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Monday May 24, 08:15
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Banks Can Use Check 21 To ’Regain Payments’
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Check 21 will act as a ‘tipping point’ for banks to “pave their own way back to a position of preeminence in payments” while speeding the elimination of paper from the payments system, according to solutions firm, Carreker. Payments amount to a USD 600 billion business globally, of which the US accounts for about a third, or USD 200 billion, Carreker reports in a recent white paper, and although US banks have about half of this business, non-banking entities are eroding that share. Check 21 in fact gives banks an “opportunity to capture a sizeable percentage of this lucrative payments space”, if a strategy is appropriately executed.
US banks, which spend about USD 8 billion annually on check processing and transportation, stand to save about USD 2 billion a year by adopting image exchange technologies. In a bank’s back-office, for instance, the image-enabling of exceptions, return items and adjustments gives banks the opportunity to increase payments revenue, differentiate their payment services and tighten relationships with customers. With bank customers bearing the brunt of check fraud (about USD 8 billion annually), payment guarantee for imaged checks is another way for banks to retrench in the provision of value-added payment services.
Banks currently offering their negative databases to non-banking entities for a fee can for instance create an online, real-time entity to guarantee check payments at the point of capture, Carreker advises. While the US banking industry will spend USD 1.5 to 2 billion on Check 21 technologies through 2008, Carreker sees a bank revenue potential of USD 2 billion if the opportunity is maximized. To reclaim the payment system, however, banks must manage payments as a unitary business, drive e-payments adoption, draft a paper migration path, pool their payments resources, and identify how best to play in a constantly changing landscape.
(Yahoo! News)
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