DATA FINANCIAL’S CHECK IMAGING NEWSLETTER August 2005
ARC growth slowdown comes into view 7/1
The phenomenal growth in A/R conversion of ACH payments will eventually decline, because consumers are paying more monthly bills online or with credit cards. Growth will essentially top out in 2007. Last year the ARC process converted 1.3b consumer checks into ACH payments at lockboxes. This year’s total is likely to be 2.4b, Aite Group LLC predicted. By 2007 the figure will have climbed to about 4 billion, Aite said - but the next year it will scarcely rise. The initial slowing, barely a tap on the brakes, was first reported in October. Statistics from Nacha, the electronic payments association, showed growth slipping from 791% in IIQ 2004 to 509% in the IIIQ. Observers say ARC is a transitional technology that all-electronic payments will eventually replace. ‘At some point, this product will go to zero, because there will be no more checks being written,’ said Leonard Heckwolf, JPMorganChase. ‘I think it will live its life cycle & then taper off.’ Heckwolf said ARC volume at JPMorganChase is still increasing as the company wins more large billers. ‘But 2 to 3 years from now, that growth may wane.’ ARC will decline because more consumers are permitting billers to automatically debit their accounts, many are paying with credit cards & banks’ online bill-payment sites are becoming more popular. ‘Certainly bill-pay is a component’ in the expected decline of ARC. Mike Herd, Nacha, said converting paper checks into electronic payments is just one step on the path to consumers’ initiating payments electronically. ‘The number of checks written to pay bills is significant but will eventually decline. We have realized for some time that check conversion products would be transitional.’ Stuart Williams, Checkfree, a provider of online bill-payment technology & services, said that some consumers are afraid to pay bills electronically - & that billers can use ARC to allay their fears. One way, he said, would be for billers to start using ARC & then tell customers several months later, ‘Whether you realize it or not, you are participating in electronic payments.’ Billers should ‘give people time to see that using electronic payments is not the big, hairy monster in the closet that they might have thought it was,’ said Williams, Checkfree. Richard Leary, Wachovia, said that ARC has grown fast because the biggest billers - especially banks’ in-house credit card units started to use it. But with many of the biggest billers on board, ‘a drop-off in growth is coming now. ARC doesn’t push people’ to stop writing checks. The conversion takes place at the lockbox, out of sight, & many consumers are not even aware of it. But awareness can spur a switch to other payment methods. Merchants that convert checks into ACH payments at their registers have often reported that once people realize what is happening to their checks, they are likely to use debit cards during later visits. Though much of the industry has been encouraging consumers to write fewer checks, ‘ARC has facilitated a way for them to continue writing checks & for us to see some savings & efficiencies in processing checks.’
Data Financial Announces New POP and Merchant Capture Solutions 8/15
Data Financial Business Services (DFBS)and Jara Diversified Services announced today two new software offerings for electronic deposit of checks for retailers and merchants wishing to electronically deposit their checks rather than transporting them to the bank every day. DFBS has seen a significant increase in the demand for this application from both its traditional commercial accounts, but also from the Banks and Credit Unions that are hearing the demand from their major commercial accounts. Their existing DCPS check imaging software for financial institutions is now enabled to receive standard X9.37 or X9.100 image files as well as ACH and POP deposits. Several Banks are now accepting remote deposit accounts and increasing the pressure for other banks to compete to preserve their existing commercial accounts.
Company News BofA - image lockbox service for healthcare providers 6/28 PRNewswire
BofA entered into an agreement with HealthLogic Systems Corp to deliver a service for healthcare providers. The service automates EOB data capture & delivers it in a HIPAAcompliant file to enable healthcare providers to post & process remittance payments quicker & to expedite cash application. The service addresses payment challenges that healthcare providers face such as EOB data extraction, claims matching & HIPAA compliance. To date, most traditional lockbox image platforms have not been able to provide an automated solution to client requirements for EOB data capture. With the BofA service, hospitals, labs & larger doctor practices are able to leverage automated data capture capabilities to expedite cash applications, reduce error rates in data capture, reduce expenses associated with manual data entry & payment/claim matching, automate matching receivables cash applications, & permit single billing. The service offers an expedient image file, creating an efficient solution for the healthcare industry. ‘Healthcare providers face many challenges in trying to achieve workflow efficiencies while still maintaining HIPAA compliance,’ said Catherine Warren, BofA. ‘As a top lender in the healthcare market & the number one provider of lockbox services, BofA is in a unique position to understand the challenges these providers face & to create technology solutions that best address their needs. Our new service is a perfect example of our dedication to this market as it helps our clients improve availability, reduce error rates in data capture & operational costs & eliminate paper-based processing - all while maintaining HIPAA compliance.’ BofA offers 3 expanded data capture solutions: Patient- level capture, Patient Plus & Proprietary data capture. At BofA Lockbox Operations, checks & associated detail are scanned & images are created. Correspondence items (items received without a payment) are scanned & images are created. By using image technology to process this payment information, data entry operators no longer key data, reducing error rates & operational costs. An image file of checks & documents is then transmitted to HLSC where a HIPAA-compliant file is created & sent back to the client. Clients may view lockbox images & payment detail on a Web-based image archive for 1 year, & view 45 days worth of check & remittance images on Receipts Direct. Clients may view information reporting via Receipts Online & BofA will create CD-ROMs to be delivered to the client. ‘We believe our new service will help us to meet the needs expressed by our healthcare industry clients,’ said Aileen Gleason, BofA. ‘They are a critical component of our lockbox client base & we are committed to bringing solutions to the market that achieve their goals. In addition to the new functionality, we are able to
offer premium availability through our lockbox network because we are the number one check clearing financial institution in the US.’ The new service is currently being piloted with several customers with full rollout scheduled for July.
Fed to outsource more cash services from branches 6/28 Reuters
The Fed will outsource more of the cash services it provides to the financial sector. In the next 6 to 12 months, the Fed said it will switch from branch-based services to cash depots in Birmingham; Oklahoma City; & Portland. The Fed will continue to look at different service models in major metro markets without a Fed presence or in smaller markets with a Fed presence, said Gary Stern, FRB Minneapolis. With a cash depot, the Fed contracts with a 3rd party - usually an armored carrier - that acts as a secure collection point for Federal Reserve currency deposits from the region’s depository institutions. Employees at Fed offices in other cities count deposits & prepare currency orders, & the Fed said it pays for the transportation between the Fed office & the depot operator. 50 Fed cash employees work at the Birmingham, Oklahoma City & Portland branches, but the number that will be affected by the changes has not yet been determined. It will offer separation packages, extended medical coverage & career transition assistance to those employees affected. ‘We want to ensure that we’re making the best use of resources while satisfying the need for cash services. We want to emphasize that the Fed will continue to make cash services available to depository institutions throughout the country, although in some cases we will do so with a different business model.’ In 2004 & 2005, the Fed discontinued cash services through branches in Little Rock; Louisville; & Buffalo & established cash depots in those cities. It would continue to evaluate cash services & would announce changes as recommendations are approved, including possible services for new markets.
5/3 & Check 21,
6/29 AB
5/3 Bancorp has become the first nonowner banking company to send check images through the SVPCo Check Image Exchange Network, & says the effort will cut down on its expenses. Most banks view imaging as a way to reduce their costs, but at 5/3, which is well known in the industry for its devotion to operating efficiencies, the transition is part of a long-term, & very directed, plan to generate savings or new sources of revenue. David Harris, 5/3, says its strategy has been to build up its image infrastructure in stages. That effort has included creating for-fee archiving services, using image statements to encourage customers to stop receiving monthly statements, & using image exchange to cut down on float. His company is considering buying a stake in SVPCo’s parent, Clearinghouse Payments Co. LLC, to maximize its cost savings. 5/3 began sending images to the Fed several weeks ago, using a direct link, & last week 5/3 shifted that traffic to SVPCo, which provides a faster network connection than the Fed. 5/3 plans to use the SVPCo connection as its primary link to the Fed & other endpoints, ‘rather than invest in multiple DS3s,’ the high-speed Internet connections that carry the large image files. Because it was not one of the system’s earliest adopters, 5/3 was able to skip some of the baby steps the early adopters took. When 5/3 started sending files to the Fed, it did not have to devote any development expenses to setting up tables of specific account numbers that were eligible for image clearing. It used routing & transit numbers to determine which checks it would send out as image cashletters to the Fed. To keep the volume low while they evaluated the system, some of the first companies to use the SVPCo
network created lists of specific account numbers for which they would convert checks into images. But when National City & Union Bank of California began sending each other images through the SVPCo system in April, they used routing & transit numbers, which can define bank units down to an individual branch. Once a company approves a routing & transit number, every check from every account within that number may be sent across the network. 5/3 is following their lead. Harris said that when his company began sending images directly to the Fed, it chose routing & transit numbers that tended to include either accounts that handled higher-value checks, or paying banks whose checks took 2 - 3 days to clear. The goal was to reduce check float, often by a day or more & save money. ‘That’s the value proposition for us.’ 5/3 is now using the SVPCo network to send its image cashletters to the Fed, which then prints IRDs & delivers them to the receiving banks. ‘What we were doing was more tactical with the Fed. We have used an iterative approach that has allowed us to move forward while managing our risks.’ Daniel App, 5/3, said his company is evaluating whether to take an equity stake in Clearinghouse, which is owned by 21 large US banking companies. The main reason? Cost.’ 5/3 believed we had to be involved with some of the larger networks in order to achieve the savings in efficiency.’ Susan Long, SVPCo, said 5/3 gained another benefit from packaging its images into the Fed’s image cashletter format: It does not have to decide whether to send items as images or as IRDs. The Fed can make that decision according to the readiness of the receivers. ‘That’s very forward thinking on the part of 5/3.’ The Fed began its FedForward service, which accepts image files from sending banks, in October but has not introduced the counterpart, FedReceipt, which will let banks receive image cashletters from other banks that are routed through the Fed’s network. Fred Herr, FRB Atlanta, said an initial group of banks is in final testing to go live with FedReceipt. Until then the central bank is printing IRDs - now 850,000 - 875,000 on an average day - for delivery to the receivers. 5/3 is looking for more partners for image exchange. App said it is talking with the other big banking companies that use SVPCo. 5/3 has found other ways to take advantage of images. In recent years, as it implemented its imaging systems, it gained a return by storing those images on optical disks for corporate customers. More recently 5/3 shifted to image statements, & in April it stopped returning cancelled checks to its retail customers. Previously 1/3 of its 3m checking & savings account holders had gotten their checks back. Chris Sibila, 5/3, said it redesigned its monthly statements & made them available online. 5/3 says it can now get monthly statements out faster, because it no longer has to sort the checks to stuff them into the envelopes. Last month it launched an online campaign to promote e-statements, & it has promoted the electronic option to call center callers who asked about the statement changes. Since April 500,000 account holders have started viewing their statements online.
PPS early warning fraud assessment 6/27 Businesswire
Primary Payment Systems (PPS), an affiliate of First Data, announced that its Early Warning databases, which help mitigate losses associated with payment & identity fraud, now cover 90% of all open & active US transaction accounts. To achieve this 60% increase in coverage, financial institutions contribute information on previously unreported accounts to the databases. This growth enables PPS to offer unprecedented depth & breadth in deposit & payment fraud risk assessment to financial institutions, check acceptance companies & credit card issuers. The near total coverage is expected to help save US financial institutions another $100m+ in fraud losses this year. Powered by the databases, the Early Warning deposit & payment risk assessment services help prevent fraud-related losses by notifying users of high-risk deposits & payments via transaction
accounts, such as checking, demand deposit, negotiable order of withdrawal, automatic transfer service & CU share draft accounts. The databases, which are used for fraud prevention, receive daily updates with non-public secure information regarding accounts, transactions & identities. ‘We’re well positioned to help all financial institutions, regardless of size, realize the value of implementing fraud detection services with extensive national coverage. Early results show 94% of items submitted to PPS for review match accounts contained within the Early Warning databases, enabling financial institutions to have exceptional fraud coverage,’ said PPS’s Paul Finch. ‘The vast reach of our deposit & payment risk services provide a highly compelling & profitable business case for banks & CUs interested in implementing fraud protection measures.’ ‘The expanded coverage from PPS enables Wachovia to review a greater volume of deposited items each day, positively impacting our ability to reduce return item losses,’ said Russ Clark, Wachovia. ‘The scope of the Early Warning services enables us to ascertain even more relevant data, such as the last return reason & whether there have been ‘multiple returns.’ With the passage of Check 21 & expected shortening of check clearing windows, there is industry concern about increased losses at point-of-presentment. The expanded scope of information from PPS, coupled with the potential to access this information in real-time at the teller platform or POS, will help enable the industry to combat this trend more effectively. ‘An unforeseen benefit we discovered while testing the expanded databases was the detection of check fraud patterns we had not seen before,’ said Jim Martin, Union Bank of California. ‘As hold times continue to shorten, fraudsters will persist in trying to take advantage of the system. With the data provided, we will significantly increase our ability to deter fraud before it compromises our institutions.’
DataTreasury & JPMorganChase 7/6 Businesswire
DataTreasury, a Long Island-based technology company, announced today that a major patent-infringement lawsuit brought against banking giant JPMorganChase has been settled. This lawsuit was one of several related suits filed by DataTreasury in federal court in Texas. The settlement applies to former defendants Bank One & in various forms to Viewpointe Archive Services. DataTreasury had accused JPMorganChase of infringing US Patents 5,910,988 & 6,032,137, which were issued to the Long Island company in 1999 & 2000 for image capture, centralized processing & electronic storage of document & check information. These patents describe a technology process capable of implementing Check 21.’ The developmental leap that Check 21 encourages--the electronic exchange of digitally imaged checks--is as profound an advancement for the banking industry as the introduction of the MICR line was 50 years ago. After 3 years of extensive litigation & analysis, JPMorganChase concluded that this settlement was in the best interest of its shareholders. Part of the settlement is documented in the form of a Consent Judgment filed in the Dallas & Texarkana divisions of the US District Courts for Northern & Eastern Districts of Texas. ‘It is comforting to my client that this dispute has been resolved through this settlement agreement,’ said DataTreasury’s patent counsel, Rod Cooper, Cooper Law Firm. JPMorganChase has now been granted a license by DataTreasury, allowing the bank to utilize the patents on a worldwide basis. Terms of the licensing agreement are confidential, but they include ‘safe harbor’ & ‘most favored licensee’ protection for JPMorganChase, giving the bank a competitive edge in checkprocessing. It is clear that JPMorganChase understands both the importance of Check 21
& DataTreasury’s ability to help the bank realize the benefits afforded by that law. ‘JPMorganChase has shown respect for our patents, & a costly court battle has been resolved,’ said Claudio Ballard, DataTreasury & the inventor of the company’s patented technology. Keith DeLucia, DataTreasury’s President, whose incisive negotiating skills were indispensable in attaining this settlement, added: ‘Both parties come out winners in a manner that is clearly in the best interest of the stockholders of each company.’ ‘A complaint for infringing DataTreasury’s patents should be interpreted as a formal invitation to either license or litigate,’ said DataTreasury’s counsel, Ed Hohn of Nix, Patterson & Roach, LLP. ‘We are now preparing to take defendants First Data & Ingenico to trial.’
