STORES Magazine - September 2008 - (Page 46)

NUTS AND BOLTS / CREDIT BOC Budget-Beater Walgreen puts a new SPIN on check processing BY LAURI GIESEN M ost retailers are intrigued by the prospect of being able to convert paper checks into electronic transactions in their back office. Doing so would allow them to substantially reduce their bank fees and receive their funds faster. So why aren’t more of them doing it? Because they would have to install costly scanners in each store and train personnel to run them. The investment, installation and personnel issues are the major obstacles keeping back-office conversion (BOC) from reaching the potential that was predicted for it several years ago. But Walgreen has found a way to get the benefits of BOC without installing its own equipment and overseeing the operations. It has implemented a system called Solutran Point of Sale Image Network (SPIN). Rather than scan and convert paper checks into electronic transactions in its own stores, Walgreen has its clerks use existing check authorization terminals to read the MICR line on each check — a procedure identical to the one the stores already use to authorize checks. But what is different is that at the end of the day, instead of shipping the paper checks to the bank, those checks with transactions that are capable of moving through the automated clearing house are shipped off to Min- neapolis-based Solutran. In Solutran’s back office, electronic images of the checks are taken and matched with the data captured by the MICR line reader. The checks are then destroyed but, because the MICR line info was immediately captured at POS, retailers can get available funds the next SPIN-OFFS BOC solution: Saves retailers 50-70% of the cost of handling paper checks Saves Walgreen $3 million per year in bank fees (estimates) 46 STORES / SEPTEMBER 2008 day via the ACH — often even before the images are fully converted. Checks that are ineligible for ACH (roughly 5 percent of all retail transactions) are shipped separately to Solutran and settled through an image-exchange network. With those checks, retailers receive their funds a few days later. Either way, SPIN gives Walgreen the benefits of BOC without the investment in equipment and training. And other retailers are beginning to see the advantages of this type of outsourced approach. One of the problems with traditional BOC is that retailers have to purchase at least one scanner for each store, says Solutran CEO Barry Norstrand. Then there is the cost of the software and installation. For a retailer the size of Walgreen (6,200 stores), that can be a hefty investment. In addition to the up-front costs, retailers have to train personnel at each loWWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - September 2008

STORES Magazine - September 2008 Contents Executive Editor's Page President's Page Office Depot Unveils First Green Store Dunkin’ Donuts Debuts DDSMART What Shoppers Think 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Are You a Facebook Fan? RFID Concept2Watch E-commerce Supply Chain Marketing ERP Credit Web Optimization LP Vantage Point Newsbeat Cover Story LP Program Building Biometrics Industry Perspective Customer Service Site Selection E-Commerce LOEB Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - September 2008

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