ECP (New Keys to an Old Kingdom)
Did you know there is an organization whose basic charter is to
improve check handling? The U.S. Financial Services Technology
Consortium (FSTC) is a group of banks, computer manufacturers, and
advisers working on Interbank Check Imaging (ICI) projects. This
group's primary charge is to find better ways of managing and
processing checks, and their most active initiative is Electronic
Check Presentment (ECP).
ECP is a concept which we are hearing more and more about at U.S.
Financial Services conferences these days. It is generally positioned
as a check replacement concept. While this is an interesting thought,
and obviously helps to build conference interest and attendance, it
may well be that ECP will help to give the "Paper Check" a longer
life, rather than eliminate it.
First, let's review why there are so many checks in the
marketplace. Consumers like checks because of the float they are able
to enjoy, the predictability of how the transaction will flow, and
the documentation a check provides. However, the two most important
reasons why checks are so popular are seldom discussed. The first is
that the check has been around a long time and represents a payment
method consumers find comfortable. Second is that the ideal
alternative to checks has not yet been discovered. To say that "yet"
another way, "We have always done it that way."
In addition, a lot of organizations, from check printers to banks,
depend on checks for a high percentage of their income. And with
3,200 collection agencies in the U.S., the consumer's ability to
manage money and business' opportunity to make money supporting check
activity may disappear, if and when paper checks become obsolete.
How does ECP change this accepted paradigm?
Overall, the best answer is that ECP can speed along the
information handling portion of the paper check process. From
point-of-deposit imaging to truncations opportunities, checks can
become faster and easier to process with ECP. Banks can enjoy MICR
line transmission from the collecting bank in advance of paper, and
can archive the paper check at bank of first deposit or an alternate
agent. Also, ECP can help to create fewer adjustments and improved
research, each of which will reduce cost of handling.
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