The Broken Link - Digital Transactions

ecently adopted NCR Corp.’s solution
for remote deposit capture with backoffice
conversion.
For Hy-Vee, NCR’s e-check product
addressed problems it encountered
in an earlier test of POP, says Kevin
Reed, assistant vice president and
controller. Hy-Vee, one of the nation’s
top 20 grocers with 224 stores, processes
2 million checks a month.
Hy-Vee tested conversion at the
point of purchase and “we were not
happy with the results,” Reed says.
“It was too slow and too expensive.
It slowed down our front end and we
didn’t like that. The model we had was
more expensive than depositing paper.”
Using Dayton, Ohio-based NCR’s
ImageMark-Commercial Passport technology,
Hy-Vee’s second attempt at electronic
check conversion is proving more
successful. “It didn’t affect our customers
other than they had to be aware of it,”
Reed says. “It didn’t affect our cashiers
so there was no change on the front end.
Of course, it does affect our bookkeeper
in the back office—it takes a little big
longer to scan the checks.”
The only extra investment
Hy-Vee has made in electronic check
Although there is growing interest in electronic check
conversion, retail check conversion will peak in
2010 as check usage at the point of sale continues to
decline, according to a new report from Celent LLC.
More than 50% of checks presented at the retail point
of sale in 2010 will be converted using point of purchase
(POP) or back-office conversion (BOC) methods, while
checks are expected to account for only 4% of point of
sale transactions, the report says.
POP, which has a head-start on BOC, will maintain its
lead as the favored method of check conversion, accounting
for three-quarters of retail e-check volume, Celent says.
That’s due in part to Wal-Mart Stores Inc.’s rollout of POP
to its 3,400 U.S. locations coupled with processor First Data
Corp.’s dominance of the market with a POP-based product
offered through its TeleCheck Services Inc. subsidiary.
Only 4% of surveyed retailers were already using or
piloting BOC, while 6% said they were interested and
evaluating the business case, the report says. Fifteen percent
said they had heard of BOC but had no interest, and
Climbing to the Peak, Then Down
55% said they had never heard of it. Twenty percent of
retailers said they had heard of BOC and were possibly
interested in it.
Of retailers surveyed, 45% said they prefer POP
check conversion while 25% preferred BOC. Thirty percent
said they have no plans to implement either.
Celent also found that two-thirds of retailers use verification
and guarantee services, which capture magnetic
ink character recognition (MICR) data on the check at
the point of sale, and already have the hardware capability
for POP check conversion.
The report—“Back-Office Conversion: Too Little Too
Late?”—is based on interviews conducted between July
and November 2007 with 16 treasury and finance staff
at retailers across multiple segments, eight BOC solution
providers and six large billers using the accountsreceivable
conversion (ARC) e-check code. Celent also
interviewed financial institutions currently offering or
planning to offer BOC as well as administering a Web
survey to more than 300 retail treasury staff.
Recent and Projected e-Check Dynamics
• Checks as % of POS Payments
• % of POS Items Converted
• No. of Retail Checks Converted (millions)
824
1,114
45%
1,112
52%
55%
963
56%
836
60%
728
29%
464
16% 15% 14%
15%
12%
269
148 162 10% 9% 120
168 7% 7% 64
6%
1%
2% 3% 3% 4%
5% 4% 3% 3% 2%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Celent LLC
16 • digitaltransactions • February 2008