DataTreasury files against BofA, Citigroup, Wachovia & Wells Fargo 7/6 Businesswire
DataTreasury, a Long Island-based payment processor, has filed patent-infringement lawsuits in the US District Court for the Eastern District of Texas against 4 major banks. These lawsuits allege that BofA, Citigroup, Wachovia & Wells Fargo infringe US Patents 5,910,988 & 6,032,137, which were issued to DataTreasury in 1999 & 2000 for image capture, centralized processing & electronic storage of document & check information. These patents describe a technology process capable of implementing Check 21. Annually, BofA processes 9.4b checks, Citigroup 2.4b, Wachovia 4.5b & Wells Fargo 3.7b. The filing of these 4 patent-infringement lawsuits follows the entry of 2 Consent Judgments signed by federal judges in Texas, judgments that ended patent-infringement lawsuits that had been pending against one of the world’s largest & most respected financial institutions. (www.datatreasury.com/consentdocuments.) These Consent Judgments explicitly state that DataTreasury’s patents are valid & enforceable, & the financial institution in question is now a licensee of DataTreasury’s patents. ‘We hope that these new defendants realize that long & expensive litigation is definitely not in the best interest of their shareholders,’ said DataTreasury’s lead litigation counsel, Ed Hohn of Texas-based Nix, Patterson & Roach, LLP, ‘since it is now clear that DataTreasury’s patents are not only valid & enforceable, but have gained commercial acceptance in the banking industry.’ DataTreasury’s patents have been recognized in several other countries, including Australia, Egypt, Malaysia, Mexico, New Zealand, Pakistan, the Russian Federation, Singapore & Taiwan, & their issuance is pending in a number of additional countries & in the European Union. The international licensing process is scheduled to begin later this year.
DataTreasury could become a toll collector in check imaging 7/7 DTN
Little noticed until now, a small, privately held technology company on Long Island this week scored a major victory in a patent-infringement case that is sending shock waves throughout the electronic payments business, observers say. One direct result, they say, could be sharply higher costs for banks & third-party processors that are building imageexchange networks to swap digital images of checks, including images captured at remote
locations, such as retail stores. These organizations, for example, could be forced to pay fees to license technology for these processes, a cost the smaller companies may not be able to bear. ‘It creates a tollbooth on the superhighway’ of check imaging & exchange, says John Leekley, a former banker & now a consultant & partner in a new Web site, RemoteDepositCapture.com, Parsippany NJ. ‘It will definitely thin out the crowd.’ The potential beneficiary will be DataTreasury Corp., a Melville NY company few heard of until yesterday, when it brought one of the world’s largest banks to its knees in one patent case & then filed suit against 4 other large financial institutions. The company, which holds two patents seen as key to document imaging, storage, & transmission, reached a settlement with JPMorgan Chase & Co. in which the bank admitted the patents are valid & enforceable. JPMorgan will license DataTreasury’s technology at an undisclosed price for worldwide use. DataTreasury, which has filed a series of infringement cases over the past 3 years, last month reached a similar agreement with another defendant, NetDeposit, & is pursuing litigation with 11 other banks & vendors, including BofA, Citigroup, Wachovia & Wells Fargo, which it sued yesterday. But now even major banks, processors, & imageexchange networks will have to take the little company, & its claims, seriously. ‘Yesterday was a wakeup call with the JPMorgan settlement,’ says Leekley. The settlement comes at a time when banks are forming image exchanges to get rising check-processing costs under control by replacing paper with digital images. They’re also eyeing major cost-savings— and, possibly, big fee revenues—in a business made possible by image exchange: socalled remote capture, in which commercial businesses image checks & send them to central locations to be processed. In this way, chain stores, for instance, can consolidate checks electronically at a single vendor for all locations, rather than deposit locally with scores of different banks. How much DataTreasury could ultimately extract in licensing deals, should its remaining claims be upheld, is anyone’s guess. Even the company’s lawyers say they don’t know. ‘We’ve never set a dollar value on the technology,’ says Rod Cooper, a Dallas-based attorney representing DataTreasury. RemoteDepositCapture.com’s Leekley figures it could charge up to a nickel per check. With about 40 billion checks in circulation annually, that would generate $2b a year. Numbers like that send shivers up the spines of industry players, especially since many feel DataTreasury’s claims, which are based on business-method patents, cover processes long in use. ‘I’m surprised it’s gotten this far with DataTreasury,’ says Leekley. ‘There’s clearly prior art.’ That may have to be determined when one of the remaining cases actually goes to trial. In the meantime, DataTreasury’s representatives puts little stock in arguments resting on prior art. ‘JPMorgan responded to that for us,’ says Cooper.
AmStar Systems check-cashing ATM 7/14 PRWEB
AmStar Systems, a Texas self-service financial kiosk manufacturer, announced its new automated check cashing multi-function ATM in summer 2005. Carole Haynes, AmStar Systems, said’ the AmStar eca$hier financial services kiosk has been designed to totally eliminate the need for a back room office to handle customer identification & the check approval process.’ ‘After the check is cleared in ‘real time’, according to Check 21 guidelines, the customer then receives his cash from the machine, rather than having to take a voucher to a service desk to pick up his cash. This automated feature sets AmStar’s terminal apart from other check cashing terminals in the market that are only partially self-service.’ To identify the check-cashing customer, AmStar has designed a self-service terminal that uses a PIN based prepaid debit card. To obtain the debit card for check cashing, the customer must answer questions on the user-friendly eca$hier kiosk screen for
ID verification & an OFAC scan as required by the Patriot Act. If the customer is approved, the machine dispenses the PIN based debit card & the customer can continue with the check cashing process. Haynes explained that the customer has the option of receiving all or part of his check in cash or he can load it onto the debit card, which can then be used at millions of locations to purchase goods & services. This latter option offers security to the person who otherwise might have to carry large sums of cash to pay for groceries, gas, clothes, etc. In addition to cashing a check, the customer can have the added convenience of sending a money transfer or purchasing money orders while at the eca$hier financial services kiosk. ‘Listen to the market & you will find much interest in providing a variety of automated financial services for the large % of unbanked citizens in the US so they can have the same type of conveniences, & at a reasonable cost, that are available to the banked population. The AmStar multifunction ATM offers a variety of reasonably priced financial services on a totally self-service basis, while creating multiple revenue streams for the kiosk owner. ‘There is intense interest in automated check cashing. Many ISOs with customers wanting to buy a self-service check cashing multifunction terminal have contacted us to inquire if we were going to manufacture such a unit.’ ‘Because we have had so many requests over the past 2 years, we decided to bring it to market sooner than originally planned. We believe our self-service check cashing ATM provides the very best solution for the right market at the right time.’
BancorpSouth & Viewpointe 7/11 PRNewswire
BancorpSouth has selected Viewpointe to provide check image exchange activities through its check image clearing service, Pointe2Pointe. BancorpSouth will become the 3rd financial institution in less than sixty days to join the Viewpointe membership. Other Viewpointe members with whom BancorpSouth is now eligible to exchange check images include: BofA, BB&T, Compass, JPMorganChase, First Horizon, HSBC, Harris, National City, SunTrust, Synovus, US Bancorp, Wells Fargo & Zions. ‘BancorpSouth is intent on taking advantage of Check-21,’ said Bill Gully, BancorpSouth. ‘Viewpointe’s growing exchange membership represents a large % of our check clearing volume. We look forward to being a part of & adding value to a group that is providing industry leadership.’ ‘BancorpSouth has a reputation as a progressive institution & that is illustrated in their early adoption of Check-21 technologies,’ stated Jerry Chambers, Viewpointe. ‘Their indepth experiences in image technology & image exchange relationships will contribute greatly to our growing membership of organizations.’ Pointe2Pointe enables any financial institution to safely & directly send & receive check images, rather than paper, with the nation’s largest banks while maintaining their current image archive environment. BancorpSouth will join the Viewpointe User Group - a collaborative team made of Viewpointe bank peers that is chartered to execute image sharing & exchange relationships & operational business practices decisions. ‘This being the 3rd image exchange agreement in less than 60 days for Viewpointe, we are experiencing a growing sense of momentum in the adoption of Check-21 technologies that will ultimately assist the banking industry in reducing significant costs associated with paper check processing.’ BancorpSouth & existing Viewpointe members will begin prioritizing image exchange production scheduling to take advantage of image clearing benefits. Settlement will be facilitated by NCHA.
FSI, VSoft & Fed image services 7/12 Businesswire
VSoft announced that Financial Services Inc (FSI) has implemented its Check-21 product
suite, eDesk Genesis, & the Federal Reserve’s FedForward product, allowing customers to exchange check images for transit items in compliance with Check-21. eDesk Genesis allows financial institutions to capture check images at the central site & electronically transmit them to the Federal Reserve for presentment with any banking institution as a substitute check. FSI is a leading provider of quality data processing, items processing, & Internet services to financial institutions. ‘Implementing VSoft’s image exchange solution was the ground breaking step FSI needed to move forward with a comprehensive imaging plan,’ said Kevin Courtney, FSI. FSI captures check images of deposited items at the central site on behalf of their client banks, & then imports them into the eDesk Genesis system where they are processed. eDesk Genesis creates image cashletters & transmits them to the Fed. The Fed sends the image cashletters to the Fed location nearest the paying bank. If the paying bank is image enabled, the Fed will transport the image cashletter via a secure Internet connection. If the bank is not image ready, the Fed will print a substitute check & physically deliver it to the bank. FSI will implement VSoft’s Branch Item Capture, allowing their bank customers to remotely capture images at their branches & transmit the images to the central site. This will provide significant savings in courier costs, reduce lost item risk, & decrease the time personnel allow for handling deposits. ‘VSoft’s ability to have their software ready, enabled us to be an early implementer. FSI is now well equipped to adjust & begin planning for the new exchange environment brought about by Check-21. The greatest advantage of this implementation as a bank services provider is the ability for FSI to solicit new business.’ ‘VSoft began preparing for Check-21 years before implementation, & it is our goal to enable our customers to stay ahead of the check-imaging curve,’ said Murthy Veeraghanta, VSoft. ‘eDesk Genesis gives FSI an opportunity to complement their image exchange capabilities & expand their competitive position in the imaging market.’
Northern Trust & Panini 7/12 Businesswire
Panini North America, a global provider of distributed check processing solutions, has been selected by the Northern Trust Company to provide check imaging services for its 84 Financial Centers nationwide. The solution reduces a 12-step manual check transaction process by 83%, enabling tellers to spend more time interacting with & servicing clients. Panini’s My Vision X scanner, powered by software applications from Getronics & Alogent, provides Northern Trust with an end-toend check procession solution. ‘We are pleased to be a key component of the Northern Trust platform for distributed check processing,’ says Dave Youngerman, Panini North America. ‘Northern Trust needed a cost-effective, high quality check imaging solution that could accommodate the needs of multiple users, occupy a small space, & reliably handle a variety of transaction volumes in different branch locations,’ says Michael Valdez, Northern Trust. ‘The results have exceeded our expectations with the Panini My Vision X.’
NCR & Check-21 7/14 Businesswire
Since 5/02, when NCR began advocating Check-21, the company has been called upon by the majority of the leading financial institutions in the US to plan imaged-based technology strategies. NCR announced the availability of ImageMark ATM Deposit, its latest offer to help community banks, thrifts & CUs move into the next progression of their Check-21 implementation plans. ImageMark ATM Deposit is a new integrated platform
that combines NCR’s leading ‘No Envelope’ Deposit technology with ImageMark NCompass & ImageMark Passport. ImageMark Passport drives the back-office processing of captured check images, while ImageMark NCompass provides the connectivity for image exchange. NCR’s unique expertise in both self-service & payment processing unites perfectly with this offer, which is specifically engineered to drive image-based transactions from the ATM to the back office & exchange servers. It offers a comprehensive end-to-end means for smaller financial institutions to enhance their imagebased offers. Joe Kniceley, NCR, said, ‘NCR has more envelope-free, imaged-based deposit customers than anyone. Most financial institutions are capturing the images at the ATM & using them on the screen & on the receipt to enrich the customer experience. Since the signing of Check-21, everyone has been talking about the ability to move those captured images all the way through the back office. With this platform, small & midsized institutions have the technology to make that happen.’ Using NCR’s ImageMark ATM Deposit, a customer’s deposit in an image-enabled ATM is immediately routed to the back office for review & correction, if necessary. Processing can begin in minutes rather than the more traditional hours or days. Empty envelope fraud is eliminated, delivery is guaranteed between the ATM & the central operation & a common workflow for all remote-deposit capture points is introduced. NCR’s ImageMark NCompass is engaged to provide sophisticated balancing & error detection tools designed to reduce back-office time, virtually eliminate errors & flag questionable transactions for investigation. Smaller financial institutions can use this capability to expand their geographic reach & establish virtual branches by using enhanced deposit features & validation with the automated selfservice channel.
First Horizon & Check-21 7/18 eWeek
Taylor Vaughn doesn’t necessarily want to create new sales & communications channels with business partners & customers. Vaughn just wants to bring his company’s existing channels into the 21st century. Vaughn has good reason to do so. As VP of cash management at First Horizon, $35.2b in assets, he oversees 2m personal & commercial checks zipping through the bank’s financial systems every day. That amounts to a lot of paper. Vaughn wants to reduce it to none. To slash paper use, Vaughn steered First Horizon to image exchange-that is, processing electronic images of checks rather than the real McCoys. First Horizon has pushed the idea since 2001, allowing customers to view processed checks online. Last year, the bank took another step forward when it became one of the first to exploit new legislation allowing banks to swap images among themselves. ‘We said, ‘Ah, this is a dream come true—now we can exchange images with other banks,’ Vaughn said. ‘Now if a check comes into our bank & we put it on our sorter, we don’t have to put that check on an airplane & deliver it.’ The benefits for First Horizon are enormous. Vaughn estimates that the bank saves 0.75c to 3c on each processed check, thanks to reduced postage, paper & transportation costs. At approximately 2m checks per day, the annual savings can top $10m. Despite the savings, however, moving from paper to image exchange gives most banks pause. Not only do banks need costly new hardware & software, but they need to create new controls & procedures for previously manual tasks such as handling bounced checks & to create common standards for data exchange. Above all, banks need the proper legal framework allowing them to treat an electronic image just like a real check. That framework did not arrive until last year, when Congress enacted Check-21 to allow image exchange. That late start, coupled with high startup
costs, has led most banks to take their time in adopting image exchange. Not First Horizon, Vaughn said. It saw the potential of streamlined communications channels 4 years ago. ‘We recognized that there was no legal framework at that time to do this, but we thought it made perfect sense. The framework would be there one day.’ A crucial partner in first Horizon’s efforts has been Viewpointe. Since 2001, Viewpointe has worked with First Horizon & other banks to promote image exchange & to act as a central repository for check images. The scope of Viewpointe’s operations is impressive: It has a database of more than 44b check images, each 26KB in size. Customers include the largest names in banking, such as Wells Fargo, BofA & JPMorganChase, & while Viewpointe has only 11 customers, it issues 65% of the checks written on any given day in the US, the company estimates. Viewpointe provides the technology infrastructure so that First Horizon & other banks have a place to send check images. Each bank is responsible for capturing images on its own; Viewpointe stores the images & steers various data files to the proper destination, so banks know the images are available to be seen, processed & shared. ‘We work bank to bank, trying to figure out what is the most cost-effective way to move to electronics,’ said Jerry Chambers, Viewpointe. ‘This is a sharing capability we’re developing for our 11 customers.’ First Horizon went to work early. Its first step was to install new cameras on each of its 12 IBM 3890 check processors that can capture front & back images of every check that comes their way. Then came communications software provided by Viewpointe, which sat in First Horizon’s mainframe & shipped images to the Viewpointe archive daily. By 2002, First Horizon began offering access to check images to commercial customers. Customers had long been able to see a list of check numbers as they were processed; now they could click on a number & call up an image of the check itself & even burn the images onto a compact disc. First Horizon developed the Web interface internally with a tool from Viewpointe that linked into its image archive. While all that sounds simple, few banks rushed to embrace image exchange as First Horizon did. ‘The investment from the banks is fairly sizable,’ Chambers said. The total cost of installing new cameras, software & controls procedures can easily run to tens of millions of dollars. ‘This was a major expenditure.’ Viewpointe leans on IBM for its architecture. The database (10 petabytes) runs on pSeries servers & the DB2 database system, using IBM’s On Demand Business application. Storage is managed on IBM’s Shark direct-access storage devices. Introducing customers to electronic check images was a good start for First Horizon, but until one year ago, the bank still had to print & ship paper copies of processed checks to other banks; images had no standing under the law. Check-21 granted that standing. Vaughn calls such bank-to-bank operations ‘the Holy Grail of a common archive.’ As soon as Check-21 enabled electronic-only transactions, First Horizon launched such a program with SunTrust, a $165b bank that uses Viewpointe for image archiving. How does image archiving work? Say a First Horizon customer deposits a check drawn from a SunTrust account. First Horizon captures an image of the check & stores it in the Viewpointe archives. Then, rather than ship a paper copy of the check to SunTrust, First Horizon sends a data file that alerts SunTrust to the transaction & includes an index number to find the image, plus instructions for payment. SunTrust then presents that information to Viewpointe, giving an index number that lets SunTrust call up the image & process it as a normal paper check. Simple in theory-but still very complicated in practice, Chambers warns, because of the inertia that comes with decades of processing checks by paper. ‘For banks to take advantage of Check-21, they have to wean their customers off getting the paper back, & they have to retool their back room.’ Overhauling those backoffice operations ‘is all over the map.’ At First Horizon, the hardest task was adapting other bank IT systems to accept images rather than paper. New software had to tell other
systems that electronic files had been substituted for paper, & the bank had to ensure that no duplication would happen if the paper somehow did get processed. ‘That was nowhere near as simple as we thought it would be.’ First Horizon purchased a virtual sorter from Sterling Software (since acquired by CA) to receive & route electronic images, & the sorter affected other bank controls. An electronic file could be returned as a fraudulent check, so First Horizon had to amend its anti-fraud procedures to cope with images rather than paper. ‘That’s a high level of manual labor.’ Chambers said that banks will push the capture of check images further toward ‘the point of first presentment,’ such as when a consumer writes a check at the store. ‘What First Horizon wants to do, & what a lot of players want to do, is to use the Check-21 law so that commercial customers can digitize checks & make electronic deposits.’ That will let banks expand their geographic reach to practically anywhere in the US, since their transaction channels will be shuttling data rather than paper. Not bad for building a 21st century sales channel.
