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How Certegy’s PayNet service closes more online sales and provides a 360-degree view of customers
When it comes to payment, most of Internet retailers’ focus has been on credit cards. They make up virtually all retail payments on the web.
Yet Certegy Inc.’s Check Services group is building a nice business on check payments over the web. In fact, boosted by customer wins with Dell Computer Corp. and Gateway Inc., electronic check volume at Certegy Check Services has blossomed from about $50 million a month in the middle of 2001 to $100 million in December-and Certegy expects that rate to be the new base for this year. “More and more retailers want to offer more payment options,” says Jeff Carbiener, Certegy senior vice president.
Certegy, formerly Equifax Check Services, a division of credit bureau and payment database company Equifax Inc., landed Dell in the second quarter of 2001 and Gateway in the fourth quarter as customers of its PayNet service, which allows consumers to pay via an electronic check. Customers who wish to pay by check rather than credit card can provide checking account information on screen or to sales reps. Certegy authorizes the information, then converts it into an electronic check.
Electronic checks have become an important part of retailers’ strategy to close more online sales. Some retailers have reported that as many as 60% of customers who place an order by phone never follow up with the check. Collecting the information at the time of the sale has proven effective in closing those sales. Certegy customer Sears Parts Direct, for instance, says its mail-order volume has decreased by 47% since it began accepting PayNet check payments in the third quarter, while check sales have increased 24%. Furthermore, the time to complete a check-based transaction has been reduced by a week-meaning the customer has the product in hand sooner and less opportunity to re-consider the purchase.
A long history
And consumers, too, want to pay with checks online. The Washington D.C.-based National Consumers League reports that 43% of adults say their biggest worry about online shopping is that their credit card numbers will be stolen and 59% believe it is safer to pay with a check or money order online than with a credit card. Certegy is hoping to make that a reality.
Certegy has a long history in authorizing and processing check transactions. It started in 1961 as Telecredit Inc., which authorized transactions at the retail point of sale. Telecredit was acquired in 1990 by Equifax Inc., a credit bureau that was making a natural expansion into payments processing. Certegy spun off from Equifax in July 2001 and is now a publicly held company in its own right, with annual revenue of $851 million, 6,300 employees and operations in nine countries. It processes both credit card and check transactions and processed 1.7 billion payments transactions last year and guaranteed or verified $32.1 billion in check payments.
Securing a PayNet transaction starts with a consumer completing a brief questionnaire that gathers basic information about the consumer: name, address, phone, length of time at current address, etc. Certegy uses its database to create a series of multiple choice questions related to financial information that the customer answers at checkout time to verify identity. The questions include asking, for instance, who holds the consumer’s mortgage and the size of the payment. The web shopper provides a checking account and bank routing numbers to the web merchant to initiate the transfer of funds. Certegy then guarantees the payment and transfers payment to the merchant using the Automated Clearinghouse Association system.
After the first payment authorization, the customer provides a user ID. Certegy then e-mails a password to the customer for future use.
Certegy presents the consumer questionnaire in simple language with easy to follow instructions and several pitches along the way as to why consumers should participate in an identity verification procedure. The consumer screen starts with the headline “Don’t be a victim of identity fraud.” The next item the consumer sees is a boxed message explaining the procedure and briefly presenting Certegy’s credentials as a protector of consumer information. After explaining the steps, the screen wraps up with another pitch: It repeats the message Don’t be a victim of identity fraud and restates the value of participating in the Certegy program. The next two screens take the consumer through registration.
Easy and streamlined
Fraud by e-check as a percent of sales right now is higher than credit card fraud on the Internet, says Cathy Reed, senior vice president of operations. But she expects that to decline as check volume increases. “The fact that the percent of check fraud is a bit higher is attributable to the small proportion of shoppers who are using checks online,” she says. “Fraudsters are always the first to try something new.”
The largest element of fraud today is identity theft, she says, which is exactly what the PayNet procedures are designed to catch. But not all is automated; sometimes Certegy will call a customer to verify the transaction if it looks suspicious, such as a disconnect between the bill to address and the ship to address.
Certegy designed the PayNet product for both web and phone payments. While customers fill in the information for the web-based payment, customer service reps do so for telephone payments. And that requires some training, Carbiener says. Certegy trainers teach telephone reps how to read the numbers at the bottom of a check, what the numbers mean and what the various symbols mean. Because of the frequent turnover in phone rep personnel, most retailers need training every six months, he says. “But that’s one of the reasons we made our process very streamlined and easy,” he says.