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Chexar Agrees to Acquire Clear Payments, Inc.

Monday, June 11, 2012 (CHEXAR Networks, Inc.)

The transaction joins two technology partners that already function as an integrated service in the marketplace providing solutions for managing risk on checks
Atlanta, GA, June 11, 2012  – Chexar Networks, Inc. (“CHEXAR®”) announced today that it has signed a letter of intent to acquire Nashville, Tennessee based Clear Payments, Inc. (“CPI®”) in a transaction expected to close by the end of the month. Chexar is the nation’s leading provider of solutions to convert any check into “good funds” which is defined as cash or prepaid value. CPI is a leader in remote deposit capture and mobile solutions. Chexar utilizes CPI technology today as part of its solutions including imaging technologies, funds settlement engines, and mobile  enhancement solutions.

Chexar founder and Chief Executive Officer, Drew W. Edwards, commented, “We have been partnering with CPI for several years now and utilize some facet of their technology on almost every transaction we process. With mobile and Spyke™, our Good Funds Network, becoming an increasingly larger part of our future, the merger of our technologies will only increase. Considering that the professionals at CPI work with us today almost like we are already one company,  this transaction is a natural for us both.”

Clear Payments founder and Chairman, Randy Simoneaux, commented, “This acquisition formalizes a relationship that grew very strong over the past several years as we have worked side by side to provide Good Funds solutions to many of the industry’s prominent players. Now a single source fully integrated Good Funds transaction process provides our clients faster entry to the market and simplifies implementation.”

Recent studies estimate that the portion of the nation’s population that choose to conduct their financial transactions in a prepaid fashion, outside the traditional deposit account, has grown to over 100 million people. This population is expected to grow further as most banks are shifting their deposit and revenue strategies further away from overdraft based “free checking” accounts. When banks pay checks on accounts that do not have sufficient funds to cover the check, and charge the consumer an overdraft fee, the bank is in essence “making good” on funds for the consumer. Even now, many consumers choose alternatives such as payday lenders, title pawn and check cashers to satisfy this need for good funds and to access other valuable services such as prepaid Visa cards, money transfers, walk up bill pay, and more. Chexar provides the risk management for thousands of these locations today.

According to data published by the Federal Reserve Bank, checks are written each year totaling over $26 trillion. While overall check volume is declining at a rate of 7% a year, checks written to consumers, more than $5.7 trillion a year, are declining at a rate of less than 1% a year. Last year alone consumers paid over $40 billion in fees to convert checks into “good funds” and recent legislation such as the Dodd-Frank Act and the Durbin Amendment are causing the industry to re-think the process.

Edwards added, “Many people think of the need for good funds as simply a check cashing opportunity. The reality is this is more of a mass market opportunity because the $5.7 trillion in checks written to consumers are legacy type instruments with provisional availability that can and does get reversed.  Provisional deposit availability simply doesn’t fit with today’s prepaid and instant mentality. We see our  Spyke™ as The Good Funds Network™ enabling the NEW DEPOSIT for both banks and prepaid issuers in the marketplace.”

As an example, a Chexar client could be a bank that has chosen to offer cash based banking services including check cashing, loads onto prepaid cards, or fee based deposits with instant and irreversible funds availability. Once Chexar approves and guarantees an item, the bank and the consumer can treat the item as if it was a cash deposit because it is Good Funds and won’t be reversed.

Whether at the teller line, on a kiosk, ATM, or a mobile banking solution, the bank’s systems  interact with Chexar’s systems to submit consumer information and check images for processing. Part of this processing includes utilizing CPI’s solution to extract information from the image of the check for Chexar’s use in its evaluation from a risk perspective. Additionally, if the item is approved, CPI technology manages the deposit process and settlement of the check for Chexar.

CPI has also developed several mobile related technologies that Chexar is utilizing to streamline its industry leading mobile deposit capture and guarantee solution in the marketplace. Many of the prepaid  industry’s top players including card issuers, program managers, mobile banking and mobile remote deposit capture providers are currently implementing Chexar’s solution.

Edwards went on to say, “We believe bringing this company and its team into Chexar will allow us to more efficiently develop and deploy future solutions specifically tailored to our needs and the needs of our clients and partners. We couldn’t be more thrilled that we were able to work out a win-win.”

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