Parascript forms processing 7/19 PRNewswire
Parascript FormXtra Enterprise 3.0, the next generation of its complete forms processing software. FormXtra 3.0 processes all types of forms with the industry’s highest recognition & accuracy rates including: insurance claims, medical forms, business reply cards & mail order forms. With dynamic quality control, forms processing workflow & administration tools, service bureaus & data processing centers can lower operating costs by reducing keystrokes & minimizing tedious & expensive manual data entry. ‘FormXtra Enterprise 3.0 manages verification & data entry based on performance,’ said Jeff Gilb, Parascript. ‘The software offers organizations everything they need for the most complete, cost-efficient forms processing workflow.’ Highlights: Built-in dynamic quality control that achieves the highest level of accuracy with minimum keystrokes. The software automatically adapts to required verification levels so forms processing administrators can minimize verification levels for top keyers & increase them for less accurate operators. The improved forms processing workflow now differentiates between keying tasks to further minimize keystrokes. Enhanced administration tools provide the capability to customize configuration for higher processing speed & run comprehensive custom reports to improve system monitoring. ‘The integration of Parascript FormXtra Enterprise into our solution allowed us to reduce operating costs by 25 - 30% for our automated forms processing workflow, & decreased manual keying time by up to 72%,’ said Jonathan Boumstein, Data Dimensions. ‘With 100,000 documents per month running through FormXtra with little or no operator intervention, the performance of the solution has consistently exceeded client required read rates & resulted in significant cost savings for them.’
Check 21 Kodak & Check-21 7/26 Businesswire
In the business world, cash is king. & the faster that checks are converted to cash, the more competitive the business. With this in mind, Eastman Kodak document imaging business launched a suite of hardware, software, & professional services to help banks, businesses, & federal, state & local government offices more easily & quickly process checks, leading to accelerated clearance & payment. Kodak’s solution revolves around the conversion of paper checks to digital images at the point of check presentment. The new offerings, which include the Kodak i6030 Check Scanner, image capture & transmission software, & a host of support services, capitalize on the benefits of Check 21. Known as Check-21, the federal legislation removes the barriers to electronic check processing, setting the stage for checks to clear-and money to be moved-in a matter of hours instead of days. Celent
estimates that bank adoption of point-of-presentment check image capture systems will grow by 82% annually each of the next 3 years, with adoption by businesses & government offices rising 40% - 60% annually. Banks; middle-market companies with revenues between $5m & $1b; & government offices, especially at the state & local levels, are target customers for Kodak’s portfolio. Kodak’s portfolio of products & services enable high-quality digital images of paper checks to be captured at the point of presentment-for example, when a customer gives a check to a bank teller, when a county resident purchases a marriage license or duplicate birth certificate in a clerk’s office, or when a small business owner stocks up at an office supply store. The checks can either be scanned by the teller, government clerk, or cashier or by back-office employees at the branch, office, or store level who oversee the preparation of the day’s checks & other payment-related documents. A key benefit of check capture at the point of presentment is that checks clear faster-same-day clearance rather than 2 - 5 days with paper checks. Banks, businesses, & government offices can realize decreased operational costs through a reduction in the need for labor-intensive services, such as the transportation of checks & deposits from one location to another. Other benefits include the expedited collection of returned checks & the ability to more quickly identify fraud. For banks, customer service is enhanced through fewer disputes, greater accuracy, & gains in efficient cash-drawer balancing. ‘Kodak is the world leader in imaging, & we have 75 years experience in helping businesses deploy imaging solutions, beginning with a commercial camera & microfilm that George Eastman designed to help a NY banker take pictures of checks,’ said Andy Lawrence, Kodak. ‘For the past 15 years, Kodak has been an industry leader in digital document scanning for businesses & government offices of all sizes. We are now marrying our financial services heritage with our digital innovation to bring a new offering that fulfills crucial business & government needs.’ Kodak’s portfolio includes: A scanner that converts paper checks into high-quality digital images. The Kodak i6030 Check Scanner is designed for use in environments such as bank branch teller lines, local government offices, retail stores, or back-office locations at the branch, office, or store level. The i6030 will enable tellers, clerks, cashiers, or back-office personnel to scan up to 40 checks per minute, in accordance with industry standards. The 5.1-inch-by-11-inch scanner can be equipped with a pre-scan imprinter that prints document control numbers or other custom information onto the paper checks. The scanner has a list price of $1,895 with imprinter. Software programs, developed in with Wausau, that manage the capture of images & the secure transmission of them via the Internet & IT networks. The Kodak t6000 Client Software for Transaction Applications manages the capture of check images-either with the i6030 Check Scanner or other devices-and then transmits extracted data & digital images securely via the Internet to either the Kodak t6000 Server Software for Corporate Transaction Centers or Kodak t6000 Server Software for Financial Transaction Centers. The software then aggregates & routes the data & images to banks, 3rd party clearinghouses. Software pricing is dependent on the volume of checks to be processed & specific application requirements. Professional services that support the smooth delivery of the product into a customer’s environment-including site inspections, installation of hardware & software, consulting services, software customization, & product training. The portfolio of hardware, software, & professional services will be available beginning in September. Kodak plans to sell the solutions portfolio via a select group of its reseller channel partners that have a proven track record of delivering enterprise solutions in target markets. Kodak’s team of professionals will work with reseller partners to identify sales leads, complete sales, & provision products & services.
Check 21, ARC and Payments Payments in transition: where
have all the changes gone? 7/25 gtnews
The uptake of new & improved payments products has been much slower than anticipated. Paper-based manual payments systems are still prevalent & most banks are still using payments platforms & architectures that had their genesis in the 1960s & 70s. Given the broad spread acceptance of personal computers & Internet communication, the question becomes why has the payments industry been so slow to change? For many years, pundits have been predicting the dawn of a cashless & checkless world & the demise of traditional transaction methods. In the US specifically, the ‘death of the check’ has been heralded & discussed for at least the last 30 years. The reality is, however, that the uptake of new & improved payments products has been much slower than anticipated. Paper-based manual payments systems are still prevalent & most banks are still using payments platforms & architectures that had their genesis in the 1960s & 70s. Given the broad spread acceptance of personal computers & Internet communication, the question becomes why has the payments industry been so slow to change? By their nature, financial institutions are inherently conservative & risk averse. Barring regulatory demand, change usually takes place very slowly, almost coming to a complete halt without some strong motivation. The typical drivers for change in banking tend to be cost control or efficiency, customer demand (revenue pressure), & risk control. While each of these areas can be affected by transformation of payments systems, the overall impact of these drivers has been less than impressive, in terms of mandating change. The foundations of much of the current payments system infrastructure have been in place since the 1960s. As business & consumer demand for financial transactions increased in a post-WWII era the public & private sectors, in the form of banks & central banks, joined together to create an incredibly large & sophisticated infrastructure to manage the flow of paper-based transactions, primarily checks. As volumes grew, existing processes were automated to improve efficiency & entire businesses grew up around meeting the needs of the checkprocessing industry. The end result has been the creation of a large base of fixed costs dedicated to processing manual transactions. Electronic transactions are arguably more cost effective than corresponding paper-based ones, on a per transaction basis. However, when the costs of supporting the existing infrastructure are included, the business case for change becomes questionable. As will be discussed later, this situation is exacerbated by the fact that few banks look at payments holistically. Most banks operate in silos & have created separate operational entities for paper & electronic payments. This makes it difficult to determine the overall economic impact of changes in transaction patterns & results in continued investment in existing systems that have already reached scale economy, rather than investing in newer unproven payments vehicles & platforms. This situation is changing as maintenance costs for ageing payments platforms increases. But at the moment, banks tend to be more focused on increasing the cost efficiency of their existing payments products rather than making extensive investments in new systems. The economic situation is complicated by the surprising lack of customer demand for newer payments products. Consumers have been very slow to move from paper to electronic payments. Despite a variety of marketing campaigns by banks, retailers, & trade associations, it has only been in the last year that the volume of retail electronic payments, primarily card & ACH, has equaled that of the paper-based market in the US. Businesses have been even slower to change their payment habits. Trade organizations, such as AFP, have made it very clear that checks are the preferred method of payment, at least from the disbursement side of the house. This lack of demand has made it difficult for banks to justify huge investments in new payments infrastructure. Faced with taking the risk that ‘if
you build it, they will come,’ banks have again focused on improving the overall efficiency of traditional payments platforms, & only making limited investments in newer systems. The third potential driver of change is risk control. This can be looked at from several points of view. Firstly, it is the issue of transactional risk control. Banks & corporations have spent significant time & money developing technology & processes to control & manage the risk of check fraud. Although check fraud is a growing concern for most banks & many corporations, few consumers see check fraud as a major issue. By comparison, both banks & consumers are increasingly concerned about credit & debit card fraud. Banks have spent large amounts of time & money developing ways to control the risk of card fraud, but losses continue to climb & consumers’ fears, largely due to growing concern about identity theft, continue to increase. As a result, at least for the moment, transactional risk does not seem to be an adequate reason to radically change payments systems. The second point of view is that of operational risk. The increasing cost of maintaining existing payments platforms may be an incentive to move towards newer & more efficient platforms. As previously mentioned, much of the existing payments infrastructure has been in place for 30-40 years. Although the systems & technology have been updated & modified over time, their overall complexity & the related cost of maintenance continues to grow. Despite the increasing cost, however, the existing systems do work, & as the old adage says ‘if it ain’t broke, don’t fix it.’ While the drivers for change may be mixed, barriers preventing it are significant. Here again we can look at risk, revenue or customer demand, & cost efficiency. In each case, there are factors that create potential barriers to any change barring absolute necessity. Payments are a core function for financial institutions. Various studies have indicated that payments account for 30-40% of total net banking revenue. Understandably, most banks are hesitant to make major changes to core systems in a big bang approach when so much of their revenue is at stake. The risk of potential failure is just too high. Unfortunately, the same complexity & age of existing systems that increases maintenance costs also makes it difficult to make significant changes incrementally. As a result, major changes in existing systems tend to be deferred if at all possible. Although referred to earlier as surprising, the lack of customer demand for new & improved payments systems is actually not that surprising at all. Most consumers tend to resist change unless there is some strong incentive to make the change. In the case of payments, one might expect this to be an economic incentive, given that electronic payments should be cheaper & more convenient than the corresponding check-based ones. While this might be a true statement on an all-in cost basis, most customers, whether consumers or corporations, do not see it this way, mainly because there is lack of transparency in payments processing costs in the banking industry. Very few bank customers see the actual cost of check writing as a disbursement method. Rather than charging transaction fees, most banks recover their costs through a combination of float & exception item service charges for check writers & deposit charges levied on commercial customers. In fact, many US banks have extensive ad campaigns around variations on the theme of totally free checking. Even for commercial customers, the per-transaction or ‘penny price’ for individual checks is rarely equal to its true cost. This apparent subsidy of check writing by the banking industry provides customers a strong incentive to stay with their traditional habits of writing checks, while check receivers bury their costs in the prices that they charge the end-users. This lack of transparency is also an issue within most banks. As previously mentioned, most banks are highly siloed when it comes to payments platforms. Very few banks have the ability to look at payments as a whole & have difficulty apportioning costs & revenues across various payment channels & platforms. As a result, decisions are often made based on an incomplete understanding of the impact of
change on all payments products. While free checking may be viewed as a needed prerequisite to maintaining demand account balances, electronic transactions are fully charged, resulting in an added customer disincentive to change. Additionally, investment decisions are often made based upon the relative size & importance of the payment channel, rather than on the long-term strategic interests of the financial institution. This tends to favor existing payments systems & platforms that have already developed scale volume. Finally, from a cost efficiency point of view, payments processing is a highly complex network system. This is especially true in the US, since there are a large number of financial institutions that clear payments. In large systems of this type, participants are highly dependent upon the actions of other network participants. One bank cannot change to a more efficient method of processing payments unless a significant number of the other participants make a similar change. As a result, in a variation on the traditional concept of ‘The Prisoner’s Dilemma’ in gaming theory, the network tends to suboptimize & discourage change. Since everyone can process checks, we continue to process them & there is little movement towards more efficient payment methods. While the economic transparency of our various payments systems is unlikely to improve any time soon, end-users are finding other reasons to demand incremental, if not overnight, change. Decades of such incremental changes have already had significant effects on both check & electronic payments systems. Over time, we have gradually built an electronic infrastructure that can effectively parallel existing paper-based systems. The increasing age of the existing systems will eventually force a transition as maintenance & operating costs continue to increase. Regulatory issues, such as Check-21 in the US, image processing mandates in parts of AsiaPac, & pricing harmonization in the EU, will only accelerate the rate of change. We may never see a totally cashless & checkless society, but the transition to more integrated & automated payments systems is happening. Rather than the revolution in payments that was once predicted, we are in the midst of an evolution, a slow sea change that will occur without most of us ever realizing that there has even been a change. How we get there is perhaps not as important as the fact that we will eventually get there. & by then, the pundits will be predicting even more radical changes.
Company News AFS remote capture solution 7/22
AFS Advanced Financial Solutions announced AFS Direct POS, an approved cashiering solution with check image capture that enables remote check deposit from the POS. This provides retail merchants with multiple benefits, ranging from fewer trips to the bank, improved cashflow, & a shortened collection cycle that narrows the window for check fraud with faster authentication & earlier notification of questionable or fraudulent items. AFS Direct POS provides retail merchants with the ability to scan, capture & send check payments directly from the POS, as they occur, throughout the day. Returned or NSF checks are identified in hours, rather than days, providing retail merchants with the ability to re-present these items quickly, with a higher % of collection. ‘AFS Direct POS provides retail merchants with a viable & affordable electronic payments solution that can eliminate the need to physically deliver & deposit checks at financial institutions,’ said Gary Nelson, AFS. ‘Our solution helps retail merchants optimize their image capture processes by increasing revenue, decreasing costs, & improving operational efficiencies, which can eliminate the expense, risk, & limitations of traditional deposit methods.’
