ISO First American Seeks Early Mover Advantage with Remote Capture

Further evidence that independent sales organizations are mobilizing to sell Check 21-based electronic check processing to merchants emerged last week with First American Payments L.P.'s announcement that it will re-sell remote deposit services from RDM Corp., a Waterloo, Ontario-based vendor of electronic-check solutions. Fort Worth, Texas-based First American, which provides credit and debit card services to more than 100,000 merchants, will begin marketing remote capture within two to three weeks, says Jason Putnam, director of business development for the company. Putnam says First American sees other ISOs getting ready to move into the market, and wants to be an early entrant. “We're happy to stay ahead of the competition,” he says. “This is not something ISOs have gone after in the past, [but] this is a product that will gain a foothold in the ISO industry.” First American's deal with RDM follows news that Wausau Financial Systems Inc., a Mosinee, Wis.-based vendor of Check 21 and automated clearing house software, is preparing to sell its remote deposit capture service through ISOs (Digital Transactions News, Jan. 8). To that end, Wausau has reformatted a Web-based product it markets to banks to meet ISO needs and has started presenting the product to selected ISOs in lunch meetings around the country. Putnam says First American, which will match RDM's system with check scanners it markets for a variety of companies, has worked out informal projections for first-year merchant response to the new service but isn't prepared to make them public. “We've seen demand for this from some of our sales partners,” he says. First American works with approximately 100 ISOs and some corporate-owned sales offices. Remote capture, which allows a merchant to make images of checks and send them via an Internet connection to its bank for deposit, offers ISOs a chance to enter new merchant markets that might have a stronger need for electronic check acceptance than for credit card acceptance, Putnam says. “The compelling thing is this is offering another tool,” he says. “It opens doors. Credit cards have been the lead factor [with merchants] but may not always be the lead factor.” While some ISOs have expressed concern that remote capture, which is typically priced on a per-transaction basis with a monthly fee, may not offer as much profit potential as credit card services, with their interchange-based pricing, Putnam says resellers can make up much of the difference through scanner leasing. Nor does he entirely dismiss the potential for transaction revenue. “It can be fairly lucrative as another way to earn residuals,” he says. For that reason, First American had been looking for a product before settling on the one from RDM, Putnam says. “It opens a market that is to some degree untapped,” he notes. “And we really haven't had a product to fit with that market up to now.” Remote deposit capture, which banks introduced after the Check Clearing Act for the 21st Century (Check 21) took effect in October 2004, has been one of the fastest-growing electronic-payment products ever launched. More than 380,000 scanners had been deployed at merchant locations by the end of 2008, a number that will grow to more than 3.2 million by 2012, according to researcher Celent LLC.