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Diebold Inc. announced last week that its Opteva line of intelligent-deposit ATMs cash payroll, benefits and IRS checks. Diebold's announcement comes five months after Tranax Technologies Inc., a Newark, Calif.-based off-premise ATM maker, introduced the Tranax 500CS, a desktop check-processing-approval terminal.

Both ATM manufacturers have signed agreements with Valid Systems, a Fort Worth, Texas-based software company that approves check transactions at the ATM, John Templer, Valid co-founder and CEO, tells ATM&Debit News.

Valid's success comes 11 years after Templer introduced a similar ATM check- cashing model called Mr. Payroll. A company called InnoVentry deployed the advanced-function check-cashing Mr. Payroll ATMs at stores, gas stations, restaurants and bank branches in 24 states before going out of business in 2001.

InnoVentry was a joint venture of San Francisco-based Wells Fargo & Co. Inc. and Cash America International, a Fort Worth, Texas-based company that operates more than 450 pawnshops.

"We learned from our experience," says Templer. "Customers like self-service, but they did not like our method of delivery. It took 20 minutes and calls to a call center to verify the check amount. Now we verify checks in a second because of check-image capture and the Internet."

Diebold, which manufacturers ATMs for banks, says its Opteva line of ATMs with intelligent deposit would house a check-cashing module. Intelligent deposit immediately captures the check's image, says Margaret Bost, Diebold director of financial industry marketing. Valid verifies the check amount and, in some cases, guarantees the full amount of the check, Templer says.

Tranax Technologies, which deploys ATMs in off-premise markets, including convenience stores and fast-food restaurants, has approached the market in a different manner from Diebold.

Tranax makes the 500CS, which is not an ATM because it does not dispense cash or accept deposits. It is a check-processor terminal that collects check images. The 500CS sits on a store's countertop next to the cash register.

Tranax is not the first terminal deployer to recognize the potential of check cashing at stores. Cardtronics Inc., a Houston-based ATM ISO, has deployed 2,200 Vcoms, or multifunctional kiosks, that cash checks for customers  in 7-Eleven stores. 

Once the 500CS approves a check transaction, the customer receives a receipt with a temporary PIN. He then takes the receipt to a Tranax ATM located inside the store and taps the ATM's check-cashing button. The customer then types in the PIN, and the ATM dispenses the cash. 

 Diebold's Bost says banks may employ a variety of methods to facilitate check cashing, including issuing non-bank customers a check-cashing card or assigning an identification number similar to driver's license or Social Security numbers. As in the previous case, the customer first must tap the ATM's check-cashing button.

To use either Diebold's or Tranax's checking-cashing service, consumers first must register with a bank employee or a store clerk. Registration, which includes fingerprint identification, should take 70 seconds or less, Templer says.

Valid cashes only benefits, payroll and IRS checks–not personal checks. "We can set parameters that apply to each and every check," Templer says. Valid, however, is promoting cashing benefits checks at the same time the U.S. Department

of Treasury is replacing checks with debit cards for unbanked recipients of Social Security and Supplemental benefits. 

Consumers, however, continue to cash checks, Templer says.

Although Diebold is deploying check-cashing ATMs in banks and Tranax is deploying 500CS terminals in stores, the companies' goals are the same: to attract the unbanked or underbanked.

In a 2006 Diebold white paper "Banking On The Unbanked," the ATM manufacturer said the "unbanked and underbanked markets are a serious potential market for financial institutions."

The unbanked and underbanked spend $10.9 billion annually on 324 million non-traditional financial transactions, such  as  patronizing check-cashing services, Diebold added.

"New approaches are needed to capture this market, including new ways of thinking and innovation in bank offering," the company concluded.

The manufacturer suggested ATMs with deposit automation  should offer check-cashing services because some of unbanked and underbanked consumers are more comfortable using automated tellers than human ones.

By offering check cashing to those consumers, banks can open the door to a group that could become checking-account customers, Bost says.

Diebold, however, does not plan to limit deployment of its check-cashing ATMs to banks.

The manufacturer also expects to deploy the machines in off-premise locations, Bost says.

Check cashing remains extremely popular, Wes Dunn, Tranax director of business development for self-service products, tells ATM&Debit News.

"I spend 70% of my time discussing it with customers," Dunn says. He warns, however, that the price of entry into the retail check-cashing market is high.

Retailers need state and federal money-handling licenses. State applications for money-handling licenses range from simple to daunting, he says.

Retailers are required to have money-handling licenses because they are not sponsored by banks, says Dunn. Tranax is seeking a sponsor for its retail clients.

The potential for incremental sales justifies the sometimes-rigorous application process, Templer says.

"After they cash their checks, they may buy a six pack of beer before heading home," he notes.

Dunn provides another argument for check-cashing machines.

"Distributors have to have it because merchants are asking for it," he says.

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