Payments Watch

Perhaps one of the biggest developments to come out of Check 21 is Remote Deposit Capture (”RDC”), which, as I have previously noted, turns Check 21 and image exchange into a revenue opportunity, not just a story on improving operating efficiency in cheque processing. One idea I had recently was of a RDC wholesaler, a company that could provide a soup to nuts (e.g. front office scanners to clearing and settlement) solution that banks and other third parties could simply brand and sell to their clients.

As background, RDC is a process where a user scans cheques and transmits these images and accompanying cheque data to a bank for posting and clearing. In essence the cheques you receive can be scanned to create a digital deposit. Typically RDC is used by merchants or corporate locations, although some banks have offered such a service to consumers. It should also be noted that one could technically apply the term RDC for any remote capture including banks capturing images of cheques at the teller wicket. For more information on RDC go here.

My idea of a turn-key RDC wholesaler was inspired by Xoom, which provides a complete (overseas) person to person remittance service wholesale to companies. So for example, a bank in the US midwest that notices their Mexican/Mexican-American clients taking money out of their paychecks and walking across the street to Western Union, can rebrand and price Xoom’s solution for their own clients while Xoom handles all the processing for them. Note that Xoom also sells their service to consumers directly, so in some instances Xoom could be competing with companies that use the Xoom wholesale solution!

Anyway, like most of my ideas, I figured that someone has already thought of this, and I was somewhat correct. While there are many vendors/suppliers in the RDC landscape, many offer only pieces of the whole solution such as concentrating on scanning equipment, image recognition software, image quality software, exchange platforms, etc. These, I would think, are typically used by banks that create and manage their own RDC product and platform. However, there are many providers that have developed ASP (application service provider) models by providing a network (e.g. internet) based front end for end users to capture and manage remote deposits. Several providers go further to provide some processing as well. One such provider is Bankserv. I spoke with Barry Lillington, Bankserv’s sales coordinator about their RDC offerings. Like Xoom in the remittance arena, Bankserv sells it’s RDC services directly to merchants and corporate clients as well as to financial institutions who re-brand and resell the service to their own clients. For these resellers, Bankserv can provide almost any depth of service, including installation, first tier customer support (although typically banks have their own call centres), processing and posting. Their RDC product can be integrated with Quickbooks and they are working on a version for Peachtree, so there is also value add on the merchant side as well.

At the end of the day these kind of providers will supply data (for example, an image cash letter) that the reselling bank will need to use to actually clear and settle the remotely captured items (e.g. via image exchange or even IRD). To clear and settle, a provider would need to have a bank charter, so a full turn key wholesale solution with all the value add of a Bankserv that can also settle the captured items is hard to come by (please let me know if one exists). The problem is that you have to be a bank, and banks are typically not in the ASP business supplying services to who in essence could be their direct competitors. However, they might do this through an owned subsidiary, e.g. Net Deposit (Zions Bancorporation) or Creative Payments Solutions (BB&T).