Transcript: CheckAlt Debuts New Way to Turn Checks into Cash and Implement Check 21 Standards

DAVID S. EVANS: Hi, this is David Evans. I’m delighted to be with Shai Stern today, the founder and CEO of CheckAlt. CheckAlt is a startup, Shai, and you’re a serial entrepreneur. What did you do before, and what were your greatest hits?

SHAI STERN: So prior to becoming the CEO and Co-Chairman of CheckAlt Payment Solutions, I worked at American Stock Transfer and was instrumental in building the business called AST Stock Plan, administered stock options and stock benefit plans. Then, after AST Stock then was sold to Citigroup, I went on to found Vintage Filings, which provides SEC filings financial print services, which we sold in April of ’07 to PR Newswire.

EVANS: Those sound like two great successes. What’s your professional background?

STERN: That’s really it. I came out of school, went to go work straight at American Stock Transfer, worked there for close to five years, and then started Vintage Filings in April of ’02. We sold in April of ’07, and I remained on in the sale, and I as well am the Co-Chairman of a business called Vcorp Services that provides entity formation services and state filing services.

EVANS: So let’s talk a little bit about CheckAlt. What problem does CheckAlt solve, and how does it go about trying to solve it?

STERN: There are two different areas, or two different components, within CheckAlt services. There’s one side that is our patented Remote Deposit Capture Check 21 solution, and as other side is our e-check/ACH platform. So in that remote deposit capture side, really we’re looking to solve a problem amongst banks and credit unions and credit card processors, where everyone is discussing, it’s a very popular topic, about scanning checks and getting funds faster. So there are two different elements. Number one is that this is our technology, and we really enable and allow our clients and those who use our technology to make sure that they’re protected by the patent not to be sued by others out there, and as well, they have ease of use – the availability of their funds. We’re the only ones out there that have a direct link to the Fed to deliver funds in less than 12 hours.

The e-check/ACH platform, that’s coming to solve a problem that I had in my own businesses from actually growing a business. One of the biggest problems you have is how to get cash faster, easier, and cheaper. And we’re all very familiar with… just waiting for checks in the mail, and credit cards, and PayPal. We really – small business owners are not educated enough in using the ACH platform. You might have a CFO of a business that is using online banking at home, but is still writing paper checks at the office, I’m sorry. So, we’re looking to change that behavior and enable them to use an ACH platform, pay their vendors via an e-check, and as well receive funds via an e-check as well.

EVANS: CheckAlt’s slogan is simple solutions for better business. What are some of those solutions that you offer?

STERN: So really, let’s focus more on the e-check side of it. How do we provide things that are simple? And to me, if I have one of my clients… and I’m e-mailing an invoice, or if they’re receiving invoices via the mail, and all they have to do is go online and put in the numbers at the bottom of the check and hit send, and then me, as the merchant, will receive an e-mail that second saying, so-and-so client is looking to pay this invoice right now, and they’ve initiated a transaction. And they have those funds in less than 24 hours. I hope that that’s considered pretty simple.

EVANS: What sets CheckAlt’s remote deposit capture system and e-check service apart from the competition? I assume you have competition, right?

STERN: Every business has competition, especially in the payment area. I don’t think there’s any business that doesn’t have competition. I think that in the remote deposit capture side… is the technology that we have, the people that we have. I’m still a big believer that businesses are built on the people that run the technology. So the founders and the creators of our technology all have 25 plus years’ experience, and as well, the ease of use of integration. We’re easily integrated with all banking systems, all… processing systems, and we’re processing files competently with all those banks that we’re all familiar with.

EVANS: There are a lot of challenges these days in the payments business, and a bunch of ones that are facing the payment processors. How is CheckAlt going to be addressing those kind of issues – the challenges that face payment processors these days?

STERN: I guess there are different challenges in each business. In remote deposit capture, I think our challenge is that – is how quickly we can have clients adopt our technology, how quickly we can really educate the marketplace that it is a good thing to adopt such technology. Even, for example, the credit unions – and there are 8,500 credit unions today, and they’ve all gone through many challenges one way or another with the corporate credit unions, with market conditions, of us being able to educate them that they could install, and they could adopt our technology very simply and easily, I think, is a challenge.

On the e-check side, I think a challenge amongst ACH providers and e-check providers today is having easy adoption for businesses to be able to adopt and then to be able to go live, to be able to receive ACH payments. I think historically there’s been a challenge, and it’s our job to educate the marketplace that we can do that, hopefully easier and quicker than the others.

EVANS: What are some of the new initiatives that you guys at CheckAlt are working on now?

STERN: It’s about education. I think that the marketplace is a monster opportunity. I think it’s an area where people are and businesses are looking for solutions. But it’s about educating them about our solution and how we differentiate. In the ACH e-check platform is how we can take a brand new merchant and have them up in line in less than 12 hours. That’s, I think, our number one goal in the marketplace is how to take an ACH new client and have them to be able to receive ACH payments in less than 12 hours. Today I believe it take between five to 10 days is really the quickest turnaround time for a new business to be receiving ACH payments.

EVANS: Shai, if you look forward, let’s say three years, where do you think CheckAlt is going to be? Where do you want it to be?

STERN: Well, on the remote deposit capture side, to me it’s still fascinating that… the number – and, Dave, correct me if I’m wrong – that in 2010, we’re still going to finish with 28 billion paper checks processed within the United States. And our goal is hopefully to be processing north of a billion of those on the remote deposit capture side. And on the e-check/ACH side, my goal is within, three to five years, to have north of 50,000 merchants.

EVANS: Shai, you’ve obviously been a very successful entrepreneur with kind of two hits already behind you, and who’s to know, in the case of CheckAlt, but it sounds like a very promising business. Who or what has been the greatest influence on your career? What would you point to as the factors that have really influenced you as an entrepreneur?

STERN: So my partner in CheckAlt is George Garfunkel, and George is the founder, alongside his brother Michael, they were the founders of American Stock Transfer. And that’s who I worked for beginning of my career. Really have learned a tremendous amount from them: how to build a business, how to service clients, and how to create a profitable enterprise. I would clearly point to George as the single most influential person in my career.

I guess also I would attribute a lot, my parents and upbringing that I have, that we come from a family of survivors who came – immigrated into the country in 1948, 1949 – and really had businesses that they started from nothing. So I guess the combination of a family upbringing of entrepreneurs, and as well learning a tremendous amount in my career from George Garfunkel, I point to that as really what I’ve learned from the most.

EVANS: Shai, we really appreciate your insights today on CheckAlt, and we wish you all the best success with the business. So thank you very much for your time today.

STERN: Thank you very much, Dave. Thank you.


Executive Bio

Shai Stern, Co-Founder and CEO of CheckAlt

Shai Stern is a driven entrepreneur with a passion for providing niche services to the legal and financial communities. Mr. Stern also serves as CEO and co-chairman of Vintage Filings, a New York based EDGAR filing firm which he co-founded with Seth Farbman in 2002, and sold to PR Newswire in 2007, as well as the co-chairman of Vcorp Services, which services new and current business owners in entity formations, business filings, trademark applications, compliance services and more. Mr. Stern was formerly a vice president at American Stock Transfer Company where he initiated business relationships and was responsible for outstanding share balances of over 2,000 publicly held companies. He was instrumental in the growth of AST Stock Plan, which administered stock options and stock benefit plans to 500 publicly traded companies prior to its purchase by Citibank.