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With the advent of the Federal law known as “Check 21,” billers and
retailers have new opportunities for refining check payment processing
while reducing costs. Check 21 defines a new legal payment instrument
called a “substitute check” and enables “image exchange,” the ability to
swap check images and data directly with the paying bank. Yet how does
one choose both the most expeditious route for settling each check and
the least expensive?
Solutran has developed a groundbreaking payment decisioning engine that
allows billers and retailers to submit their entire check payment file
to Solutran, confident of optimally efficient and low-cost
settlement. Solutran will process this file through our payment
decisioning engine based on the following routing and eligibility
criteria:
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Client Setup
– For which settlement methods is a client eligible, and under what
customized conditions? Retailers, for example, are not permitted to
use ACH for back office transactions, so their checks would settle via
substitute check or image exchange. On the other hand, billers who
follow NACHA’S rules for ARC have all options available to them today.
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Cost of Settlement
– Each settlement type (ACH, image exchange, and substitute check) has
a unique cost structure. The ACH network will likely remain the
least-cost option for some time, but some items are ineligible for ACH
processing. Solutran’s payment decisioning engine would settle these
items as either image exchange or substitute check, whichever incurs
the least possible cost.
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Funds Availability
– Funds availability for each type is unique, too. Once widespread,
image exchange will likely enable immediate availability, but few
banks settle via image exchange today. Some speculate that significant
image exchange volumes will not occur until 2007. Substitute checks
have an availability schedule like that of customary paper checks,
except the substitute check can be printed near its clearing point to
expedite funds availability. ACH items
settle via batch processing, translating to next day availability of
funds.
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