Fed, BofA hard-pressed to explain lost checks 7/21 CharlotteObserver
Somehow, the checks disappeared. Several thousand checks were lost in transit 2/23 between the Baltimore office of FRB Richmond & a Baltimore office of BofA. The checks, written by BofA customers, had arrived at the Fed from the other banks where they had been deposited. They were on the way to BofA so the company would withdraw the proper sums from the accounts of the people who wrote the checks. But the bank called the Fed on March 10 to say the checks had never arrived. Unlike a string of recent losses of customer data by BofA & other financial institutions, the loss of the checks should not endanger customer privacy. But so many customers were inconvenienced that the Fed received calls for months. In an unusual move, Richmond FRB released a letter Monday describing the situation to banks. BofA & Fed say they don’t know what went wrong. They say a BofA courier signed for a package that should have contained the checks. Both say they’re working to fix the problem, in some cases by finding electronic images of the missing checks so BofA can send the proper sum to another bank. 5 months later, some of the people who cashed those checks are still waiting to see the money in their accounts. ‘It’s dragging on a little longer than we hoped,’ Jack Turnbull, FRB Richmond, said. A Fed spokeswoman said she did not know how many transactions remained incomplete. BofA said: ‘We’re aware of the issue & we’ve been working with the Fed to determine what & how it happened & to ensure that it is fully resolved. We do not believe any of our customers were impacted.’ BofA & many other banks keep an account with the Fed. When a check written by a BofA customer is deposited at another bank, the 2nd bank sends the check to the Fed, & the Fed credits the bank with money from BofA’s account. The check is then sent to BofA, which withdraws the funds from the account of the customer who wrote the check. There are 40b checks written each year, & ¼ are handled by the Fed. The rest are written & deposited by customers of the same bank or transferred through private services. While losing checks in transit is very rare, the problem highlights the importance of the industry’s move to processing checks electronically, said John Hall, ABA. Since October, federal law allows banks to send images of checks electronically instead of sending the checks themselves. Only a small share of checks now travel through the system, but the number is expected to grow steadily over the next 3 - 5 years. ‘Then there wouldn’t be the need for actually moving these paper checks.’
Viewpointe’s strategy 7/21 AB
Viewpointe’s image-sharing system, conceived as a centralized check-clearing hub, is morphing into a decentralized exchange network that nonmember banks could use to send files to one another. The vendor has long claimed to be unique because of its file-sharing model for clearing images. By developing a service that will let banks exchange files with each other, whether or not they use the archive, Viewpointe is becoming a more direct competitor to the image-exchange networks operated by SVPCo, M&I’s Endpoint Exchange, & the Fed. ‘To a large degree, Viewpointe is competing with SVPCo in the exchange arena,’ said Bobby Moody, Synovus. Last month Synovus became the 2nd banking company in as many months to announce that it would use Viewpointe’s Pointe2Pointe service. 11 banks store check images in Viewpointe’s massive shared archive, & the vendor says its system stores about 65% to 70% of the nation’s check volume. It has spent years developing its system & has long said its goal is to let its customers clear checks within the archive, with banks giving each other permission to view their files. 4 member banks are doing so, though the volume is low, & the vendor has said
the approach is more efficient than image-exchange networks, in which banks transmit the files to each other. But in May, Viewpointe said it would let nonmembers connect their own archives to its own to facilitate the exchange of images. Compass Bancshares was the first company to sign up for Pointe2Pointe. BancorpSouth said that it is preparing to use the service. Those 2 companies, along with Synovus, are conducting 90-day implementation projects. None of the 3 store images in Viewpointe’s shared archive, but all of them said they wanted to exchange images with some of Viewpointe’s members. Synovus & BancorpSouth said they wanted to exchange files with Compass. ‘With Pointe2Pointe, they’ve basically adopted the SVPCo model as one of their options,’ said Aaron McPherson, Financial Insights. ‘It’s not that big of a jump. Basically, they added the ability to download images rather than using Viewpointe software to view them.’ Jennifer Lucas, Viewpointe, conceded that the new model lets banks use her company as a middleman for transmitting files between companies that don’t use the archive. ‘Short term, we are trying to promote adoption’ of image settlement. Viewpointe’s long-term focus is on sharing rather than exchange, & ‘we don’t think we compete with any of’ the image exchange networks. Banks have multiple options for using images to clear checks. Many banks are eager to cut their processing costs & accelerate settlement by transmitting checks electronically, instead of sending the original items. Use of image systems remains low, & though Pointe2Pointe is a new option for banks, it remains to be seen how rapidly it will take off. Moody said Synovus is talking with potential Viewpointe trading partners, which he would not name. Pointe2Pointe customers must establish individual agreements with each of the banks with which they hope to exchange images. Synovus is sending images across Endpoint Exchange. His company is testing its connection with the Fed & hopes to use the FedForward service to transmit check images to the Fed by the first week of next month. ‘With the way the landscape is today, we believe it makes sense to have multiple clearing partners, which is really exactly the same way we do it in the paper world.’ George Thomas, Clearinghouse, expressed skepticism about whether Viewpointe’s exchange will take off. Viewpointe conducted its first image-sharing test in December, & the low participation now demonstrates the challenges in rolling out image-clearing services. Thomas does not consider Viewpointe a direct competitor, & noted that ‘they don’t have a working product.’ First Horizon & SunTrust began clearing through the Viewpointe archive in December, & BofA started doing so this month. Lenora Thompson, SunTrust, said that clearing volume remains low but has grown to thousands of images nightly, from a few hundred when her company started sharing files with First Horizon. She agreed with Moody that Pointe2Pointe could facilitate image clearing with more banks. ‘We’re excited about that. That gives us more potential trading partners to exchange with.’ For now SunTrust is focusing on ramping up its volume with First Horizon, though ‘we’re going to be looking at new partners very soon.’ 8 banks are using SVPCo’s network to exchange images, but the going has been slow. The system had its first successful test in August, & participants are sending 4m items per month, only a fraction of their volume, through the network. Its system is connected to the Fed’s & Viewpointe’s. The Fed has had problems getting its image systems up & running. FedForward, which lets banks transmit images to the Fed, went live in October, but several target dates have been missed for the introduction of the FedReceipt service for sending files to paying banks. ‘We’re still in testing’ with FedReceipt, said David Fettig, FRB Minneapolis, who would not offer a revised start date. ‘My hunch is, it all depends on how testing goes.’ Jeff Vetterick, Endpoint, said 4,000 banks, most of them small ones, are enrolled in the network; 2,500 of them are clearing payments through it, & the rest are testing their connections. The banks transmitted just 6m images through the network last month. Viewpointe’s move into
image exchange is a departure from its file-sharing approach. ‘It’s potentially more competition for me, but it’s a good thing, because it validates our model.’
Carreker & remote capture 8/2 PRNewswire
Carreker announced that its Remote Deposit Capture Strategy, including a complete remote deposit capture solution called Source Capture Suite, is capable of capturing check images from any deposit-taking location at a bank, savings & loan, credit union or customer site. This includes corporate centers, branches, teller stations, small businesses, operations centers, & ATMs, & cash vaults, mortgage offices, lending offices, private client offices, & bank by mail offices. Remote deposit capture has emerged as one of the most attractive technologies enabled by advances in check electronification & the enactment of Check 21 legislation. By capturing checks earlier in the deposit process, banks estimate they can realize sizeable revenue increases & significantly reduce their costs through reduced transportation & processing requirements & improved float. Carreker’s offering consists of a full set of technologies in the Source Capture Suite & a consultative service, Alternative Capture. Embedded in all components of Carreker’s remote deposit capture suite are common, open, integrated technologies for image quality & usability, duplicate item detection, item level qualification & balancing, IRD file creation, & electronic exchange. All are designed to be compatible with the user’s existing payments environment & to be easily integrated with the existing technology infrastructure. The popularity of remote deposit capture with banks’ corporate & small business customers is the source of the significant product revenue potential. Other major benefits include: uniform standards, policies & service level agreements; reduced maintenance, conversion & interface requirements at central operations; consistently high quality data & images for clearing & archival purposes; & reduced risk exposure & fraud losses. Source Capture Suite includes the following components for supporting check electronification at virtually all possible locations. They can be deployed separately or as an integrated suite: Corporate Capture is designed for corporate customers that receive as many as 10,000 items a day. The system can be used to capture payments & remittances in batches & transmit them to the bank electronically. Carreker’s Corporate Capture has been deployed by Creative Payments Solutions (CPS) for corporate customers with up to 3,000 items a day. Teller Capture enables efficient check image capture & balancing at the teller station, while the customer is present. Teller Capture can be combined with Branch Capture for maximum deposit capture efficiency. Teller Capture is being deployed by Wells Fargo for 3,300 stores. Branch Capture allows bank branches to capture deposits in batches, behind the teller counter. The system accommodates a wide variety of volume & processing window scenarios to accommodate branches in major cities or very remote locations. Web Capture is a solution for businesses that would typically capture hundreds of items a day. It is an easy-to-use, browser-based solution offering check image capture & processing & requiring minimal software at the client site. It is in beta at Creative Payment Systems (CPS). Batch Capture is designed specifically for the unique branch environment of savings & loans & credit unions. Its store & forward capability allows for capturing & submitting work at the most efficient times throughout the day. ATM Capture enables check image capture at ATMs & can be integrated within the banks ATM processing software to maintain the highest levels of reliability & support. Carreker’s consulting service, Alternative Capture, is being deployed at a number of leading banks. John Carreker, Carreker’s Global Payments Technologies Division, said, ‘Between the
breadth of our suite & our clients’ embrace of the special features of our Source Capture solution, we lay claim to the market leadership position in this critically important aspect of payment electronification. Our clients are reaping significant savings & competitive advantages because of the integrated design of our solution.’ Suzette Massie, Carreker, said, ‘From a strategy standpoint, our clients are faced with a complex array of remote deposit capture choices - each of which requires careful planning & staging. Our Alternative Capture consulting is helping them orchestrate & accelerate wise decisions, so that they can begin to reap the reward quickly & avoid costly mistakes.’ Denny Carreker said, ‘With each advance in check electronification, our company is ready with the broadest array of solutions & the deepest expertise for helping banks make & implement the right decisions. Remote deposit capture has proven once again that different customer segments require different solutions. Our integrated design approach is paying off.’
Fiserv & BillMatrix 7/27 Businesswire
Fiserv will acquire BillMatrix, a provider of expedited electronic bill payment services, adding a fast-growing niche to its significant payments business. BillMatrix is expected to generate revenue of $90m in 2006. The purchase price is $350m, & the transaction is expected to close in IIIQ. The transaction is expected to be neutral to earnings in 2005 & slightly accretive to earnings in 2006. Leslie Muma, Fiserv, said the acquisition of BillMatrix will enable Fiserv to expand its capabilities in electronic bill payment. ‘It’s no secret that Americans are increasingly using the Internet & the telephone to electronically pay their bills,’ Muma said. ‘The acquisition of BillMatrix gives Fiserv a foothold in electronic bill payment technologies to enhance our extensive payments capabilities.’ BillMatrix, founded in 1994, provides billers with an outsourced payment solution that allows their customers to get immediate credit for bills paid online or over the phone using electronic checks, debit cards or credit cards. The company’s 120 clients include utilities, telecom providers, insurance companies & lenders. Electronic transactions made up 36% of the 17.7b consumer bill payments initiated in the US in 2004 compared with 23% of total bill payments in 2001. The share of electronic transactions is expected to increase to 56% of total bill payments by 2007, which is 16% growth rate from 2004. Pat Foy, Fiserv, said Fiserv is seeing strong demand from its financial institution client base for electronic billpay solutions. ‘There is considerable opportunity for BillMatrix to expand on its current client base, & we believe we can leverage the company’s success in the biller-direct market to offer more options to our clients. Financial institutions can use BillMatrix’s services for their own expedited payment needs & to resell the company’s services to their corporate customers.’ BillMatrix’s Scott Walker, will join Fiserv after the acquisition is completed. The majority of the company’s stock is owned by Great Hill Partners, a Boston equity firm, & other outside investors, while the remainder is owned by management & employees. Walker said the acquisition by Fiserv will enable BillMatrix to continue its track record of strong growth. ‘This is a very exciting time in the history of BillMatrix because we are joining with a company that not only understands payments, but values the entrepreneurial spirit that is so much a part of our company. Through Fiserv, we will have access to capital & other resources that we can use to improve our current offerings to clients & to pursue additional growth & new market opportunities.’ Fiserv has a comprehensive payments business that includes processing of debit/ATM transactions, credit cards, checks, currency & lockbox, & cash management products & services, Internet bill payment & presentment, plastic card production, statement mailing & ACH solutions.
KeyCorp clears the way for Check-21 dptmag 7/27
Back in 2003, executives at KeyCorp, assets of $88b, were looking forward to Check-21 which allows banks to store & deliver electronic copies of customers’ checks in lieu of paper checks, if customers prefer. The creation of substitute checks or check images removes the need for physically transporting checks & eliminates delays that can pose problems for check clearing, such as extreme weather conditions or transportation constraints due to homeland security measures. Key’s management recognized early the advantages of Check-21. With Check-21, Key could offer customers choices in how they receive their cancelled checks – print or electronic – & cut costs. Automating & streamlining some processes associated with retail accounts & monthly statements, Key could offer better service. As more financial institutions were to adopt image exchange, the checkclearing cycle could begin to shorten, providing customers with quicker deposit availability. As one of its first tasks, Key selected Prinova, a North American provider of innovative document design, development & delivery solutions for the large volume document delivery market, to help them with the project. Key then chose Exstream Software’s Dialogue software to handle the companies’ digital imaging needs today & into the future. ‘We selected Dialogue for its ability to dynamically include check images or substitutes, truncated statements-those that receive no checks—& statements that still include physical checks,’ said Al Pytel, KeyCorp. ‘We knew that Prinova’s expertise with the software would provide smooth integration across the entire project. Prinova helped Key transfer the coding for the traditional retail statement programming to Dialogue. Key lacked documentation detailing its legacy system’s underlying business rules, which could have meant that each business rule would have to be recreated. But Prinova had a strong banking background & understood the inner workings of Key’s existing technology. ‘Prinova’s expertise in bank document management allowed them to reverse engineer the old application, uncover the business rules & translate them to the new Dialogue system,’ explained Nancy Cook, Key. ‘That saved us a tremendous amount of time & effort, because we didn’t have to redesign the statement from scratch.’ Prinova brought in one of its programmers & a team leader for the project, who interfaced with Key’s team on a daily basis. The project was split into 2 phases. The first phase involved converting a large portion of retail bank customer statements. Phase 2 converted the remainder of the retail customer statements, including high net worth statements for Key’s best customers, which consolidate all of a customer’s accounts into a single statement. Key & JPMorganChase were the first to exchange images electronically in 8/04. In November, Key became the first to use the Fed’s FedForward product supporting the Check-21-enabled electronic clearing process. This FedForward service enables deposited paper items to be converted to electronic images & presented as either substitute checks or an electronic file to the paying bank. At launch, 70% of Key’s customers were receiving truncated statements, meaning no checks were being returned. The remaining 30% were targeted for the image statement project & all but 6 - 7% accepted, or opted in to receive check images. 200,000 customers migrated to receiving statements electronically. Within 30 days of the first phase of implementation, Key saw savings, while the entire project, including the Prinova work & the Dialogue purchase, achieved payback in just a little over a year. Feedback from client advisors & retail staff has been extremely positive: 94% of all retail branches have opted in to the new digital imaging system to date. ‘Prinova helped us speed delivery, which resulted in a faster time to market,’ said Helene Matheny, Key. Its retail banking customers now receive a digital image of the front side of their checks as part of the actual statement, which is easier to store. The new process cuts 1 - 3 days off
of mail delivery time, & since the envelope weighs less, Key saves $1.5m per year in postage. Key has been able to reduce staff as a result of the new automated processes. ‘After the checks are captured & charged against, we used to have to store & then cyclesort them to put them in order so we could automatically insert them with the statements. Key is charged on a per-click basis for each check that runs through the machine. Since we no longer have to sort those checks, the number of clicks has gone down & we’ve reduced the number of sorters & sorter operators.’ The new digital system is faster, increasing output from up to 800 checks per hour to up to 6,000 per hour. & there are fewer errors. ‘In the past customers could get a wrong check & then would have to contact the call center & report the mistake. That’s no longer an issue.’ Since Dialogue provides a graphical user interface, many of the daily functions can be handled by the operational group in charge of the project, alleviating the team’s dependency on IT. Key & Prinova are evaluating new projects they can work on together that will continue to improve process efficiencies & increase customer satisfaction. ‘With Prinova’s help, we’ve been able to maximize the flexibility of the new imaging system & react to customer needs quicker. We’ve been happy with the work Prinova has done in the past for us & we’re happy with the work they’ve done on this project. When we see a good thing, we stick with it.’
