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Insider's report on payments
All signs point to RDC
By Patti Murphy
The Takoma Group
If someone had said when I first began writing about
payments nearly 30 years ago that checks would
be a mainstay of the U.S. economy in the 21st century,
I suspect I would have considered that person
a fool.
It was, after all, a period of great optimism. It gave us a
generation of philosophers, deemed futurists, who proposed
the demise of pesky paper payments in the not-toodistant
future.
They said we'd all carry a single card (what today might
be called a smart card) with which we could transact all
types of business electronically.
Alvin Toffler's seminal book, Future Shock, had been
widely read, and his latest tome, Third Wave, was just
hitting the bookshelves. Banks were beginning to install
automated teller machines (ATMs) and issue debit cards.
There was even talk of ATM networks.
The optimism among some bankers was palpable, as was
the entrenched mindset of "second wave bankers" (to borrow
a phrase from Toffler) who weren't quite ready to bet
their careers on consumer adoption of electronic funds
transfer (EFT).
Now, here we are well into the 21st century, and the
banking system remains awash with checks. It probably
will remain that way until long after I put away my
reporter's notebook. That's not as bad as it might have
once seemed, however.
That's because banks (with substantial assistance from the
Federal Reserve) have managed to push a lot of paper out
of the system by effectively "electronifying" the clearing
and settlement process.
It's been great for the banks. Because of new product
opportunities like remote check capture (RDC), banks
have been able to break down remaining barriers to
nationwide deposit gathering. I've interviewed bankers in
New England who have relationship officers all over the
country selling RDC.
But, as is often the case with banks, they're leaving behind
a lot of low-hanging fruit. That's where abundant opportunities
exist for ISOs and merchant level salespeople.
Millions of small merchants accept credit cards today
– mom-and-pop stores, medical offices, auto repair
shops – that are prime candidates for RDC services.
These are the folks who actually take check deposits to
their local bank branches day in, day out.
Getting bank branch personnel to sell remote check capture
hasn't proved easy. U.S. Bancorp, parent company
of Elavon (the card acquirer formerly known as NOVA
Information Systems), has 2,400 branches that would
seem ideally positioned to sell services like RDC. But
building on that network to reach small business customers
isn't easy.
"If we could get our branch personnel to lead with
remote deposit when a small business owner comes to
open an account, we could potentially have 10,000 new
leads a month," said Beth Blaisdell, Senior Vice President
at Elavon.
Blaisdell said she sees opportunities for the feet on the
street to sell all-in-one agreements under which merchants
get to make all noncash deposits electronically
– checks and cards.
Boston-based consultancy Celent LLC estimates there are
14.5 million small businesses that are prime candidates
for RDC.
While on a routine visit to the doctor's office recently,
I noticed a desktop check scanner on the billing clerk's
desk, right alongside his card terminals. I couldn't help
but ask what he thought of the service. "I think it's great,"
he beamed. "The best part is now I don't have to take time
to go to the bank every day."
I was curious, so I inquired as to how many checks he had
to deposit. Perhaps a handful each day, I thought. Wrong.
The stack he had of the previous day's deposit contained
at least two dozen checks.
Bob Ficarra, Vice President for ISO and Partner Relations
at CrossCheck Inc., sees opportunities in the RDC sphere
for ISOs. And he likens them to the opportunities that
existed in the early years of selling card acquiring services
to merchants.
"It's a huge opportunity for anybody who is willing to
stand up to the fraud," Ficarra said. Risk of fraud arises
from the fact that consumers are entitled to contest some
demand deposit account transactions for almost 90 days
from the posting date.
Federal check law provides a 45-day period for consumers
to contest transactions; this applies whether the check
is cleared as paper or as an electronic check. Consumer
EFT law, as implemented by the Fed's Regulation E, provides
60 days from the receipt of the statement containing
the suspect transaction.
So, depending upon when in the statement cycle a trans-