Emerging trends & technologies in remittance and payment processing: Following the fads, exploring the realities

Today, Jun 2000 by Pinkham, Rick

Slowing down the rush toward electronic checks is the simple fact that other electronic payment options such as Web-based payments are attracting both vendors and patrons away. Patrons aren't as inclined to initiate the use of electronic-check generation software. Also, since the creation of the electronic check can occur at various steps within the process, determining where to build in the OCR/ICR recognition capability can be complicated and may vary from site to site. Finally, electronic check fees will be increased by 11 percent later in the 1st quarter, making them slightly less cost-competitive when compared to pure electronic payments.

Wanted: Single, Compact Remittance Systems

Typical remittance solutions are designed so that there is a single "center"-a core remittance processing system-to process high volumes of checks and remittances where they enter the organization.

Increasingly, banks across the U.S. and Europe are handling the critical first pass of remittance processing as soon as the remittances enter the organization-at the teller level. As banks strive to be more competitive, particularly smaller banks and credit unions, the single-user remittance systems, which operate from individual's desktops at speeds of more than 50 items per minute, are showing strong potential. By decreasing handling of paper documents and reducing shipping and scanning costs, the single-user remittance system may revolutionize remittance processing organizations' business models.

The single-user remittance system lets the first customer representative who handles the remittance and payment use a very compact, shoeboxsized transport to manage the first pass of deposit slips and checks. The first pass includes OCR recognition on scanlines, courtesy amount and other fields as well as MICR reading.

The entry of this information by multiple users as soon as it enters the organization allows for immediate electronic tracking of the information and greatly reduces opportunity for error, because the customer representative is more familiar with the contents of payment transactions than an employee of a remittance processing center.

The single-user remittance system poses exciting new possibilities for remittance operations with geographically-distributed locations. Normally, these sites would ship incoming remittances and payments to the "central" remittance processing location for scanning and subsequent handing; they can now perform the first pass of remittance processing on-site, as remittances enter the organization.

The challenge for customers is that there is not a wide offering of payment processing software compatible with these smaller transports, limiting the choices of vendors and features; however, the limitation is being quickly overcome through new offerings from some of the leaders in remittance processing software, systems and hardware.

Remittance Software Goes Cross-Platform

There is an increasing trend with vendors of remittance processing software to expand functionality across multiple platforms for the flexibility of their customers. The reasons are easy to understand vendors want to expand their reach to potential customers who have existing install bases or preferences for other platforms.