Trustmark hesitant to exchange images 8/2 AB
Trustmark National Bank of Jackson MS said it is quickly ramping up its image-capturing capabilities at its branches for processing checks at a central site but is more cautious about exchanging images with other banks. Nicholas Anderson, $8.2b-asset Trustmark Corp., said that check processing volume dropped 11% in the first half of the year, compared to the same period last year, as customers have switched to other payment forms, such as debit cards & online bill payment. As a result, per-item expenses are on the rise, Anderson said. ‘The biggest thing is the transportation cost.’ Trustmark, which has 145 branches in Florida, Mississippi, Tennessee, & Texas, is installing image-capturing software from VectorSGI. Anderson said he thinks the software will be ready to capture check images within 90 days. ‘Our main strategy is to capture them there & not have to transport’ the checks to Jackson, where Trustmark does all its check processing. ‘We’re going to save a good bit of money.’ (He would not put a dollar figure on the expected savings.) Anderson said he is less eager to start exchanging images with other banks. ‘There’s still a lot of same-day settlement that we’re doing with local banks.’ 30% - 40% of Trustmark’s check volume is settled that way; only 9% of its checks are traveling such distances that image clearing would reduce the float from 2 days to one. The Fed is still testing its FedReceive service, which would let banks process incoming checks as image files. The Fed is producing image replacement documents, & to participate in the service, Trustmark would have to pay for the IRDs, which would eat into the savings it could achieve from faster clearing. ‘You’ve got to wait & see what the network looks like as the volumes grow. You keep coming back to the transportation costs.’ Trustmark expects to connect to the Fed for its high-dollar & long-distance items. ‘We’re waiting for the network to grow a little bit. We don’t want to be first.’ Executives are considering whether to link to the image-exchange service being introduced by Viewpointe, which has signed at least 3 southeastern banking companies, or use a correspondent bank instead for image exchange. Trustmark’s main correspondent is First Horizon, a Viewpointe customer that could give Trustmark access to the other big banks in Viewpointe’s shared archive, & links
to other image-exchange banks.
Merchants stop taking checks siouxfallsargusleader 7/19
Personal checks are no longer cutting it with some South Dakota retailers. The push toward accepting only cash & credit or debit cards follows a national trend as more businesses get fed up tracking bounced checks. ‘Each check written represented a risk,’ said Jill Willard, Minnesota Avenue Dairy Queen, which stopped taking personal checks 7/1. ‘We were getting returned checks for all sorts of reasons.’ Willard said 7 - 10 checks would come back each month. In a year, accumulation of bad checks can hurt a small business. Willard’s store is one of an increasing number of businesses that don’t take checks. In June, McDonald’s restaurants in Sioux Falls & Brandon stopped taking them. All Olive Garden restaurants stopped accepting checks last fall following a corporate decision. The shift comes as national studies show Americans now use more electronic payments, such as credit or debit cards & online banking, than checks. Historically, South Dakota businesses have been quick to take personal checks when other parts of the country have not, said Dan Nelson, Sioux Falls Area Chamber of Commerce. But that is gradually changing. ‘It’s a sign of the times. Everyone is trying to get away from paper & going to direct payments. The problems businesses are solving by not taking checks makes the policy worth it.’ Willard said her business would rather have the payment guaranteed from a credit card, even if that means paying a processing fee, which is 3%. Dairy Queen customers were surprised by the new policy at first. ‘People who wanted to pay with checks were like, ‘We’re not coming back.’ Those were probably people who didn’t have money in their accounts.’ Willard said the no-check policy hasn’t had a noticeable effect on business. Cash is still the most common method of payment. Credit & check card usage has grown quickly. 1/3 of customers now pay with plastic. The policy doesn’t bother Dairy Queen customer Kelley Oaks, who paid cash for her Monday afternoon purchase. ‘I hardly use checks anymore. It doesn’t matter to me.’ Oaks would like retailers to check her signature & ID more often to thwart fraud. Mel Larson, Sioux Falls Olive Garden, said his customers have embraced the change. ‘We gave people notice when we switched, & they understood.’ He estimates that ½ of his customers pay with a credit or debit card. The Pawn Shop on South Minnesota Avenue always has discouraged checks. Owner John Sichmeller said he sticks to cash so he knows the payment is good. Customers don’t seem to mind paying cash, even if that means going to a nearby ATM. ‘I lose very little sales by not taking checks. Most people carry enough cash. It’s always been that way.’ As more businesses refuse checks & electronic payments increase, some South Dakotans see the practice as offense, said Jerry Wheeler, South Dakota Retailers Association. ‘Many people here still like to do business with a handshake & looking eye to eye,’ Wheeler said. ‘If you don’t take their check, it says you don’t trust them.’ But business have to adapt to compete. That can create a problem with small purchases, where the credit card surcharge might exceed profit. While some merchants shun taking a credit card for purchases less than $10, small-ticket credit & debit card purchases have jumped by more than 6 times this decade, according to Cardweb.com. US shoppers racked up $35b in small-ticket purchases - mostly at fast-food restaurants.
Check imaging at community banks 7/1 CommunityBanker
First State Bank in Louise (Tx) immediately began seeing benefits when it moved its check
imaging process in-house, said Chip Jenkins, $134m-asset community bank. ‘As soon as a check is captured, we have access to it. When we were outsourcing our imaging, we had to wait at least 24 hours.’ The bank, which switched from using an outside vendor for check imaging this spring, eliminated courier fees that it had been paying to have its checks shipped to the outside vendor, giving it better control of operating costs. ‘We bought the software, & we have an annual maintenance contract for updates. The system will be completely paid for in 2½ years.’ The bank uses VSoft’s eDesk image & image exchange product. 4 branches are equipped with branch item capture units, & all check images are sent to First States central location for further processing. A variety of other vendors, including Fiserv, an ACB Preferred Solutions Provider, offer this type of document management software. ‘With our old vendor, we’d send out the checks, & they’d image them for us & then send them back. When our contract came up for renewal, we decided we’d rather handle imaging issues directly, & not have to rely on a third party.’ With imaging up & running, the next step is check image exchange with the Federal Reserve, but Jenkins said the bank has no firm timeline for when that will begin. ‘Its really up to the Fed. As soon as they can allow us to do it, we’ll do it,’ Jenkins said. The Fed is approving banks to exchange images on a first-come, first-serve basis. Moving imaging & exchange solutions in-house is something that all community banks should take a look at. ‘Some thirdparty providers are saying wait & see when it comes to Check-21, but we know that Check-21 is going to help & be very beneficial.’ Going inhouse, however, may not be the right move for every bank. If the bank doesn’t have skilled staff in place that can handle imaging, it might be better off staying with a third-party provider. Banks with only one branch may not realize the same kind of cost savings associated with eliminating courier fees. Uwharrie Capital took check imaging a step further when in February it began imaging checks directly at the teller line. By doing so, ‘we eliminated a $4,000 a month courier fee right away,’ said Jackie Jernigan, Uwharrie, a NC holding company composed of the Bank of Stanly, Anson B&T & Cabarrus B&T. From a risk standpoint, imaging at the teller line has made Uwharrie more secure. ‘Prior to teller imaging, an internal bank courier would pick up all the checks from the various branches & take them to the bank headquarters. An external courier would then take them on to the unit-processing center. So if a courier got waylaid, we wouldn’t have the item, either as an image or as an original. With teller imaging that risk is removed.’ Teller imaging has enabled Uwharrie to change its check processing schedule, making it more flexible for customers. Previously, the banking day was cut off at 2 p.m., & any items that came in after that were not processed until the next day. Customers have until 5 pm to get same-day processing. The teller imaging process is an easy one. When there’s a break in the action at the teller line, a teller can take batches of checks to the scanner for imaging. A Canon CR-180 scanner costs $3,500 - $4,000 & is easy to use. Some banks are exploring moving check imaging beyond the teller line & into the hands of customers. ‘We’re looking into selling imaging equipment to our small business customers. It would help us build our relationships. IQ 2006 is our target date,’ said Wendy Wagner, Cardinal State Bank, a $135m-asset community bank in Durham NC. Wagner went on to say that with the technology currently available, banks could move imaging directly to non-business customers. Cardinal State Bank has been imaging checks at the teller line since March. ‘Our tellers are working up until we lock the doors,’ processing checks. While the installation went fairly well, Wagner said that there were some issues with getting employees up to speed. ‘It’s certainly a learning curve for the employees, & we did receive a little resistance from older employees. Employees have to image batches of checks throughout the day, & that took some getting used to. But everyone’s embraced it now.’
Electronic check conversion expands its reach 8/5 GreenSheet
The costs of accepting, processing & handling paper checks are extremely high. Estimates for the real cost of a paper check range from $0.75 to $3, & average $1.22 per check. For electronic checks, the cost decreases to a range of $0.32 to $0.70 per check. Electronic check conversion continues to win converts based on the benefits of faster funding, reduced risk & fewer hassles. While ECC provides a strong value proposition for the right merchant, many check conversion providers try to fit merchants into a one-sizefits-all solution. These providers offer a system that only supports guarantee services for consumer checks in a consumer-present environment. Many might view check conversion as adding complexity to POS & reconciliation processes, especially if it places limits on the types &/or methods of checks accepted. Check-accepting merchants need a solution that can convert all checks (business or consumer) in any environment (in person or via the mail) & extends the flexibility of a variety of service levels (guarantee, verification or conversion-only). Most consumer check conversion solutions use a third-party company to provide verification or guarantee services, & they ‘ride the ACH rails’ for processing. Using a service provider that offers direct DDA access enhances consumer check acceptance. Direct access significantly reduces risk by offering real-time ‘decisioning’ & placing a hold on funds. 30% of consumer DDA accounts can be accessed using Visa’s POS Check Service solution. Depending on the merchant footprint & check conversion provider, between 12% & 20% of checks accepted could be ‘decisioned’ based on actual funds availability. This reduces overall risk for the provider, which can then extend better rates based on direct DDA access. Visa POS Check Service partners include US Bank; Wachovia/SouthTrust; BofA; FNB Omaha; BB&T; State Employees’ CU; Navy FCU; & Suncoast Schools FCU. ACH & Visa POS Check Service systems are reliable processing networks for consumer checks. Most merchants accept business checks in the form of insurance co-payments, B2B supplies or as a regular course of doing business. Using a solution that handles consumer-only checks requires managing 2 check acceptance & reconciliation methods, which further complicates a merchant’s accounting practices.As a merchant level salesperson, partner with a solution provider that, in addition to offering direct DDA & ACH check processing, uses the Check 21 networks to process business checks & other exception items (e.g., convenience checks). Does the phrase ‘check conversion’ make you automatically think of a point-of-purchase environment in which both the consumer & the check are present? This is the usual environment, & it certainly represents a large opportunity. The introduction of ARC processing, in which the check is present, but the consumer is not, opens new markets. This is typical of receivable payments, mail order purchases & companies that operate in a drop-box environment, such as apartment properties. Often, ARC target markets are not credit card acceptors. These businesses usually know their customers, accept recurring payments & operate in consumer-not-present environments. The businesses want the efficiency of electronic processing to reduce costs & improve the timeliness of deposits. They provide customers with a notice explaining that they will process their checks electronically. Good candidates for ARC solutions are vocational & trade schools; medical, dental & veterinary service providers; property management companies; municipal utilities, including electric, gas, water, sanitation; rental companies; marinas; self-storage unit operators; trade associations & membership clubs; political & religious organizations; contractor services; & accounting, auditing & bookkeeping services. Properly aligning the service level to fit a
merchant’s needs is important. When looking for an electronic check service provider, work with a company that follows a flexible model. Many providers only offer check guarantee services, but merchants without a bad check problem often have a difficult time justifying the price versus benefit of guarantee-level services. Partner with providers that offer a variety of flexible service levels, including conversion only; check verification; check verification with collections; & check guarantee. Many merchants who process payments through the mail or in a drop-box environment prefer to use integrated software solutions to stand-alone terminal solutions. These merchants do not want to install extra stand-alone equipment to process checks. Attaching a check-imaging device directly to their PC-based POS system works well in their environment. Look for a check conversion provider that offers software solutions for processing consumer & business checks, & interfacing payment information with accounting or patient record keeping systems. Let’s face it: Even though the decline of check usage continues to make headlines, it will take a long time before checks go the way of ‘zip-zap’ credit card knuckle busters. Partnering with the right solution provider will help you reap the rewards of improved merchant retention & increased revenue.
AFS & IQA 8/1
AFS Advanced Financial Solutions announced Image Quality Assurance (IQA) Suite. The AFS IQA Suite inspects the front & back of each captured check image, testing for a variety of potential image quality & usability problems. All 49 tests of the AFS IQA Suite conform to or exceed industry metrics for image quality & usability. This essentially ensures that images forward presented through check image exchange networks have met the industry’s most rigid check image quality assurance standards & confirms the integrity of check images prior to hand-off to a check image exchange network. These tests secure the quality of the on-us & other non-exchangeable items to be stored in the financial institution’s check image archive. ‘Acceptable image quality is an expectation throughout the check imaging industry as financial institutions have begun joining image exchange networks,’ said Gary Nelson, AFS. ‘AFS IQA diminishes the risk of transmitting unusable check images into the payments system; diminishing their financial exposure in the process. It can prevent financial institutions from forward presenting items that are bounced back, delaying the clearing, settlement & collection process, & losing the savings achieved through electronic image exchange.’ The AFS IQA Suite performs image quality tests that include partial images, missing or obstructed images, streaks, missing corners, too light to be read, carrier detection, & image to data mismatch. Image usability tests include the legibility & readability of the MICR, endorsements, data, payee line, signature, courtesy & legal amounts, payor information, & bank name & address. Many of the national check image exchange networks are encouraging financial institutions to integrate image quality assurance programs into its existing image-capture process. ‘For check image exchange to be successful, images must be readable & verifiable at the receiving institutions.’
