 percent interest, making $700 off Adam and $7 off Brenda. They pay each customer an interest rate of 1 percent, meaning that Adam earns $100 in interest, and Brenda earns $1. But since each account costs the bank $250 to maintain, the bank makes $350 off Adam and loses $244 on Brenda.

Although Brenda’s deposit earns less in interest than it costs to maintain, the bank also makes money every time she swipes her debit card and every time she incurs an overdraft fee. The latter was particularly lucrative for banks, particularly because low-income customers, who tend to have lower balances, are disproportionately more likely to incur overdraft fees. Ten such charges a year would cover the cost of her checking account, even without revenue from debit card transactions.

Today, that equation looks much different: The bank now lends at 5 percent interest, and pays out 0.1 percent on deposits. Adam’s account earns the bank $500, while he only receives $10 in interest; Brenda’s garners only $5, and she earns 10 cents in interest. On balance, Adam’s account is still profitable for the bank: it nets $245. The bank now loses $245.10 on Brenda’s account, and can no longer count on swipe or overdraft fees to make up the difference. There’s no incentive to hold onto a large number of low-income accountholders. Quite the opposite.

Big Retailers Fill the Void

By contrast, some big retailers are offering financial services that actively court low-income people. Stores like Walmart and Best Buy can take advantage of economies of scale, as well as boost in-store sales if they offer financial services to shoppers. Beyond this, Walmart doesn’t offer deposit accounts, so it doesn’t have to worry about the cost of maintaining them, or about paying interest to accountholders. Instead, Walmart makes a profit by charging fees to cash checks or buy prepaid debit cards.

While these onetime fees are more appealing to some people than the ongoing and often hidden fees associated with many big banks, it’s questionable whether financial services offered at retailers are actually a bargain. Wal-Mart, for example, charges $3 to cash a check between $300 and $1,000, and levies a host of fees on the prepaid Walmart MoneyCard. Compared with the average 2 percent to 4 percent charged at most street-corner check cashers, Walmart is generally cheaper. But if you cashed two $500 checks, used an automated teller machine (ATM) twice, and reloaded your prepaid card once, you’d incur $16 in fees — far more than mainstream checking accounts.

Even more worrying, however, is the indirect harm of remaining unbanked: Those without access to mainstream financial services are far less likely to save for retirement, college, or emergencies. Bank accounts are more secure than relying on cash. Directly depositing part of your paycheck into a savings account helps you adhere to your budget. The unbanked, however, do not receive these incentives or safeguards.

What about Credit Unions?

Unlike either banks or retailers, credit unions are not-for-profit. They’re member-owned, and pay their “shareholders” in the form of lower interest rates and higher yields. In addition, most credit unions have less than $10 billion in assets, and so are exempt from the Durbin amendment. Oddly enough, checking account costs can be 50 percent lower for small institutions. Larger banks face high overhead costs from bank branches, ATMs, and so on, while credit unions and community banks can outsource call centers, payment processing, and ATM networks.

But while credit unions aren’t put off by low-income members, they may not be as highly motivated to recruit this population as chain retailers that stand to make a profit. This may in part explain the low profile that credit unions tend to have as compared with their for-profit counterparts.

Given the low fees of credit unions, why do so many people seem to prefer less conventional options to fulfill their financial needs, and why are they content to live without checking or savings accounts? There are several possible explanations. For one thing, the term credit union is still only vaguely familiar to many people. People may not be clear about what services credit unions offer, and they’re often unaware that credit unions are not-for-profit institutions, where profits are funneled back to members in the form of lower fees and better interest rates.

In addition, so many people have had bad experiences with unexpected fees at banks that some feel they are better off avoiding financial institutions altogether. Paying a fee at Walmart to cash a check is a one-time deal: You know exactly how much you’ll have to pay, and there won’t be any surprise fees down the road.

Serving the Underserved

This “‘underserved’ market is considered one of the fastest growing segments in the United States and represents significant potential for banks willing to develop new products and services,” a 2011 study by the consulting firm KPMG concluded. Altogether, the unbanked and underbanked have around $1.3 trillion in income, and spend $5 billion each year paying off predatory loans. A 2009 survey by the Federal Deposit Insurance Corp. found that some 9 billion households were unbanked and another 21 million were underbanked. Nearly a third of African-American households and a quarter of Hispanic households were underbanked.

