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June 2012
Some Small and Home Businesses Willing to Pay Large Premium for RDC

Small and home businesses (SHBs) are willing to pay a per check premium in order to make deposits from their office using special carriers and fax (see sidebar – 2010-11 Survey of Small and Home Business Check Deposit Practices). While the survey question was specific to our CheckFaxRDC solution, we believe the results have general applicability to SHB RDC.  The average premium willing to be paid was $0.37 per check, but there were significant relatively equal peaks at $0.10, $0.25, $0.50 and $1.00 suggesting a segmented market. Further investigation showed this was related to the number of checks deposited per month and the value of the person making the deposit.

The premium derives from the perceived cost of depositing a check, and how much one is willing to pay to avoid that cost (the $0.37 above).  The perceived cost, which in the survey averaged $17, and had a range up to $150 per check, is driven by:
• Number of checks per deposit,
• Number of trips to the bank,
• Time it takes to go to the bank, and
• Value of the person going to the bank.

The first three drivers had values that one might expect. The average number of checks deposited per month was 37.  For those depositing 100 or fewer checks per month the average dropped to 15.  Trips to the bank average 4 per month, with a range of from 1 to 22.  Time to go to the bank averaged 21 minutes.

What is surprising was the range of values for the person making the trip to the bank, which ran from $0 to $500 per hour. While 55% of respondents valued the person going to the bank at $50 or less per hour, the other 45% placed much higher values, clearly indicating non-clerical personnel making deposits. 

Supporting this observation is an average business size of 6 employees and inclusion of business types that typically deposit a few large checks per month. A recent article on our website identifies those industries. To get to 100 checks per month these businesses needed to have 10 to 25 employees, which is fairly good size by SHBs standards.

The SHB market is huge, including 20.1 million non-cash businesses depositing 100 or fewer checks per month. In aggregate they deposit 4.5 billion checks per year.  Businesses without employees account for 16.8 million of the 20.1 million and deposit 3.0 billion checks.  The 3.3 million businesses with employees deposit another 1.5 billion checks.

The portion of the SHB market willing to pay a per check premium is large. Many of these businesses are highly attractive customers to banks. Because of their low deposit volume a variable cost solution is needed.  Because the person preparing and making the deposit does it as an adjunct to other responsibilities the RDC solution has to be simple and easy to use.


March 2011
Small and Home Busines Check Deposit Practices 2010-11 Survey Results

October 2007
Small Business RDC Survey Results



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