(June 24, 2009) So-called third-party checks represent a potentially lucrative niche market for remote deposit capture, and now a biometric-authentication vendor has been granted a patent for a process by which such checks can be authorized and imaged for deposit under Check 21 rules. AllTrust Networks, which announced the patent last week, now looks to mine this niche among the 2,000 stores that use its equipment. “We’re pretty excited about the growth opportunities,” says Jon Dorsey, chief executive of Herndon, Va.-based AllTrust.

Third-party checks are paychecks consumers cash at stores, check-cashing locations, and financial institutions. It’s a $300 billion business, according to 2006 data from Aite Group LLC, a Boston-based researcher. Banks account for half of it, with grocers, convenience stores, check cashers, and other locations dividing up the other half.

Dorsey says about 200 of the locations that use AllTrust’s Paycheck Secure service also use the company for remote capture, a process by which checks can be imaged at the store and deposited electronically for faster settlement. Paycheck Secure features fingerprint scanners to authenticate check cashers. Each of these stores averages between 500 and 600 third-party checks per month, at an average value of around $450, he says. Meanwhile, merchants can also image and transmit checks customers use to pay for merchandise.

Nine-year-old AllTrust, which until early this year was known as BioPay, has been on a growth curve. It now has 5.5 million consumers enrolled in Paycheck Secure, up from 4.75 million a year ago. Its store count is up about 10% over the same period. That growth has come despite a fair share of turbulence. BioPay was part of Pay By Touch, a San Francisco-based biometric-payment vendor that went bankrupt early last year. It became an independent company again in March 2008 with a management buyout for which funding was led by WWC Capital Group, a Reston, Va.-based equity fund.

The company is no stranger to remote deposit capture, a service it has offered for several years. Indeed, it filed for its patent in January 2005, almost two years before it was acquired by Pay By Touch. Now, with the patent in hand, it plans to leverage its ability to link biometric authentication to remote capture for third-party checks. Dorsey says he expects AllTrust’s store count will be up 30% by this time next year. And the company has recently added bill-pay processing and is marketing instant-issue, reloadable prepaid cards issued by Metabank. “Check cashing is the feeder source” for these other products, says Dorsey. “Once they do a check-cashing transaction, the person wants to pay some bills, get a money order, or load a prepaid card.”