Payments Watch

Earlier this month, the Federal Reserve made available a summary of the 2007 Federal Reserve Payments Study. I have used these results, as well as previous payments studies to update the Payments Watch payments model. Preliminary results from this model are predicting that (for the United States) debit card use may surpass checks paid as early as this year, and that ACH and credit card use may both surpass checks paid by 2009.  Longer term, at current trends, the model is predicting that checks as we know it may cease to exist before 2020.

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Joe Gregory and the team at Orbograph are Sponsoring a TAWPI webinar summarizing the financial benefits for deploying an embedded Business Process Outsourcing (BPO) solution. Orbograph provides an excellent embedded BPO product for image POD check processing called APEX Key-Pay.

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Proof of Deposit (”POD”) is the verification of the dollar amount on a check or draft being deposited. This verification is done by comparing the handwritten amount on the check/cheque to the amount written on the accompanying deposit slip. Proof of deposit is an important step in check processing, yet has alluded full automation (unlike the sorting of checks via MICR technology).
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Over on Paul Kedrosky’s Infectious Greed blog, he has a link in the research he is catching up on regarding how check clearing through correspondent banks may have contributed to bank collapses during the depression.
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What I want is a financial services mash-up. I want a single online application that combines all of my financial services products, whether from the same or different providers. Consider an on-line banking website where you view transactions and seamlessly transfer money between your savings account, line of credit, your mortgage and credit cards, with access to a consolidated summary of all of your finances - even though all of these products are all provided by different banks and vendors.
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Canadian Tire has announced that they are getting into the mortgage and chequing account business. They are following other retailers in offering core banking services, but with a twist - an “all in one account” that puts your mortgage, savings and chequing into a single pool of money.
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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.
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Orbograph, a developer of recognition solutions for the U.S. cheque processing industry and provider of solutions for business process outsourcing has announced some management changes. Orbograph’s technologies including image recognition, fraud detection, business process outsourcing and image quality assurance are used at many financial institutions across North America, processing millions of items each day.
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No one is going to use your new payments platform until a significant number of businesses or people accept the new method, yet no one is going to invest in the infrastructure to accept and handle the new payment method until lots of customers are using the new method. This chicken & egg problem needs to be addressed in any strategy, and the answer is often having a backward compatibility option that dissolves the problem.
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I wrote earlier about remote deposit capture (”RDC”) being a popular outcome of Check21. RDC is a process where commercial bank clients scan and transmit their cheques to be deposited into their bank. My point at the time was that, despite the spirit of Check21 being one of efficiency and cost reduction, RDC is a revenue play when you figure that it allows a bank to acquire new customers outside of its geographical footprint.
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