DataTreasury patent & Check 21 8/5 GreenSheet
For payment processor DataTreasury, Melville NY, a company involved in several patent disputes, the first week of 7/05 was full of events that have potential implications for Check 21. On 7/1, a federal judge in Texas granted 2 consent judgments in favor of DataTreasury in its lawsuits against JPMorgan Chase & Co. & former defendant BankOne, which JPMorganChase now owns. Following that news, DataTreasury announced on July 6
that it will pursue patent litigation against 4 major US banks, including BofA, Citigroup, Wachovia & Wells Fargo. DataTreasury filed suit in US District Court, Eastern District of Texas. At issue is enforcement of 2 patents owned by DataTreasury for technology developed by the company’s CEO, Claudio Ballard. The technology enables the implementation of Check 21, enacted in 10/04. Check 21 makes it possible for banks to truncate checks, turning them from paper-based documents into electronic images for processing. Ballard founded his company in 1998, based on patent applications he had filed for DataTreasury’s Global Repository Platform, a system that manages image capture, centralized processing & electronic storage of document & check information. The company received US Patents 5,910,988 & 6,032,137 in 1999 & 2000. In 2002, before Check 21 became law, DataTreasury filed suit against several payments companies including JPMorganChase, First Data, Ingenico, ACS & RDM, for patent infringement. DataTreasury filed its initial lawsuits for protection of what it claimed, & the federal court recently agreed, is its property. The ability to license the technology is a key factor in the company’s business model & success, & is critical now that Check 21 is on the books. According to DataTreasury, each year BofA processes 9.4b checks; Citigroup processes 2.4b; Wachovia processes 4.5b; & Wells Fargo processes 3.7b checks. JPMorganChase processed 1.5b checks in 2003. The consent judgments announced in early July explicitly state that DataTreasury’s patents are valid & enforceable. JPMorganChase, which opted to settle with DataTreasury in the infringement suit, is now a DataTreasury licensee. Current defendants, take heed. ‘We hope that these new defendants realize that long & expensive litigation is not in the best interest of their shareholders,’ said DataTreasury attorney Ed Holm. ‘It is clear that DataTreasury’s patents are not only valid & enforceable, but have gained commercial acceptance in the banking industry.’ DataTreasury has been successful in its attempts to go after patent infringers. It has entered into licensing agreements with some companies, & at least one company, ACS, is permanently barred from ever using its technology. In 6/03, DataTreasury granted RDM a nonexclusive worldwide license for use on a per-click royalty basis. 2 years later, in 6/05, DataTreasury entered into a settlement & license agreement with NetDeposit, a company that provides Check 21 & franchise-building software for the financial services industry. DataTreasury is currently preparing to take First Data & Ingenico to trial to resolve its claims against them; it has refiled its claims against Viewpointe Archive, a check-image archiving provider founded by JPMorganChase. Will DataTreasury eventually ‘own’ Check 21? The JPMorganChase settlement indicates that the company does control check imaging technology, but long-term implications for banks & existing services such as ATMs are unclear. Some analysts believe that many financial institutions could be compelled to pay licensing fees to DataTreasury, depending on how the scope of its patents is interpreted & enforced in the future.
Fed - are the 12 Reserve Banks still relevant 8/5 ABA-BJ
Now that the Fed is cutting its back-office operations in ½, could more Fed functions soon be consolidated? Maybe. But would that include the combination or elimination of some of the 12 district banks in the Federal Reserve System? Not anytime soon. Not only does the Fed have a certain aura of permanence, but the structure is legally & economically well entrenched. Each of the Fed’s district banks is part private & part public institution. Each stands like a giant, with one foot rooted firmly within the control of its local commercial bank owners & the other foot planted in Washington DC, where its president brings his or her regional knowledge to bear at regular meetings of FOMC, the body that formulates the Fed’s monetary policy. Created by Congress 92 years ago, it would literally take an
act of Congress to change the system. The Fed was set up to create financial conditions that produce economic growth. Its use of interest rates to check inflation & foster a strong economy keeps the public spotlight on the Fed’s monetary policy mission. But the Fed is a lot more than Alan Greenspan’s periodic announcements of changes in the federal funds rate. Its mission includes check processing, & supervisory examination of its member banks, all bank holding companies, & financial holding companies. Over the past 2 years, check processing at regional bank locations has been consolidating. So far, the number of processing locations has been reduced from 45 to 29 & an additional 7 locations have been scheduled for elimination next year. The Fed’s wire transfer service, Fedwire, & its automated clearing house activities have been consolidated in NY. & new products & services are being rolled out to support implementation of the Check 21 Act of 2004, which cleared the way for using substitute checks. There’s more work to do, says Rich Oliver, FRB Atlanta. ‘We’ll continue to evaluate various sites to see whether there is reason for further consolidation.’ A 2004 study shows that 37b checks were paid in the US in 2003, down from 42b in 2001 & 50b in 1995. & the decline is continuing. Oliver says managing a decline is a much more difficult proposition than managing an increase in demand for services. But he hopes to ‘continue to downsize & improve our processing system while maintaining reasonable levels of efficiency.’ Banks seem satisfied. ‘We have a great relationship with the Fed & they have worked with us to facilitate our operations,’ says Lloyd Hamm, Eastern Bank, Boston, $6b. The Fed has even created new business for Eastern. ‘Fed consolidation has created market opportunities to grow our bank as a correspondent to smaller banks, selling coin & currency services, cash letter processing & certain wire transfer services. We began this business a year ago & now we have 40 clients.’ Logic would have the Fed looking at ways to consolidate its bank examination operations, too, especially in light of recent streamlining by other federal regulators, most notably FDIC, which has been applauded all around for its very successful effort. No effort to systematically downsize operations is under active discussion at the Fed. Other barriers to merger or elimination of any of the district banks are manifold. Each district bank is a local power base. Each one serves a different constituency. In an effort to keep themselves entrenched, several have expanded their regional services. FRB San Francisco operates a center for Pacific Basin studies, FRB Dallas studies Latin American economics, FRB Atlanta collects information about Latin American & Caribbean financial markets, while the FRB Kansas City focuses on rural America. The FOMC is now more than ever dependent upon regional input. The 12-member body includes the 7 members of the Federal Reserve Board & 5 of the district bank presidents. 4 of the 5 presidents serve on a rotating basis while the NY Fed’s president is a permanent member. All of the regional reserve bank presidents attend FOMC meetings & participate in the discussions, bringing a perspective shaped by economic conditions in their districts. ‘There’s a virtue in being proximal,’ says Richard DeKaser, National City. ‘What the Fed presidents bring to the table is the more-timely, sometimes anecdotal information from the business leaders in their districts. Since consolidation of the payment systems, the rationale for 12 districts has perhaps been undermined, but there still are reasons to maintain the system.’ The Fed’s mission does not include profit taking. Any pressure to cut overhead costs through consolidation is minimal. Even the Shadow Open Market Committee, which as a friendly critic of the Fed has been the yin for the Fed’s yang, believes the Fed System is here to stay. ‘The regional banks provide a wide array of functions that make the Fed tick, everything from supervision, examination, oversight & representing the districts,’ says member Mickey Levy, BofA. ‘The presidents of the district banks have significant input to the macro policy debate in Washington DC. A long time ago, some of the bank presidents
felt that their feelings weren’t being heard around the table. But that has changed.’ Consolidation of the districts would undermine Congress’ original intention of establishing a central bank system that divides authority among regions instead of one European-style central bank. The decision to create the system was the result of widespread bank failures in 1907, & signers of the Federal Reserve Act of 1913 feared the power that Wall Street could exert over a single central bank. This sacred cow looks here to stay.
Fed – FRB Dallas courier loses checks 8/8 WFAA-TV
A truck carrying thousands of Federal Reserve checks that were headed to Houston for sorting somehow lost some of its precious cargo. Now the Federal Reserve said they don’t know just how many checks with people’s personal information are missing. The checks are paid & canceled, but they have a combination of information that identity theft thieves could capitalize on, which include social security numbers, full names, addresses & signatures. The contractor driving the truckload apparently pulled away with the back door to his truck wide open. Rudy Colorado expected to dodge rain showers during his Sunday bike ride through downtown Dallas. While he managed not to get wet, he didn’t escape getting flooded by pieces of paper falling from the sky. ‘I look up & I see checks floating off the bridge & landing everywhere. So I just started picking them up.’ It took him 3 hours to gather some of that cargo the Federal Reserve truck lost under the Central Expressway near Deep Ellum. He picked up 1,000 canceled checks written against personal & business accounts all over Texas. ‘It’s a $44,000 check,’ he said of one check. ‘Here’s another $1,090 check.’ He wasn’t the only one who was surprised by the lost checks. ‘It was open,’ said Juan Villegas of the truck that drove by him. ‘One of those sliding doors’ Villegas said he saw the truck driving away from FRB Dallas just before dawn. He then said he made a discovery on Woodall Rodgers Freeway similar to Colorado’s. ‘I saw a box. I pulled over - picked it up - put it in the back of the truck.’ Inside the box were hundreds of endorsed Social Security checks. There was enough information on the checks he said for a thief to make someone’s life hard. ‘Someone who steals someone’s identity can totally destroy their credibility,’ said Mario Lopez. The government clears millions of checks each week in Dallas for banks across Texas, ½ of New Mexico & Louisiana. All Texas checks must come through Dallas where they are paid & sorted at FRB Dallas. Despite attempts to call during the weekend, there was no answer at the Federal Reserve number designated to notify if the lost items were found. However, after News 8 alerted the reserve bank, they started an internal investigation & said they did not yet know how many checks may be lost. ‘We do appreciate the good Samaritan who actually stopped & helped pick up the checks,’ said Diane Holloway, FRB Dallas. She said despite this incident, she believes the system is usually safe. ‘Accidents can happen. Human error can occur. But it is a very safe system & one that we take very seriously.’ Colorado is still disturbed by what fell from the sky during his bike ride. ‘That’s a thousand bank accounts that someone can get access to. All you gotta do online is use those few numbers right there & you can charge stuff.’
Frost & Viewpointe 8/9 Businesswire
Cullen/Frost Bankers has teamed with Viewpointe to participate in check image activities through its Pointe2Pointe service. Frost Bank will directly exchange check images & information with Viewpointe’s growing network of the Nation’s largest banks, enabling
Frost to take advantage of the check processing efficiencies associated with Check 21 legislation. ‘At Frost, we have made strategic investments in image technology to enhance the products & services we offer our customers & to be competitively positioned to take advantage of Check 21,’ Gary McKnight, Frost. ‘Viewpointe’s member banks represent a large volume of our check clearings. By exchanging electronically with these banks, we can offer enhanced services to our customers & improve the efficiency of our check & settlement operations & infrastructure.’ ‘Frost Bank is a highly respected financial institution, well known for making progressive & sound technology decisions, ‘stated Jerry Chambers, Viewpointe. ‘Their decision to become an active & contributing member of Viewpointe’s image exchange program illustrates their leadership in adopting innovative & proven technologies that will provide them early competitive advantage in the marketplace.’ Pointe2Pointe enables any financial institution to safely & directly send & receive check images, rather than paper, with Viewpointe’s national archive customers & other Pointe2Pointe members while maintaining their current image archive environment. Frost Bank will immediately join the Viewpointe User Group-a collaborative team made of Viewpointe bank peers that is chartered to execute image sharing & exchange relationships & operational business practices decisions. Frost Bank & existing Viewpointe members will begin prioritizing image exchange production scheduling to take advantage of image clearing benefits. Settlement will be facilitated by NCHA.
Remote deposit capture dptmag.com 8/1
A new service being introduced by many of the nation’s large banks promises to revolutionize the check processing industry. The benefits of this new service, Remote Deposit Capture (RDC), include convenience, better deposit availability & reduced transportation cost & risk. Inspection of traditional remittance processing reveals that RDC can be much more than just a convenient Cash Management tool. Tremendous value & processing efficiencies can be unlocked by reengineering control documents & remittance process flows to leverage Remote Deposit Capture as a receivables processing platform. Remote Deposit Capture is a service that allows a user to scan checks & transmit the scanned images to a bank for posting & clearing. The basic requirements for an RDC service include a PC, an Internet connection, a check scanner & a service provider such as your current bank. Checks you receive at your corporate location can be scanned to create an image-based deposit. This image deposit is then transmitted (usually over an encrypted Internet connection) to your RDC bank service provider. This provider can then accept the deposit, post the deposit to your account & assign availability based upon your availability schedule. Check 21 makes this process possible. Check 21 allows banks to clear checks based upon images of the original items, instead of having to transport the original check all the way back to the paying bank for clearing. Most perceive the benefits of RDC to be clear & straightforward. It provides convenience, reduced transportation risk & cost & better availability. A closer look at the capabilities of RDC & its underlying technologies show us that the above benefits are only the tip of the iceberg. A number of technologies have matured to a point where they exhibit the quality, reliability & cost characteristics required for high-volume financial transaction processing. The combination of these enabling technologies is what makes RDC a viable solution for most companies. The Internet is now a common platform for banking-related functions. Image scanning hardware is now able to capture items reliably, with great quality & at an affordable price. Image quality & recognition software has finally overcome
processing time & success rate hurdles to allow for real-time processing with success read rates in excess of 80%. The image quality & recognition software component of an RDC solution may be the most important, yet most often overlooked, part of the process. Unlike in a traditional paper processing environment where the original is almost always available for review & reprocessing, in this new image-based environment it is critical to capture a quality image on the very first try. Poor-quality images can result in returns, adjustments, requests for re-scans. & can result in a less efficient & more costly process. Ensuring image quality at the point of capture is therefore critical to a more efficient process. Recognition software can enhance process efficiencies. A simple example is a company that receives 500 checks per day. Assuming the average dollar amount is in the hundreds, this volume of checks would normally result in about 2,500 keystrokes just for the dollar amount alone. Recognition software can be employed to extract data from the original item, thereby reducing the need for manual keying while also providing the opportunity to capture additional data, which may have been previously omitted from company records. Data fields such as the dollar amount, payor & check number can now be automatically captured. The traditional bank deposit preparation requires keying items at least twice (key twice if in balance the 2nd time, more times if out of balance), resulting in at least 5,000 keystrokes just to tally & balance the check deposit. An RDC solution enabled with recognition software with an 80% success read rate on the dollar amount will decrease the number of keystrokes from 5,000 to 500. This is a 90% gain in deposit automation. ‘Benefits from employing recognition software in your RDC solution can include fewer errors from manual processing, labor cost savings from fewer required resources & enhanced customer relationships generated from the information now captured on each customer payment,’ says Yuri Prizemin, Parascript, LLC. A Remote Deposit Capture solution can go far beyond making the bank deposit process more convenient & efficient. It can become a platform to automate your entire check-A/R operation. The key is reengineering your control documents to fit into this new automated environment. In the same way the recognition software can scan parts of a check to extract data; this same process can be used to extract data from control documents such as invoices, deposit tickets & payment stubs. In conjunction with pre-defined business rules, control documents can be scanned along with an accompanying check to extract such data as account numbers, amount due, amount paid, goods purchased, etc. This extracted data can then be stored in a database, posted to your internal systems & referenced during research & customer service inquiries, among other applications. Many of today’s control documents are ill-suited for a check scanner. To utilize recognition software as part of an RDC solution, these documents must not only be formatted with standardized scanning fields & corresponding transaction codes to drive the business rules logic processing, they must literally fit & be processed through the check scanners used in the RDC process. Control documents with plain backgrounds, clear data field organization & the approximate size ranging from a traditional deposit ticket up to the size of a traditional business check make the most sense. To fit within the RDC solution, exact maximum dimensions would be determined by the allowable size specifications as determined by the check scanner hardware manufacturer. To ensure greatest automation opportunity, the control documents should be able to be processed within the standard operating guidelines of the specific RDC solution being used. Finally, once the control documents have been reengineered to fit within the RDC operating environment, maximum value & efficiency is achieved by re-engineering the A/R process itself. While the old process was dependent upon the physical paper checks moving from one function to the next in order to be processed, RDC breaks this dependency chain by extracting the necessary
information from the paper items via ICR. Breaking this dependency chain allows for concurrent processing & process automation. If each check needed to be assigned to a 6digit account number, that’s another 3,000 keystrokes. Assuming miscellaneous other traditional manual data entry requirements (such as product codes, check numbers, etc.), it is plausible to have over 10,000 keystrokes for these 500 checks in order to process & post to your internal ledger system & to prepare the items for deposit. Document & process re-engineering made possible by RDC & its underlying technologies can reduce (assuming an ICR read-rate of just 80%) manual keystrokes from 10,000 down to only 1,500 per day - an 85% reduction. Alogent, an RDC technology provider to banks & corporations, has much experience in helping its clients reengineer their A/R & deposit process. Alogent serves a mid-market provider of copiers & fax machines with tens of thousands of clients. They once were a lockbox customer of a major bank but became dissatisfied with service levels & brought the processing back in-house. It took an FTE the better part of an entire day’s work to process 300 - 500 payments daily. By leveraging an RDC platform, ensuring ICR compatible documents & re-engineering their operational process, the client reduced the effort spent on this to under an hour per day. ‘Remote Deposit Capture, when combined with document & process re-engineering, can drastically reduce the time & effort required to process check payments,’ says Robert Meara, Alogent. Regardless of new legislation, technology or workflows, the entire check payments process begins with a piece of paper (the check) & (ideally) a control document. Ensuring close alignment between these documents & the platform used to process them allows a corporation to leverage new systems such as Remote Deposit Capture to create tremendous value above & beyond the obvious benefits of RDC to now include internal processing efficiencies, enhanced client relationships & new business opportunities.
