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Back office
conversion (sometimes referred to as distributed capture, remote
capture, remote deposit, and electronic deposit) is a relatively new
concept that is designed to identify the lowest-cost routing option for
a particular check transaction. In theory, a decision is made in
the back office of a corporation whether the check transaction
should be cleared as a paper check, a Check 21 substitute check, a Check
21 image exchange, or an ACH. While it is widely
believed that the ACH will continue to be the lowest cost settlement
route for most smaller-value items, the NACHA point of sale conversion
(POP) rules do not allow for this kind of check conversion to occur. Today, POP requires a signature to be captured a the point of sale and
for consumers to receive their checks back. Accounts receivable
conversion (ARC) rules, on the other hand, are much more conductive to
back office conversion. With ARC, only notice must be provided and
the merchant retains the check. Should POP ACH rules change to
allow back office conversion in a retail environment, corporations may
find new benefits in this application, including:
Fewer deposit runs (needed only for non-U.S.
checks and cash), which should reduce courier fees and staff time -
Increased funds availability (in many
cases)
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Ability to reduce the number of bank
relationships
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Simplified concentration of deposited
funds
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Automation of bank deposit, fewer deposit
prep tasks
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There are a number of issues surrounding back office conversion as you
analyze its ROI. The first, and most important, is that the cost is
untested and unknown. The Federal Reserve just came out with their
pricing ranges on image exchange and substitute check processing. The
costs range from $.015 to $.50 per item and include eight deadlines. The information is available at
http://www.frbservices.org/Retail/Check21.html. If you believe the
adage that “technology enables but economics drive” then you know that
the ability to create a believable ROI is still not there.
Solutran is
proactively working on our own back-office conversion solution,
believing that many of the issues will be addressed. Our solution will
include client software and imager interfaces, an administrative
console, image storage and archival and least-cost routing capability
that will take into account float, depository costs, and other factors
important in assessing the best route for a transaction. |
