CrossCheck is a National Independent Information and Check Authorization Service Company. CrossCheck provides Check Guarantee and Information Services to merchants and financial institutions.

CrossCheck - Check Acceptance Services enables merchants to increase sales by safely accepting checks from more than 180,000,000 individuals who have checking accounts and a valid driver's license, state issued I.D. or Military card. Consumers benefit through easier and faster check acceptance.

CrossCheck - Check Guarantee Services indemnify subscribers against loss on checks approved by CrossChecks Authorization Center by agreeing to purchase, at face value, checks that have been so approved. Check guarantee services can be obtained electronically 24 hours a day, 7 days a week.

With over a decade in business, CrossCheck has the most impressive record of growth of any check service company in the industry--serving thousands of outlets throughout the United States.

CrossCheck predominate delivery mechanism is electronic point-of-sale terminals. Further, CrossCheck has a voice delivery system which rivals the best in the business, and ranks number one in the industry for speed of electronic delivery. CrossCheck is the largest privately owned Check Guarantee Company in the nation. Currently, CrossCheck is supporting thousands of terminals, and has invested heavily in its electronic support systems.

CrossCheck is a pioneer and leader in developing, implementing and using real time computer and telecommunications systems to control the use of checks. CrossCheck was the first check company to develop the cost savings "store-and-forward" Point-of-Sale Terminal system for checks, which is now universally accepted in Bankcard transactions.

OUR PURPOSE

Our major objective at CrossCheck is to reduce risk and increase profitability for our valued customers. We provide an efficient, simple, and economical service, which protects our merchants while providing them with a competitive edge. We provides a broad range of computerized payment authorization services, which can be delivered either through point-of-sale terminals or through standard telephones located in retail and banking outlets.

The check remains at the heart of the nation's payment system and its use is a well-ingrained habit. "'National check volume continues to increase more than 7% annually. Aided in recent years by approval for Savings and Loan Associations and others to offer NOW accounts and Credit Unions to issue share drafts, the growth trend is expected to continue. Furthermore, the increased availability of fast, low cost check acceptance through electronic terminals at the point-of-sale will make the check more readily acceptable.

Consumers wrote over $2.8 trillion in checks in the U.S. in 1994. This number is expected to grow to $4.8 trillion in the next five years. Thirteen check guarantee firms will guarantee less than 1.64% of this amount for merchants totaling $46 billion. It costs merchants less to accept a check with the payment guaranteed through a Check Guarantee Provider, than to take a Credit Card. Checks that are guaranteed average $90.03 in size and cost a merchant $1.53, at an average 1.7% discount rate. Comparable to Credit Card transactions at an average 2.2% discount rate or $1.98, the check is by far the more economical payment vehicle.

In this decade, checks will increase their share of personal consumption spending 2.4% as credit cards increase 2.8%. Check Guarantee growth is expected to double before the year 2000, covering only an estimated 5% of total checks written at the point of sale. The dollar amount of checks will continue to grow indefinitely. By the year 2000, over 46% of all consumer payments will be by check.

Point-of-sale terminals that the banking industry expected would do away with checks, have helped Check Guarantee firms increase their volume and lower their merchant discounts. Check Guarantee firms have contractual relationships with credit-card processors, VisaNet, Banknet, American Express and others to piggyback on these systems, and some Check Guarantee companies, like CrossCheck, handle all transactions on domestic phone lines.

The service, originally sold to retailers as protection against losses, is achieving better acceptance now when marketed as another cost-effective consumer-payment option. Finally, it is generally believed that anything approaching market penetration or a slow down in check growth is far more than a decade away.

CONSUMER SURVEY RESULTS

Retailers have an excellent opportunity to increase their sales simply by accepting checks. Survey results show that checks are the favorite way for nearly 75 percent of consumers to pay, because checks are convenient and people like the personal touch of writing a check. Despite the popularity of checks, nearly one person in four (23 percent) said not all establishments would accept their checks. Nearly 60 percent of those surveyed said they would shop more often if checks were accepted and nearly 50 percent said they would buy more each shopping trip.

"Places where checks are less readily accepted include clothing stores, specialty shops, restaurants, appliance, electronic stores and gas stations. Americans write more than 95,000 checks per minute every day of the year and cite the following advantages of checks; checks provide a receipt, an excellent method of record keeping, convenient and easy to use, and provide a safety factor unlike some of the other payment systems.

-National Automated Clearing House Association

"In the United States, households' primary means of payment are checks, followed by cash, and then credit cards. According to a Federal Reserve Bank study, 57 percent of a typical family's expenditures are made by checks, 36 percent by cash, and the remaining 7 percent are made by credit card. Very few households make payments via electronic wire transfers."

-Federal Reserve Bank of San Francisco

RETAILER SERVICE NEEDS

Retailers are in business to sell goods and services to consumers. They are constantly striving to increase their share of the marketplace by innovative advertising, merchandising and marketing techniques. After finally making a sale, the last thing a retailer wants to see is a "bad check" for all that effort.

Anyone who accepts checks for goods or services encounters bad checks and the collection hassles they represent. If a merchant does not accept checks or accept them too selectively, they are turning away the business they strive so hard to attract.

The need for a Check Guarantee Service is obvious in today's economy. The soaring cost of credit cards, rising delinquencies, fraud and tight credit have all increased the frequency of check use. Our service fulfills the needs of an inexpensive service that increases sales and eliminates the risk associated with bad checks.

MERCHANT ACCOUNTING SYSTEM

Merchant Accounting

The merchant system allows the chaining of merchant outlets to provide individual or aggregate totals for billing or statistical reporting. Merchant month-end and year-end reporting supported by on-line profitability analysis provides the optimum in analysis information. Merchant billing is a descriptive statement. A statement is produced once a month.

Redeposit Support System

Original entry of a dishonored check through the data entry function loads a redeposit history file. This file originates a record on a post-dated basis, to clear the debtor from the on-line derogatory information base, provided the check is not repurchased prior to an established date.

Collector Support System

The collector support system eliminates the traditional manual effort involved in collection. Accounts going into collection are automatically assigned to the collector responsible for a dollar check size or particular business type. The collector is supported by system generated personalized letters on a request and predefined basis. All contact between the collector and debtor may be entered into the system and reviewed on-line. These memos are also available on hard copy through the collector's profile. System generated correspondence is interwoven with manual entry to provide a complete record of collection activity. The collector support system includes a "promise-to-pay" date and amount. The system is designed to retain a history of delinquency.

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