The KPMG study highlights a number of services that may be important for banks to offer as the number of unbanked and underbanked people rises. For instance, check cashing and bill-pay for noncustomers, as well as international money transfers, are services in demand among these groups. The study found that the number of unbanked and underbanked people is growing as a result of falling credit scores caused by “negative events” in their personal lives that are often linked to the downturn in the economy. Sudden unemployment , for example, can cause a previously banked individual to be forced to leave his or her financial institution.

As the ranks of unbanked and underbanked Americans continue to swell and big banks avoid serving them, big retailers stand to make a profit by finding cost-effective ways to offer financial services to the underserved. In an ironic twist, stores like Walmart have an advantage in many consumers’ eyes because they aren’t affiliated with a mainstream financial institution. In the end, the task will continue to fall to credit unions, big banks, and big retailers to make their case to the unbanked and underbanked and provide services that truly meet the needs and financial limitations of these groups.

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J. Scott Trubey – Staff, Atlanta Journal Constitution

Regions Bank, the sixth-largest bank in metro Atlanta, is pursuing revenue from services long ceded to Walmart and the so-called shadow banking industry.

More than 60 million adults in the U.S. either don’t use traditional banks or, if they have checking or savings accounts, still choose non-bank check cashers, money orders and payday lenders for their financial needs.

Birmingham-based Regions Financial, parent of Regions Bank, is offering an alternative to the alternative — services it says are cheaper and broader than those even provided by Walmart, which has crowded into the financial system.

For months, Regions has been rolling out “Now Banking,” a cache of fee-based, check-cashing services, Western Union money orders, bill-payment options and reloadable debit cards catering to Regions customers and those who don’t use the bank.

If successful, other traditional banking institutions won’t be far behind in offering these basic services, which could open up a growth market for them and bring people into the financial mainstream.

“That’s a huge segment when the industry is grappling for revenue,” said Greg McBride, senior economist with Bankrate.com. “You can’t afford to ignore 25 percent of the marketplace.”

Regions’ products are as much as 50 percent cheaper than those offered by other check-cashing services and payday lenders, said John Owen, senior vice president of consumer banking for Regions.

“We look at it as an on-ramp to other services,” Owen said. Ten percent of Now Banking users have opened Regions banking accounts since the program began last summer, he said.

Most of Regions’ 1,727 branches currently offer the new services, and Regions will begin marketing Now Banking in January. Regions had 73 branches in metro Atlanta as of June, according to the Federal Deposit Insurance Corp.

Banks, however, will have a challenge convincing unbanked consumers to change providers, said T. Stephen Johnson, an Atlanta-based bank consultant. Walmart stores, for instance, still have a traditional Friday payday rush that banks used to have before the advent of direct deposit.

“If it works, it will be copied [by other banks], I can assure you,” Johnson said.

In Georgia, nearly 1.2 million households, or about 32 percent, are considered unbanked or “underbanked,” compared to 25 percent nationwide, according to a 2009 report from the FDIC.

Those “underbanked” typically have a basic bank account but aren’t fully engaged in the financial mainstream; among them are low- to mid-income people, minorities and immigrants.

Engaging these people in traditional banking services will help them obtain affordable credit and save money, the FDIC report said.

Banks have had to become creative because they aren’t earning as much on loans, with many still trying to clean up bad loans made during the run-up to the recession.

Recent regulatory changes have curbed fees that banks can charge for overdrafts and fees charged to merchants when consumers make debit-card purchases.

In response, Regions and several other major banks, including Atlanta’s SunTrust, tried to initiate monthly fees on consumer debit-card use, but the banks retreated amid a consumer revolt.

Wells Fargo has long had a sizable money-order business, and other banks are looking for ways to provide basic, fee-based banking services, McBride said.

The fast-growing prepaid debit card market, in particular, could be lucrative. The regulatory changes don’t limit fees charged to merchants to process prepaid debit cards, McBride said.

Banks also want to sell more products to customers, making it more difficult for them to leave.

Surveys of Regions customers found 30 percent used money orders, check-cashing services and payday lenders.

