Changing Industry Evident in Benchmark Study

Today, Aug 2005

Early Results Show How Remittance Processors are Responding

Preliminary results of a landmark TAWPI (www.tawpi.org) study confirm that the remittance processing industry is facing unparalleled change. ARC, Check 21, and other new technologies are impacting how bills are paid, received, and processed. With new technology comes new opportunities, but also greater complexity in processing an ever-expanding array of payment types and systems.

TAWPI has engaged Dove Consulting (www.consultdove.com) to conduct a Remittance Processing Benchmarking Study for the benefit of its members. This study will allow TAWPI and the sponsors of the study to compare remittance processing operations with industry peers. Remittance processors will have the opportunity to learn how these industry changes are affecting their peers' operations and identify "Best Practices" to prioritize improvement efforts for their own operations.

Early results have been published in a "Wave One" white paper report that summarizes the results from the responses received from remittance processing professionals as of early May. Titled Remittance Processing: Trends and Opinions - Wave One Preliminary Findings, the study indicates the following:

* Remittance processors are generally satisfied with the performance of their operations, but they also identify a number of challenges and opportunities to improve;

* Error rates are trending down;

* Unit costs are up for some processors but down for others;

* Cost pressures and efficiency improvements continue to challenge the industry;

* There are a number of areas where respondents report opportunities for productivity improvement, such as increasing efficiencies, Check 21/imaging opportunities, ARC/ACH, and improved software;

* Investment in new systems will be driven by cost saving opportunities and new requirements for ARC and Check 21.

The initial Trends and Opinions survey results indicate that remittance processors are doing many things well and have managed to adapt to industry changes. However, there remain a number of outstanding issues and challenges that remittance processors continue to face. The most important trends influencing remittance processing operations today, three topics dominated the responses;

* Check 21/lmaging

* ARC/ACH

* Check volumes declining

Respondents were divided about the direction in their remittance processing volumes. Forty-four percent of respondents reported an increase in volumes, 40% reported a decrease in volumes, and 16% reported that volumes have remained unchanged. Those who have seen an up-tick in volumes are more likely to have experienced a large increase (greater than 5%), whereas those who have seen a decline in volumes are more likely to have experienced a small decrease (between 0-5%).

Check imaging/remote capture and ACH check conversion systems are the most likely areas where respondents plan to invest in the coming two years, with 45% and 38%, respectively, of respondents indicating either current preparations already underway or plan to soon invest.

Wave Two:

The second phase of the benchmarking study is currently underway. This in-depth survey will gather detailed benchmarking information tailored to specific operating environments. The combined results from both Wave One and Wave Two will provide objective information for remittance processors to evaluate the state of the industry and to determine where their operations stand relative to others in the field.

While a number of remittance processors and lockbox providers have agreed to underwrite the survey - and thereby help determine the questions asked - TAWPI is still actively seeking sponsoring organizations. Understanding how remittance processing is changing, and how individual organizations compare to the industry benchmarks, will benefit not only the sponsors, but also the industry as a whole.