Business Spotlight: Electronic Check Services

Springfield-based Electronic Check Services Inc. is out to prove that if a company gives consumers what they want, it can avoid the effects of a recession.

Based on the volume of consumers who want to downsize their cellular phone bills, check-processing and recovery firm ECS Inc. anticipates doubling its revenues to more than $30 million this year. The company added prepaid cellular sales in October 2007, when it acquired Austin, Texas-based software writer Softgate Systems.

"With the credit crunch and people losing jobs, people are looking for ways to get out of contractual obligations that cost them money," says Derron Winfrey, company president. "Cellular phones are a true luxury. When it comes down to how they will feed their kids and care for their family, they get rid of the cellular phone contract and pay as they go."

A recent survey by Washington think-tank New Millennium Research Council showed that 17 percent of Americans already have switched from contract-based cellular plans to cheaper prepaid services due to concerns about the recession.

ECS processes $3 million monthly in prepaid cellular sales and has 62 independent sales agents, according to Dennis Winfrey, company founder and chairman. The company recorded $16 million in 2008 revenues and anticipates up to $35 million in 2009 revenues, due to its booming prepaid wireless business, he says.

ECS started in 1997 like many small businesses; the founders blended an entrepreneurial spirit with a market need. Winfrey developed a way for retailers to collect funds on unpaid checks using debit-card industry technology.

"I thought if we could take a check at the point of sale and draft a checking account electronically, then we should be able to draft that checking account to collect a check after it had been returned for nonsufficient funds," he explains.

Back then, competing check companies were using the "old-school system" of phone calls to collect on bad checks. "We were able to draft bank accounts and take the money when it became available electronically," Winfrey says. "We were able to collect the money much faster and had much higher returns."

ECS soon developed its own database to help retailers determine whether their customers had a history of writing bad checks.

Today, ECS offers retailers check-conversion and check-processing software, money counters, and prepaid cellular, bill pay, gift and loyalty programs. All of the products are available through one point-of-sale terminal, using one software program. Derron Winfrey, son of founder Dennis, says investing in one terminal and dealing with one vendor is a cost savings for his customers. Plus, it allows store owners to spend less time training their employees.

"We may not be the largest check-processing company in the United States, but we beat out the largest check-processing companies all the time for big accounts," Winfrey says.

In March, ECS inked a deal with Shazam, a provider of electronic funds transfer services to 1,600 banks. The deal makes ECS the preferred provider of check, prepaid wireless, bill payment and money counter services to commercial accounts within the Shazam network.

"If you consider that each of these banks has an average of 70 commercial accounts, it doesn't take long to realize that we will market our company and services to 100,000 retail locations," Derron Winfrey says. "We got the job because of our technology and ability to provide service to their customers."

When Dennis Winfrey started Electronic Check Services in 1997, he opened offices in Springfield and Kansas City to test both markets. He closed the Kansas City office after one year. "I don't know if it has to do with us being a faith-based community, but people here are just a little nicer and little more Midwest," says Derron Winfrey. "The customers we do business with in Springfield - Cody's Convenience Stores (now Kum & Go), Fast N Friendly, Harter House - they are all family people like we are."

Other ECS clients include Ramey Price Cutter/Pyramid Foods, Rapid Robert's, Village Mart and Signal Convenience stores. Pyramid Foods has relied on ECS since 2001 for software programming, electronic funds transfers, and the equipment and data necessary to cash payroll checks.

"They are Johnny on the spot," says Susan Hunt, collections and loss prevention manager for Pyramid Foods. "It's helpful that they are local. They are there anytime I pick up the phone."

Winfrey says the company thrives because of technology and its ability to identify with the mom-and-pop business: "We know what they need to compete with a large chain and have the technology to help them do that."[[In-content Ad]]