Once enrolled, Regions will cash government and payroll checks, plus personal checks and money orders. Reloadable debit cards cost $4 with a $5 monthly fee that can be waived with a $500 minimum direct deposit. There are no overdraft fees.

Fees are charged to load the cards through tellers and by phone, but use of Regions ATMs is free and cash on the cards is FDIC-insured.

Now Banking and other initiatives could help Regions counter the $170 million in expected annual revenue lost from the regulatory changes.

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This trend is not good.  This is the first time in seven months that the index was HIGHER than last year at the same time.  The constant creep up is somewhat foreboding.  As we all wonder what direction the economy is going, this index that measures the level of fraud activity in the marketplace doesn’t provide a rosy future forecast.

The increase in fraud has occurred predominantly with stolen ABA and Account numbers printed onto fake checks.  In desperate times, these items are sometimes used as currency among those who have decided to put their morality on the back burner.  One outfit, who has stolen an ABA and account number, print the fake checks and find people to put their reputations and potential jail time on the line to grab a few hundred dollars.

Here is an easy example to catch.  In all examples the “naughty” check is first, followed by the real “nice” check.  I have masked all potentially confidential information with grey boxes, and removed the MICR line.

In the case above, it is simple to see that the fraudsters didn’t even try to make the checks look that similar.  They are expecting their “mules” to cash at locations like Wal-Mart that don’t have a “compare check” capability.  Without the ability to compare to a real check, many people might think the first check was fine.

Here’s another example:

Again, easy to see the difference if there is a compare.  Without, the security features of the first check might give you a false sense of security in cashing it.  The bottom check, though ripped in half was the valid item.  The rip would prevent the MICR line from being read by an electronic system, but Chexar just fixed that issue and “found a way to say YES” to the honest consumer.

One of the major type of checks counterfeited is cashier checks.  They are chosen because the fact that it says “Cashier Check” gives employees at check cashing locations some sense of authority.  Instead, they are the checks with the highest level of fraud.  That is why many check cashing locations won’t even try to cash; they know they aren’t skilled enough to identify the signs of the check being fraud.  Are you?  Here are some real life examples.  Assume you have 10 seconds to decode if the top check is real.

How did you do?  How would you have done without the compare check?

The “Consumer Desperation Index

Each month, Chexar validates hundreds of thousands of check transactions across the country. A certain percentage of these are stopped because Chexar has deemed them as “DO NOT CASH” transactions. This means Chexar risk specialists have discovered that the check is fraudulent, the account is closed, there are non-sufficient funds, or the activity in the maker’s account is suspicious. By comparing the percentage in the current month to the percentage in March of 2010, an index is created, with March 2010 as a baseline at 100. We have named it the “Consumer Desperation Index” because consumers have to be really desperate to resort to check fraud. In most cases, the check conversion location has their picture, a copy of their ID, their signature, and often a fingerprint. They are just hoping they chose a retail location that doesn’t know how to control fraud. Ultimately these culprits will be locked out of the financial system by way of their negative record with Chexar.

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Looking to make inroads with people who have long eschewed traditional banking services, Regions Bank has brought to market a line of alternative financial products.

The package of Now Banking offerings comprises check-cashing services, Western Union money transfers and a reloadable Visa prepaid card. All aim to bring to Regions a segment of the so-called unbanked or underbanked, people who have historically turned to payday lenders and other consumer finance companies for their money management. (That market, too, is changing: Locally based Advance Financial recently raised $6 million to add to its branch network and continue to take its services upmarket a bit.)

“A lot of our research showed that there is a group of people who have a different way of handling their finances, who live on a cash basis,” said Jim Schmitz, Regions’ area executive for Middle Tennessee. “So we asked ourselves, ‘Is there a way we can work with them through our branches?’ This is a way for us to leverage an asset that’s already out there.”

Schmitz said Regions’ Middle Tennessee branches, which went live with the Now Banking offerings late last month, are seeing solid activity – “maybe even a little better than elsewhere because of our large market share here.” On top of that, the demographic makeup of consumers seeking out Now Banking products has been of a higher quality that might be expected. Across the bank’s footprint, more than half come from households making $50,000 or more, further evidence that America’s middle class is increasingly managing its budget far more carefully than a few years ago.

