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Bank Coalition Proposal Would Reduce Need for Substitute Checks Truncated checks that cannot be accepted as electronic images by paying banks could be presented via the ACH network, under a concept being explored by a coalition of banks. If implemented, the proposal could dramatically reduce the number of expensive substitute checks that banks have to print, said John Feldman, senior vice president, Bank of America. Founding members of the coalition are Bank of America, JPMorgan Chase, Wells Fargo and Zions Bank. The concept was poked and prodded during an early morning panel discussion at the BAI TransPay Conference & Expo in Las Vegas.
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Under the concept, after a check is truncated, the transaction – including data on the collecting bank and where the image resided in an archive – could be sent over ACH “rails” for clearing and settlement. If a bank needed an item or needed to download all its items, it would go to one of a handful of industrial strength archives. The concept is being portrayed as complementary to image exchange and potentially a quicker way to maximize the potential of check electronification than waiting for all of the nation’s 16,000 financial institutions to become capable of receiving and processing check images. Feldman said the concept simply gives banks another option along a continuum of choices. Ian Macoy, managing director; Network Development & Risk Management, NACHA—The Electronic Payments Association, said that collecting banks would not be forced to use the option. But just as all banks must accept IRDs, they would be required to receive the new transactions if the proposal were implemented. The concept involves significant legal issues stemming from different laws that govern check and electronic-payment processing as well as standards and other technological hurdles. The coalition needed other experts and engaged ECCHO – The Electronic Check Clearing House Organization, NACHA and Viewpointe Archive Services, said Tony Gerevics, senior vice president, float, transportation & image exchange manager, JPMorgan Chase Bank. He said working groups on business requirements, operations and technology and law and rules will determine whether the concept is feasible, and if so, how quickly it could be implemented. Gerevics said the working group plans to have a model by June and is looking forward to rapid review by the experts. Feldman said that if the concept is deemed feasible, the group might pilot the concept this year and see how much volume it could get through the system next year. Ben McAnally, executive vice president, First Financial Bank, said if banks could get involved for relatively little up-front cost and realize savings over current processing, small banks would jump on board. |
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| More Articles in This Issue » OFFSHORING THE BACK OFFICE » ATTORNEY WARNS ABOUT REMOTE DEPOSIT CAPTURE RISK » DON'T UNDERESTIMATE THE POTENTIAL OF CONTACTLESS PAYMENT SYSTEMS » FOCUS ON CUSTOMER ACQUISITION, CHECKFREE ADVISES » SURVEY RESULTS: ATTENDEES EXPECT NON-BANKS TO BE TOUGHEST PAYMENTS COMPETITOR » WE'RE BRINGING IT ALL TOGETHER
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