Endpoint offers clearing of nonmember checks 8/15
Endpoint Exchange, which was set up for image-based check clearing between client banks, is now offering to clear images of those drawn on other banks too. It is accepting images of such checks & handing them off to its parent banking company, the $41.6basset M&I, which for now is clearing them by printing image replacement documents or arranging for the Fed & Fiserv to do so. Endpoint is talking with other banks about clearing such checks. The idea is to motivate members to shift away from paper-based check clearing & to provide fee revenue for M&I. ‘This provides a 100% truncation option,’ said Jeff Vetterick, Endpoint. The service, which Endpoint started providing last month but announced last week, is based on one long provided by NCHA - which provides the settlement - & called National Clearing House Image Exchange Plus. M&I is offering it as M&I National Plus. Endpoint clients can use it for some or all of their checks drawn on nonmembers. M&I Support Services Corp. acts as a collecting bank & handles the forward presentment on behalf of the bank of first deposit. Russ Soderberg, M&I, hopes to be able to settle more checks with nonclients electronically as more banks begin to participate in image exchange systems. One way will be through the FedReceipt service the Fed is developing. ‘We’ll move more & more to image exchange as we go forward.’ M&I is in discussions with other image exchange network operators, including Fiserv & Clearinghouse Payments Co & Viewpointe. It is working with some trading-partner banks to establish direct connection for transmitting image files. Soderberg said that 20 - 25 banks have agreed to send at least some of their imaged checks to M&I for clearing through its new service, & ‘more are expressing interest on a weekly basis.’ So far the service has achieved one-day funds availability on 95% of the checks it received. The business case for the service is strongest for remote rural banks that face high courier costs
to clear paper checks & for banks that have many big checks being cleared through distant banks. ‘For some banks it will make all the sense in the world. Other banks will have a different business perspective.’ Endpoint has about 5,000 members. ½ are transmitting images across its network; the rest are installing & testing their systems. Vetterick said the network carried 6m images in June. He said that a second Endpoint bank is getting ready to serve as a collecting bank, & that Endpoint wants to find more, to speed the connection to paying banks in other parts of the country. These collecting banks will charge a fee to the bank of first deposit. Other collecting banks might choose to handle clearing only with banks within their own region. Historically, large banks have provided collection services for small banks within their regions. With the new service, ‘faraway banks would pay you to take their images & clear them locally. It kind of reverses the traditional correspondent relationship.’ Aaron McPherson, Financial Insights, termed the new service ‘a modest step forward’ & predicted that other check processors would introduce similar services. ‘It seems like a natural next step in the evolution of image exchange. It is another case where the smaller banks - the ones that are most likely to use M&I - are ahead of the game in check truncation.’
Frost, SW Corporate & Check 21 8/12
2 financial companies have defied conventional wisdom by establishing a direct connection for exchanging check images with each other, & others are planning to follow suit. Most of the image-related momentum in the banking industry to date has been toward joining exchange networks. & one of the fundamental tenets of the exchange model is that it is impractical for every bank to establish direct connections with every other bank. Frost Bank & Southwest Corporate FCU agree that it would be unwieldy to create a link with every bank to which they send transit items, but they say there is a strong business case for their private connection, which went live 8/5. David Rahtke, Frost, said the direct link makes it essentially free to send image files to Southwest Corporate, & that it makes no sense to pay a network to deliver the 2m checks they exchange every month. ‘The business case just isn’t there.’ Both companies have signed up with image networks to send items to other banks. Southwest Corporate is a member of Endpoint, the network operated by Metavante. Frost said that it is planning to exchange files through Viewpointe, the large shared archive used by some of the country’s biggest banking companies. Rahtke said he considered using Endpoint to exchange files with Southwest Corporate, but at a cost of about 2c a check, ‘it doesn’t take long to get to where that doesn’t make any sense.’ Frost is still considering joining Endpoint to transmit items to other banks. Alenka Grealish, Celent, said the Frost-Southwest Corporate model makes sense. The 2 partners are exchanging a significant number of checks with each other, so ‘per-unit, it is cost-effective to have a direct connection. Why pay an intermediary if you don’t need one?’ Grealish said that she has heard of other banks mulling the idea, & that the economics that appealed to Frost & Southwest Corporate could be just as appealing to other companies. Brad Ganey, Southwest Corporate, agreed that the model could make sense for others. ‘If people have tremendous volume between each other, I think you’ll see more direct connections.’ His company might establish direct links to some other banks or CUs. ‘This is the only relationship like this that we have now, but I definitely wouldn’t close the door to doing more.’ Ganey said that the model would not work on a large scale. It could be useful to have a few direct connections, but they would not be a substitute for using an image exchange network to reach banks to which he sends a small number of items. Jeff Vetterick, Endpoint, says he does not view the emergence of direct connections
as competition for this network. He has been expecting them & even built them into his models for anticipated volume growth. Endpoint has 2,500 members transmitting images across its network; 800 more members are testing the system, & 1,200 that are establishing connections to it. 6m images flow across the network every month. ‘There is room in the market for a bank to have a few pipelines to a few trading partners. It just makes sense.’ Rahtke said it took about 2 months to set up the connection with Southwest Corporate; the files are sent across the Internet using a standard file transfer protocol. Frost has 3 item-processing centers. Its San Antonio site began sharing files with Southwest last week. The Dallas site began doing so Tuesday, & its Houston center started Wednesday. The 2 companies each send 4 to 5 batches of checks a day, & it takes about 30 to 60 minutes to prepare & transmit each batch. Ganey said the relationship was easy to set up, in part because both companies use NCHA. Frost & Southwest Corporate have been certified with the Fed to prepare image files using the industry-standard X9.37 format. ‘This was about as painless a process as we’ve been through.’ Southwest Corporate is using xVision software from Metavante’s AFS to send & receive the files. Sam Kim, Metavante, said the software was designed to support direct connections between banks. Some customers have discussed setting up their own direct image links with some trading partners. ‘2 large banks are planning to do so, but I can’t say who.’ In some ways, the direct-connection model is reminiscent of earlier check-clearing approaches. Banks have long used direct presentment - physically delivering checks to their trading partners’ doorsteps. Bob Hunt, TowerGroup, said that an electronic connection is simply a 21st century version of that old system. In fact, many banks are familiar with electronic direct connections. Grealish said that one of the predecessors to image exchange networks was electronic check presentment, in which banks would transmit a digital summary of the checks they were sending to a trading partner, so the recipient could begin processing the checks while they were in transit. Though many of these connections are still in place, they cannot be used for sending image files, so many banks that have used those connections are signing up with exchange networks. Taylor Vaughan, First Horizon, said it has evaluated the idea of direct connections, but decided against using them. First Horizon & SunTrust were the first companies to settle checks through Viewpointe’s image archive. Vaughan said he cannot justify the cost of setting up a connection with a local bank, ‘because our transit costs are so cheap.’ Nor would it make sense to set up a link with any of the major banks that are Viewpointe members, ‘because our communications link with Viewpointe has been set up.’ The direct model is inherently impractical when compared to the network model. ‘I’m exchanging with hundreds of banks. Do I now have to connect directly to hundreds of banks? Ouch.’
Remote capture worth more to clients than banks think? 8/17
Businesses have jumped on the check-image bandwagon more enthusiastically than bankers had expected, possibly because they see a bigger payoff than bankers recognized. As they do with any significant technology investment, companies are weighing costs against the operational & financial benefits they expect to accrue through the remote capture options now available to them. A similar process is playing out among banks that have to decide whether to extend that service to commercial customers. Some observers are now arguing that banks may be underestimating the value their customers place on remote capture. If that is correct - & opinion is far from unanimous on this subject - it could have competitive ramifications for those who are slow to offer the service. Last
week John Leekley, Blue Mountain Enterprises LLC, presented his case for rapid deployment of remote capture to 100 bankers & corporate listeners on a webcast by Alogent. Leekley, tracks the imaging business for a Web site, RemoteDepositCapture.com. Bankers do not fully understand how corporate clients view the value of remote capture. Bankers tend to see the benefit in terms of reduced check float & they calculate the business case for image investments using a rate of return such as the federal funds rate, the overnight rate they pay until funds come in to settle those payments. That rate is now around 3.5%. When bankers think about their customers’ perspective, they tend to think in terms of the prime rate - what the best corporate clients pay on their short-term loans. That rate is now generally 6.5%. But that is not the appropriate measure. Corporate treasurers are more apt to view the benefit through the prism of their weighted average cost of capital, a standard method of analyzing & optimizing corporate investments. He estimated that cost 15% for companies in the S&P 500. On that basis, customers would ‘absolutely’ move business to a bank that offered the service from one that did not. Only ½ of the nation’s largest banks offer such services. ‘There is really a race out there among the leading solution providers. The bank needs to sell some kind of functionality to the end user.’ Lex Litton, Phoenix-Hecht, agreed that the weighted average cost of capital is the appropriate way to view the value of the payments to the company. Payment float has long been a feature of the financial system, so ‘it needs to be valued at long-term rates.’ Check 21 has changed the way companies deal with the continuing issue of check float. ‘I do think that is a very pleasant surprise of Check 21.’ As corporate executives realize the advantage they will gain by strengthening their financial systems, ‘banks that are not involved in this are going to be behind the competitive 8-ball.’ But not everyone is persuaded by the argument. Among the skeptics is Taylor Vaughan, First Tennessee. Vaughan does not tell the bank’s clients how to perform the calculation. ‘We ask the question of the customer, ‘How do you value the funds that you supply to the bank? If they say the value of the money is prime, then that’s the value of money to them.’ First Tennessee was one of the first to offer remote capture, beginning in IQ 2004. Remote capture has definitely brought First Tennessee new customers. ‘I’ll put it this way: I’ve got scanners in 33 states; I’ve got branches in 4.’ But he expressed doubt that those customers left other banks just for the new service. ‘I don’t know if you’re going to lose your business just because you weren’t the first one out the chute’ with remote capture. John Gannon, BoNY, agreed that the capital calculation is a factor, ‘but that’s just one component.’ One company might improve funds availability by making an image deposit by today’s deadline rather than a paper deposit overnight. Another might save money by transmitting images to a cash-concentration bank & closing accounts at local banks with which it lacks other relationships. ‘Then there are less measurable benefits,’ such as the ability to integrate remittance information into other corporate systems, eliminating the need to rekey data. KeyCorp is a relative newcomer to the remote-capture market; it began setting up customers after completing a pilot test in June. It has 8 corporate customers imaging their own checks now & expects to have 4 more doing so by the end of August. Debra Sciano, KeyBank, said. Their check volumes range from 20 items per month to 2,000 - 3,000. Sciano, KeyCorp, said users are attracted for a different reasons. ‘I’m not sure weighted average cost of capital would apply to every customer.’ Selling the service is not a problem. We have a huge pipeline of customers’ at various stages of planning. KeyCorp provides a worksheet that businesspeople can use to calculate the costs & benefits of remote capture, but ‘every customer is different. For one client it may be availability. For another it’s the reduction in transportation expense.’ A small business may want the person who goes to the branch stay in the store. ‘To some of our customers, those
small benefits are huge.’
Check 21 commentary 9/05 IntegratedSolutions
Check 21 is greatly hyped in markets that handle large numbers of checks. Right now, financial institutions are leading its adoption, but what does Check 21 mean for retail? To cut through the hype, we’ve asked representatives from US Dataworks - which handled 60% of all ARC transactions in the US in 2004 - to discuss Check 21 & other forms of retail check processing. Speaking for US Dataworks are Terry Stepanik & Paul Palmer. What are the challenges of handling a high volume of checks in a multichannel environment? Stepanik: Historically, retailers maintained multiple banking relationships. In order to facilitate deposits from multiple store locations or a chain of stores, deposits from stores were collected at various banks or branch bank locations. These deposits were then sent to a master account at the retailer’s central bank. Remittance payments (e.g. for store credit cards) were deposited to a completely separate account. Additionally, returned checks were handled primarily at the bank of the first deposit, unless a consolidated return process was offered by the central bank. This environment led to retailers needing to maintain multiple banking relationships, & thus reconcile accounts separately. While the banking process has been refined over the years to minimize the retailer’s manual efforts, those refinements have created additional costs for account reconciliation, automatic cash concentration, & consolidated returns. How are checks handled electronically in that environment? Palmer: There are different standard entry class codes for electronic check processing under the ACH network. For example, one customer of ours is Cabela’s, a multichannel hunting & outdoors store. Cabela’s takes check payments in a lockbox because it has a catalog. Those become ARCs, & regulations require the retailer to notify the consumer via mail that the check will be converted to an ARC payment. If a consumer makes a purchase at a brick-&-mortar Cabela’s store with a check, the check can be imaged & handed back to the customer, which is a POP transaction. The check is processed electronically, & the consumer’s authorization is gained in the form of a signed receipt or electronic signature capture. If a consumer makes a purchase on the Internet & pays by online check, that’s converted to an electronic deduction, which is classified under entry code WEB. If a consumer makes a payment on his Cabela’s credit card over the phone, that is a TEL entry code. How does the check data come together in the back end? How do you reconcile the differing sources of payments? Stepanik: The new payment processing systems must maintain transaction origination source information to be used in the management & reconciliation process. These systems may make deposits to multiple accounts at a single bank or to several banks to minimize float & bank charges. The system must provide detailed reporting that balances exactly to the bank deposits. Palmer: With the old system of paper checks, let’s say Cabela’s had 12 different sites & 4 banks it made deposits to. Normally, merchants perform cash concentration & disbursement, which is another standard entry class code called CCD. Cabela’s sent out a debit to the 4 bank accounts where the managers made deposits & credit the one main Cabela’s bank account. That CCD is an ACH transaction. What Cabela’s does now - since all transactions are electronic - is work with one bank in an ODFI relationship. What should retailers know about Check 21? Palmer: Check 21 has nothing to do with image exchange. It has to do with reprinting a substitute check - that reprinted check has the same legal weight as the original check itself. Image exchange was around before Check 21. It was used by large banks to move images back & forth to finish their day sooner. Check 21
makes image exchange viable. It does not make electronic versions of checks legal. 4 image exchange networks exist today (Viewpointe, Endpoint Exchange, SVPCo & Fed) that make rules regarding electronic image transfer. These rules are just that - rules, not laws. You don’t have to be in an image exchange network because the government cannot demand that you create images of checks. It is an expense all organizations might not be able to afford, therefore imaging can’t be mandated. Will Check 21 replace ARC? How does POP fit into this? Palmer: Check 21 does not replace ARC. ARC has been much more successful than POP because it’s a better fit for retailers. In IQ 2005, the ACH handled 338,212,980 ARC transactions, & 38,585,576 POP transactions. ARC is easier for retailers than paying for & installing check imagers & software in every checkout lane in every store as they’d have to do with POP. Right now, NACHA’s governing board is considering a new check entry code that enables a meeting between ARC & POP. In retail stores, a single check imager would be located in the back office, & when a manager prepares a deposit, he will image the checks & present them to the bank that way.
