Electronic Check and ACH Network News
Electronic Checks Come of Age – a $27 Trillion Evolution
According to National Payment Processors
Tuesday May 11, 1:53 pm ET
ARROYO GRANDE, Calif., May 11 /PRNewswire/ -- After years of persistent threats to the dominance of the paper check, electronic fund transfers, "eChecks" or "EFTs", have finally gained acceptance by both consumers and businesses. In 2003, the total volume of paper checks declined for the 3rd consecutive year (Source: Federal Reserve Check Study, November 2003) and the ACH (Automated Clearing House) network moved $27.4 trillion.
This evolution in money movement represents a significant opportunity for businesses to increase efficiency and profits. ACH transactions include accounts receivable conversions, auto-debits, telephone checks and web payments. These are often based on a web-interface or "payment Gateway," with transaction fees usually significantly lower than credit cards. Rising consumer confidence in these payment forms has led more companies to actively implement electronic check processing.
The ACH Network is the fastest growing payment system in the United States. Operated by the Federal Reserve Bank since the late 1960's, it is the electronic payment system for inter-bank transfers. It became available to corporate users in 1999. In 2001, there were only 1.23 billion ACH transactions, including all Federal Government payments. Last year, due to consumer usage, this number jumped to 10.4 billion, an increase of nearly 900%. (Source: NACHA, March, 2004)
Consumers are legitimately concerned by risks of identity theft, and misconceptions of electronic payments add fuel to this fire. Contrary to popular belief, processing checks electronically brings greater security to sensitive information. A recent Federal Reserve study showed paper checks are handled by at least six people during traditional processing, compared to one person when processed electronically. Fraud, bad payments and the associated fees and costs are reduced through "Account Verification." This validates the check's routing/account number, account status and fund availability before the transaction is processed. Moving to a system that already saves time and money, businesses reduce internal security costs and keep their client's information safer.
The automation provided by eChecks offers significant time and money savings. Every business gains efficiency and profitability improvements by cutting staff costs and costly accounting errors. The "echeck" has secured its place as the most significant new type of payment and will continue to evolve over the next decade.
Visit www.echeck2000.com.
About the author - Michael Rees is one of only 2,800 AAPs (ACH Accredited Professionals)
in the U.S. banking industry. He is Director of National Payment Processors,
providing electronic check/ACH payment processing in the U.S.
