A new Impact Report from Aite Group, LLC looks at the state of cheque processing as cheque electronification fundamentally changes the way cheques are cleared.
Though the introduction of the automated clearing house (ACH) network can be considered a success, paper cheques will continue to dominate the market for some time. However, by 2012 only 25% of all cheques written will be cleared as paper, as opposed to nearly 100% in 2000, according to the report.
As a result, the industry will experience significant cost savings, and payment systems in the United States will ultimately be less susceptible to transportation disruptions. New business models, such as remote deposit capture, are being created that build client relationships and generate new revenues. Vendors in the cheque processing industry will have to adapt as quickly as the industry itself, or risk becoming redundant in this rapidly transforming market.
“Financial institutions need to seriously consider their time of entry, as early adopters tend to pay additional costs for technological and operational challenges. However, there is no doubt that all financial institutions will eventually need to migrate to ACH conversion or cheque truncation, though most likely both,” says Nancy Atkinson, senior analyst at Aite Group and author of the report.