Making the case for arc

Today, Jun 2003

AS PART OF TAWPI'S REMITTANCE PROCESSING CHECK CONVERSION COUNCIL, A WORKGROUP WAS FORMED TO REVIEW THE BUSINESS CASE FOR PURSUING A CHECK-TO-ACH PROCESS FOR ARC (ACCOUNTS RECEIVABLE CONVERSION). AS A RESULT OF THE WORK OF THAT COMMITTEE, TAWPI AND CHRIS HANEY OF POLITZER & HANEY HAVE PRODUCED A 40-PAGE WHITE PAPER. THE PAPER OFFERS A SENSE OF THE STATE OF ARC ACCEPTANCE.

This paper provides guidelines for evaluating a business case for implementing ARC, the Accounts Receivable Conversion of checks to ACH format for processing. The intended audience is billers that receive volumes of retail payments and processors of retail remittance payments that are evaluating check conversion. Additionally, banks providing ACH origination of converted checks and vendors offering software solutions to enable ARC check conversion will find this paper useful to better understand how their customers are evaluating the business case for check conversion. This project was undertaken in response to requests by remittance processing professionals for an actionable guide to evaluating an ARC check conversion business case. This document is not intended to provide an argument for or against ARC check conversion-but rather to provide a tool that organizations can use to develop their own business cases as appropriate.

The paper is prepared for the intended readers to evaluate the ROI of implementing ARC check conversion and does not examine the concerns or issues of corporate disbursers of checks, who may have different perspectives on check conversion.

It should be noted that this paper provides a means of evaluating check conversion at a point in time when additional rules and regulatory requirements for check conversion are still being analyzed. TAWPI and its Remittance Processing Check Conversion Council are making suggestions on policies and procedures, and are keeping current with proposed rules and regulations, shifting business practices and other industry information.

Special thanks is given to members of the Business Issues Work Group of the TAWPI Remittance Processing Check Conversion Council for providing valuable information, insight and expertise on how their organizations are considering check conversion. The Remittance Processing Check Conversion Council includes a wide representation of industry segments with strong interest in check conversion, including large retail billers, lockbox processors, software vendors and financial institutions. Industries represented include banking, telecommunications, utilities, credit card, retail and insurance. The group includes numerous participants having live production experience with ARC check conversion as well as those in evaluation stages. A list of Council members is included in the White Paper.

The sections of the paper include:

* A brief overview of ARC check conversion

* A Quick Evaluation Matrix for quickly determining the potential of an organization's ARC check conversion business case

* Detailed instructions for analyzing a business case-including benefits and costs from a biller-and separately from a remittance processor point of view. These sections can be used in combination by billers that operate their own remittance processing sites.

* Risks and Suggested Mitigations of those risks to the success of ARC Check Conversion

* Discussions of Operations issues, and NACHA and Federal Reserve Board Regulations

* Actual Case Studies

* A sample high-level implementation checklist

* Additional ARC information resource list

* An ARC Model Summary

* A comparison discussion of ARC to Check 21/Image Replacement

* A Glossary of ARC terms