More than 1,500 branches of Regions’ offices in 16 states are now online. In the two months through the end of November, John Owen, Regions’ head of consumer banking division, said about 10,000 people had used the services – half of them cashing checks, 30 percent using Western Union services and 20 percent signing up for reloadable cards. A plus for the bank: It hasn’t yet done any formal marketing, meaning a lot of the traffic it has seen so far has come from word of mouth.

“When you can offer a product someone needs and do so at a cheaper price, the word gets out,” Owen said.

While those customers are generating a nice stream of fee income for Regions, the bigger payoffs will come down the road. Owen said about 10 percent of the Now Banking clients already have signed up for other bank products. If the bank can keep those people and upsell them to other offerings, it would essentially create a new group of very ‘sticky’ customers.

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Atlanta, Georgia, December 20, 2011  – Chexar Networks Inc. (“CHEXAR®”), announced today that it is launching a new service that will allow industry partners such as banks, check cashers, mobile wallet and prepaid providers, to better control the risks of either cashing a check, or accepting a check for deposit, that has already been accepted by another provider.   The one of a kind patent pending service will give industry participants an advance warning of activity on a check prior to their making the decision to accept a check, including information about inquiries on the check prior to the first deposit.

With the rising proliferation of remote deposit capture solutions in the market, millions of checks are being accepted for deposit but remaining in the possession of the depositor.  Subsequently, either intentionally or innocently, the same check can be submitted for deposit one or more additional times resulting in duplicate check deposits that ultimately result in losses to the industry.   The Federal Reserve Bank clearing process, where most checks are originally deposited, does not check for duplicate checks.   Often the duplicate checks are not detected until they reach the bank on which the checks are written which results in multiple returned checks.

Drew W. Edwards, Chexar Founder and CEO commented that “the genesis for this Chexar solution was in our core risk management expertise where we manage the front line fraud risk for our clients all across the nation that are either cashing checks, loading checks onto prepaid cards, or depositing checks into traditional accounts.  We know first hand that if your risk management solutions rely upon post deposit data, it is too late to make the correct decisions and control losses.  Clients on our core decision solutions don’t have to worry about this risk because we are managing those decisions for them.  However, Dupex is designed for those other clients that run their own risk management solutions and gives them an advanced warning of prior activity on a check before they make their decisions.”

Chexar is now enrolling its current channel partners and plans to open enrollment to the market in January 2012.   The service will be offered at a price point that will allow the broad market to ping Dupex on all checks before they are accepted at any endpoint.  Endpoints would include brick and mortar check cashers, bank teller lines, ATM machines, and mobile banking applications.  Clients will access the solution through a variety of interfaces including a web based portal and full integrations with mobile application providers, banking platforms, and industry point of sale solutions.

“Dupex is scheduled to be active late in the first quarter at the same time Chexar is rolling out significant clients on mobile deposit capture solutions.” Edwards went on to say, “Chexar is the leader in guaranteeing checks on mobile devices and we believe that the significant deployment of mobile solutions in the market increases the risks of duplicate deposits.  Our content is focused on the underbanked consumer segments where the risk of duplicate deposits is even higher which is one reason we are uniquely positioned to control this risk for the market.”

About Chexar

CHEXAR® is the national leader for technology and solutions that enable clients to cash, deposit or load any check with immediate funds availability. Chexar’s solutions provide clients with the ability to truly serve the nation’s under-banked population now estimated to be almost 100 million people. The gating factor for these consumers is their need to change all types of checks into cash or value before they can acquire other services including bill pay, money transfers, or prepaid cards.

Chexar’s solutions enable any business to convert ANY type and ANY size of check to cash or to immediate credit onto Prepaid Cards or as fee-based deposits into bank accounts. The company’s one-of-a-kind solutions combine multiple national databases, rules engines, and proprietary technology with redundant 24/7 risk management centers to achieve the industry’s highest automated and overall approval rates on any check.  Chexar’s solutions are deployed across multiple platforms including turnkey point of sale solutions, assisted and self-service kiosk solutions, mobile devices, and full XML integrations.  For more information, please visit www.chexar.com.

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Download the full press release here

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