US-based Electronic Clearing House (Echo) is to partner TouchNet Information Systems to introduce the Visa point of sale (POS) cheque authorisation programme to its customers in the higher education market.
The service converts cheques accepted via the Internet and at the POS into electronic items which obtain immediate, real-time account verification and authorisation from the customer's bank.
Visa's cheque acceptance system provides online access to deposit accounts and utilises its authorisation network, VisaNet, to verify transactions in a similar way to credit and debit card payments.
Kansas-based Touchnet says the combination of real-time authorisation, elimination of paper cheque handling and electronic settlement, reduces operating costs and risks inherent in accepting cheques.
Joel Barry, CEO of Echo, adds: "The new system establishes a secure and cost-effective alternative to other payment forms and introduces a new segment of the economy to Internet and retail shopping."
TouchNet is currently trialling the system at several colleges and universities in association with Echo and will roll the service out to more than 450 higher education customers.
US payment industry research shows that cheques useage accounts for 85% of all non-cash personal spending. At the same time, merchants incur $23 billion annually in handling and fraud costs. Touchnet says one reason for these high costs is that a typical paper cheque passes through six to twelve different pairs of hands when processed.