California – check holds 8/20 HanfordSentinel
The Assembly approved a bill to reduce how long banks may hold checks. The measure sponsored by Dean Florez, a Shafter Democrat whose district includes all of Kings County, was approved earlier the State Senate. Now it is heading to the governor’s desk to await his signature, which will make it law. Electronic processes have decreased the time it takes deposited checks to clear, but check hold times imposed by the banks have not changed, Florez’ office reported in a news release. The gap between depositing checks & having the money available increasing customers’ chances for bounced checks & fees. Senate Bill 781 would require federal check hold limits to apply when they are shorter than California’s maximum check holds. Currently, federal law requires that deposits of $5,000 or less must be made available to the depositor on the business day after deposit. State law, however, allows banks to hold such checks until the second business day following deposit, even though the advent of Check 21 means banks can get their funds the same day. California law does not include a limit on the number of days a check of more than $5,000 can be held. Federal law limits such a hold to one day for local checks & 4 days for non-local checks. ‘Before Check 21, there was a legitimate reason for a bank to hold a check until it was sure the funds were there to back it up,’ Florez said. ‘Now, it is an outdated practice that allows banks to earn extra interest while customers are hit with yet more fees.’
SVPCo - automated settlement for check images 8/17 PRNewswire
SVPCo introduced its automated settlement capability for financial institutions transmitting check images through the SVPCo network. Automated net settlements are averaging $3.6m a day among the 6 financial institutions that are actively exchanging image cash letters. In conjunction with the rollout of settlement services, SVPCo changed the name of its image system to SVPCo Image Payments Network. SVPCo Image Payments Network is the only private-sector image network that offers integrated settlement with image exchange. ‘Automated settlement is another milestone in transforming check image exchange into the payments platform of the future for US financial institutions,’ said George Thomas, Clearinghouse Payments Co. ‘The settlement service of SVPCo Image Payments Network is a system created for electronic payments & is fundamentally different from other, less efficient image exchange networks that use settlement platforms originally designed for
paper checks. The unique capabilities of the Image Payments Network are the result of 150 years of payments experience & our role in settling $300 trillion a year in payments.’ SVPCo Image Payments Network is the nation’s premier check image network & the only one with the participation of the Fed. All financial institutions that exchange images directly with each other via the SVPCo network will use the automated settlement function. Automated settlement reduces risk by facilitating the exchange & settlement of check images within a single, integrated system. Automated settlement eliminates the need for bilateral settlement agreements because all participating institutions exchanging images directly with each other in the Image Payments Network operate under a single set of rules. In addition to lower risk & streamlined check image processing, automated settlement provides real-time net & bilateral settlement position reporting & eliminates all of the manual intervention required with other settlement arrangements. Financial institutions can see their net debit or credit position online & view their position with all of the participating institutions at any time. ‘Automated settlement will cut the risk of systems failure by eliminating the hand-offs between image exchange operators & their thirdparty settlement providers,’ said Susan Long, SVPCo. ‘With automated settlement, financial institutions for the first time have the capability to monitor all of their paper check, adjustments & electronic check image settlement information in one place. This is the power of an integrated system.’
Checks will stick around 8/29 BusinessFormsLabels&Systems
Checks won’t be bounced out of the forms business anytime soon Talk to anyone in the forms industry about the fate of the check business & 2 main issues will undoubtedly dominate the conversation: online banking & Check 21. Ever since the dawn of online transactions, the demand for personal check orders has been declining. And, ever since the passage of Check 21, there has been some conflict as to whether a manufacturer’s security features pass muster. Despite these looming issues, there is a silver lining. ‘The real story about checks is that the paper document is going to be around for a long time because there is always a threat of identity theft & fraud with online business,’ said Karen Gregg, Independent Ink, Gardena CA. ‘People still want an audit trail. Checks are secure & simple, & a lot of people & businesses like that.’ Dick Gray, Xtension Technologies agreed. ‘All of the reports that I’ve seen indicate that business check printing will continue at a slight increase through 2012. While some businesses are doing online banking, many have had problems with it because no one has been able to secure the process.’ Void pantographs, fluorescent fibers & true watermarks are security measures commonly used on checks from Printegra. Checks, on the other hand, do provide security. The trick to success is to better understand Check 21 & to stand up to banking institutions requiring that checks meet specifications not mandated by the newly passed law. Banks spend $45m a year to process checks, which is why they lobbied for Check 21. The act allows banks to transmit electronic copies of checks & destroy the originals instead of shipping them. While the legislation went into effect last fall, many banks will need 5 years to fully implement the new system. Gray advised distributors to know what the boundaries of Check 21 are, & to be prepared to question an end-user’s bank about what they want or expect. ‘The new law is like a jigsaw puzzle that is being interpreted differently by different institutions. Some banks are saying checks can only be printed with certain pastel colors, or they are prohibiting void pantographs & logos, but these are not required by Check 21.’Distributors have to know when to challenge the banks.’ Just like Xtension Technologies, Brooklyn Park MN-based Northstar, a division of Ennis, boasts check
documents that are entirely within Check 21 compliance, & it is taking a proactive stance on the issue. ‘We look at the new legislation as a positive thing. We’ve been in compliance for 5 years. We’ve had to upgrade software & hardware to generate different reports to indicate features, such as font size, on our checks. But, other than that, we haven’t had to change anything.’ Northstar is one of the nation’s leading providers of negotiable & nonnegotiable secure documents, internal bank forms & secure distribution services. So, what types of compliance features should distributors consider selling to their customers to protect them against the estimated $14b lost to check fraud per year? Gray said there are numerous measures available from security papers, to overt & covert features such as microprinting & watermarks. ‘Microprinting is the technique used in the signature line or check border that consists of a very small font. When magnified, words are revealed in the border or signature line, but when copied, those areas become solid lines. Watermarks cannot be copied or scanned.’ Another method includes void pantographs. Bill Reid, Printegra, Peachtree City GA, said pantographs are one of his company’s largest sellers. ‘We offer features such as fluorescent fibers that will react to bleach, & true watermarks built into the paper at the mill. We have the ability to provide bleedthrough numbering.’ At Northstar, thermochromic printing & checks with various security holograms are in high demand. Thermochromic printing involves printing checks with heatsensitive ink that changes colors when copied, & returns to normal when cooled. ‘Most people want something that is visible, so we provide features such as the hologram. Holograms do an excellent job of beating desktop copiers that try to recreate the check.’ Gray added that some of the most effective check background features include fluorescent inks, endorsement back printing, padlock icons printed on the face of the check, the MP symbol indicating where microprinting is present, & bleed-through numbering on pre-printed checks that make a mirror image on the backside of the check paper. Other security measures to promote to customers include variable imaging, MICR & modulus numbering, barcoding, security designs, secure distribution, & secure facilities & operations. Once armed with knowledge about various features, what types of checks can distributors sell, & where can they sell them? Gregg said Independent Ink’s compact & pocket checks are favorites among small businesses, such as contracting companies that carry payroll checks around in their trucks from site to site, & local regional banks. ‘Banks seem to be the #1 purchaser of our checks. I’ve found that distributors are most successful when they target the smaller regional banks where they can develop a strong relationship with the buyer.’ Bill Reid said that unit checks, pressure-seal checks & laser cut-sheet checks are popular. ‘In fact, some distributors sell various software-compatible checks for programs such as Quicken & Peachtree. That’s what we call a horizontal package. Small to mid-size companies use them, & they are very good sellers.’ Reid reported that vertical markets such as financial, hospitality, medical & manufacturing are very strong for Printegra. ‘We set up specific templates for whatever software is being used by the enduser. The distributor just reports to us what the end-user’s format, design & ink colors are.’ At Northstar, the focus is on the financial industry, & state & federal governments. ‘Our plant is the largest producer of money orders in the US, which is another option for distributors to think about,’ said Jim Staricha, national sales manager. ‘Distributors just need to keep in mind that checks are used all over the US. There are millions of them. The last report I saw said that there were more orders for checks than wire transfers, indicating that there will be plenty of business for checks for years to come.’ Staricha cited the Fed Payment Study, reporting that of all payment transactions in the US, checks comprise 45% of them, while credit cards came in at 23%, & offline, online debit transactions at 20%. ‘Checks remain the payment of choice.’ Gray agreed, noting that the
preference for check transactions exists among businesses more than the individual banker. As for the markets Xtension Technologies sells into, they include entertainment, insurance, medical, manufacturing, trade associations & financial. ‘We really don’t have one market that dominates over another. Distributors can find success anywhere people are printing & writing out checks.’ The increase in price to include security features is dramatically less than the loss incurred due to fraud should a customer opt out of good security. ‘The whole issue is about who will be responsible for funds lost should fraud happen to occur. With that being said, end-users in the business world prefer to transact with checks as opposed to online banking, & they will opt for high-end security measures to ensure that they don’t loose out on millions of dollars. The trade-off is worth it. Gray emphasizes how important security features are in preventing check fraud. He offered this case study: A prominent West Coast jewelry designer wanted a laser check design that reflected the designer’s image & incorporated multiple check security features. 10 different security features were incorporated into the checks, along with a unique, custom-designed background. As added security, a letter outlining the security features of the laser checks was forwarded to the jewelry designer’s bank, notifying the bank not to cash checks that didn’t look like the designer’s checks or that indicated attempts to alter the documents. 2 years later, 2 checks arrived in the branch for processing that the branch personnel suspected were forgeries. The checks didn’t look like the designer’s checks, were the wrong color, had misspelled information & were not the same size. The branch manager stopped the processing of the forged checks, did not honor the checks for payment & returned them to the bank that first deposited them. This saved an extensive deduction from the jewelry designer’s bank account. The bank’s branch manager credited the prior notice with helping his staff know what to look for in a high-level security document & how to protect their customer from a large financial loss. Talk to anyone in the forms industry about the fate of the check business & 2 main issues will dominate the conversation: online banking & Check 21. The real story about checks is that the paper document is going to be around for a long time because there is always a threat of identity theft & fraud with online business. Distributors must know what the boundaries of Check 21 are, & to be prepared to question & enduser’s bank about what they want or expect. In terms of security features, there are numerous measures available from security papers, to overt & covert features such as microprinting & watermarks. The preference for check transactions exists among businesses more than the individual banker. In terms of cost, the increase in price to include security features is dramatically less than the loss incurred due to fraud should a customer opt out of good security.
ARC’s downward arc is expected to hit after 08 8/1 BTN
Aite Group forecasts ARC conversion items will peak at 4b in 2008, when the demand for ACH check conversion will decline amid wider acceptance of card & online payment methods. That’s a far cry from ARC’s adoption rate these days. The 2.4b items projected for 2005 is double that of 2004, which itself was a 6x increase since 2002. With a 14% annual decline in consumer check volume, a plateau for what is a bridge solution to checkimage exchange & fully electronic presentment systems was a foregone conclusion. But other factors may be playing into the eventual decline of ARC. No single player among the retail lockbox firms- Remitco, Regulus, EDS, JPMorganChase, Mellon, ABN Amro or Unisys-has more than a 15% share of the total ARC volume. This will force consolidation that Aite believes will increase lockbox activity for some providers like Remitco, & interest banks & other processors in outsourcing. From there, lockbox firms & processors will turn increasingly to in-house & service bureau services like electronic bill-pay titan Checkfree,
whose wholesale & low-cost clearing fees will make the business case for providing ARC services for low-volume billers (50,000 items & below) difficult to justify. Checkfree competes with US Dataworks, Wausau & J&B Software in the ARC environment, although Checkfree reseller deals by Wausau & J&B make it a 2-horse race. As ARC volume nears its peak, Aite reports, ‘competition will likely focus on components of the value chains that have not yet been fully commoditized. As shown by Checkfree’s inroads into ARC processing, market participants will increasingly compete on clearing fees & the ability to process items faster.’
Endpoint & Minnesota Item Processing Corp 8/22 Endpoint
Endpoint Exchange Network, a Metavante company, announced that Minnesota Item Processing Corporation (MnIPC) has brought 81 CUs online to the country’s largest private electronic check image exchange network with 4,000 member institutions enrolled across the country. MnIPC, Bloomington MN, offers advanced image item processing & back office operational services to 108 of Minnesota’s not-for-profit cooperative CUs. MnIPC processed more than 50m items for its CU clients in 2004. MnIPC joined Endpoint in early 2004, & the first few member CUs began clearing & settling image-based payments through the check image exchange network in 6/04. ‘Our CUs are looking to reduce operating costs & provide new value added services to remain competitive & check image exchange through Endpoint is providing a meaningful clearing & settlement advantage,’ said Peter Skaalen, MnIPC. ‘MnIPC has always been an industry leader for image-based payment processing solutions & check image exchange through the Endpoint Exchange Network will continue this legacy & ensure their CUs attain maximum value from image exchange,’ said Jeff Vetterick, Endpoint. MnIPC is a CUSO, Bloomington MN. It is owned by the Minnesota CU Network & several Minnesota CUs. MnIPC offers advanced item processing services to 100 Minnesota cooperative CUs.
5/3 - electronic deposit services 8/1 MichiganBanker
5/3 announced introduction of its electronic deposit service, developed to address changes in the banking environment generated by Check 21. Leveraging opportunities created by Check 21, this beneficial service enables the bank’s commercial customers to transmit their paper checks electronically, as images, for deposit from any site in their network at a time convenient for them. ‘Electronic depositing augments the migration toward paperless banking, using remote capture technology to process images as opposed to the actual paper checks,’ said Georgette Cipolla, 5/3. ‘Whether our customers receive checks by mail, in a drop box, or over the counter, they can deposit them from the security of their own office, significantly reducing the time, effort, & resources expended on remittance processing.’ 5/3 has worked in tandem with customers & its strategic business partner, NCR, to ensure that the features incorporated provide practical & desirable benefits, employing innovations in technology to the fullest extent possible. ‘We’re at the forefront of building customer-driven solutions for receivables management that are consistent with the changing payments environment,’ said Julie Dixon, 5/3. An attractive attribute of the service one that customers are responding to very positively - involves its ease of use. ‘Operators require only minimal training, & for most items, manual keying is unnecessary.’ The scanning equipment recommended by 5/3,
which attaches to the customer’s computer provides a clear read even when the check isn’t perfect. 5/3’s electronic deposit service pilot began in early June, with rollout scheduled for IIIQ 2005.
US Bank remote capture 8/25 Businesswire
Since its release in 9/04, US Bank On-Site Electronic Deposit has been implemented at 150 business customer locations nationwide. Launched one month before Check 21 was enacted, US Bank On-Site Electronic Deposit was among the first remote capture solutions marketed to customers that receive customer checks at one or more locations via a dropbox, mail, or at a walk-up window. As a result, businesses can save time by making customer check processing more efficient. US Bank has recently launched a new set of enhancements to its On-Site Electronic Deposit product. The latest version of the product gives customers the option to automate check data entry using CAR/LAR, deposit to multiple accounts from a single PC workstation, & process a full range of transaction types, including transactions with multiple coupons or other associated documents. Other enhancements include extensive reporting features, additional deposit cutoffs, & new equipment & scanner options. ‘This new round of product enhancements helps maintain US Bank’s position as an industry leader in Check 21 & check conversion technology,’ states Kristine Oberg, US Bank.