At the Association for Financial Professionals 2009 Annual Conference, held October 4 through 7 at the Moscone Center in San Francisco, automated clearing house (ACH) and Check 21 opportunities were running themes among presenters exploring upgrades to the electronic pay-ments sphere.
Indeed, while the conference addressed a range of financial topics, payments industry subjects had a noticeable role. From the exhibit hall to the forum rooms, issues beyond ACH and Check 21 surfaced, including remote deposit capture (RDC), credit card fraud, the credit crisis and international currency exchange.
One noteworthy forum was Same Day ACH: Potential Opportunities and Limitations, wherein three panelists discussed a plan by the Federal Reserve for same-day ACH clearing on debit payments, set for rollout in the second quarter of 2010.
"ACH has been pretty stagnant the last couple years - the last 35 years or so," joked presenter Peter A. Davey, Senior Manager, Enterprise Payment Strategy for Capital One Financial Corp. The national ACH network was established in 1974. Davey and his fellow presenters, Stephen Ledford, Senior Expert at McKinsey & Co., and Richard R. Oliver, Executive Vice President and Retail Payments Product Manager for the Federal Reserve System, lamented the federal ACH system as archaically slow in a world where money transfer has become highly efficient in other places.
"We know people are [streamlining settlement processes], but we need to move toward it as an industry or someone else will," Oliver said.
Oliver said the same day ACH program was inspired partly by the Check 21 law, which took effect in 2004. It is planned as an opt-in service for banks under which ACH-converted checks and debit payments will be cleared in the afternoon rather than overnight (payments made beyond a certain time will be cleared the following afternoon; at present, clearance of ACH debit payments can take two to three days). Check 21 payments, which convert physical checks into digital images sent remotely to a banking institution, are not subject to ACH rules and are generally cleared much more quickly than physical checks.
Oliver said the benefits of same day ACH clearance will be many. Among them will be accelerated revenue for banks and accelerated returns - or what Oliver called "less temporal exposure" for pending monies to keep balance sheets cleaner.
"Certainty of payment is a big issue," Ledford added.
Davey said faster clearance will also allow banks to invest their money earlier, as well as reduce insurance premiums to the Federal Deposit Insurance Corp. Premiums are based on the size of a bank's overnight deposits and can be lowered by transferring afternoon settlements away from deposit accounts.
Check 21's influence was also evident in the conference's exhibit hall. On the vast and luminescent exhibit space, where over 200 organizations held booths, RDC digital check scanners were among the most commonly displayed contraptions.
Exhibitors ranged from the world's biggest banks to smaller lenders, payment processors, technology providers and NACHA - The Electronic Payments Association. One exhibit was the Panini I:Deal from payment technology provider Panini. A smaller than average RDC device, it is designed for small businesses with lower check volumes. In demonstration, checks inserted into the I:Deal did a quick see-saw motion through the scanner; John Bristol, National Channel Manager for Panini, opened the device to a reveal a moving camera lodged inside a rotating cylinder that captures images of the front and back of a check, requiring checks to be inserted only once.
Goldleaf Financial Solutions, too, presented an RDC scanner intended as a "dummy proof" device in which even haphazardly inserted checks can be properly scanned. Goldleaf's scanner is rectilinear and flat, and resembles conventional paper scanners.
Meanwhile, NACHA promoted a program, deployed in September 2009, to more strictly regulate international ACH transactions.
According to Debbie Barr, Senior Director, Network Rules Processes and Communication for NACHA, the system - which is run through the United States Department of the Treasury's Office of Foreign Assets Control - uses a vast database to prevent blacklisted individuals from conducting cross-border transactions. "We are doing a full screening and blocking by verifying against this list," she said.
About 4,000 people attended this year's conference, according to Rebecca Wolfson, Manager of First Impressions for AFP. The next AFP Annual Conference is scheduled for Nov. 7 to 10, 2010, in San Antonio, Texas.
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