STORES Magazine - February 2008 - (Page 38) NUTS AND BOLTS / CREDIT Clearing Hurdles ACH payments may account for 75 percent of checks by 2012 BY PATRICIA A. MURPHY C heck writing is on the decline, but with billions of checks still being written by American consumers each year, retailers and others on the receiving end are looking more closely at electronic alternatives to traditional check clearing. Americans wrote 33 billion checks in 2006. Three billion of those checks were converted to ACH payments. Overall check usage has been falling by an average of 6.4% annually since 2003. Source: Federal Reserve One of those companies is H&R Block. With 8,500 storefronts providing tax preparation and other financial services to consumers nationwide, the Kansas City-based firm began converting customer check payments to ACH transactions in 2003. Today, 95 percent of checks taken in at H&R Block’s retail locations are converted to ACH payments on the spot; the paper checks are voided and returned to customers along with transaction receipts. The decision to convert checks to ACH payments had backing from the tax preparers’ Go Paperless, Go Green treasury management department, which saw it as a way to romoting electronic payments, billing and statements as eco-friendly is a program of the Pay It Green Alliance, a trim costs and improve cash connew cross-industry group organized by NACHA. centration. It achieved those goals The Alliance counts as members some of the nation’s and more. largest banks and payments services providers, in addition to In the first year of implementa- tion, check losses declined 60 percent and “we instantly saw a reduction in expenses in terms of the cost of processing transactions,” says Ken Hicks, director of field financial operations at H&R Block. Return check losses are now about 10 percent of what they would have been without check conversion (taking into account an overall decline in check volume), he says. H&R Block is running an ACH transaction called POP (point-of-purchase check conversion), one of the earliest such transaction formats. While other ACH check conversion formats like ARC (accounts receivables transactions) swiftly garnered popularity, POP had languished until just recently. According to NACHA – the Electronic Payments Association, more than 123 million consumer checks were converted to POP transactions during the third quarter of 2007, a 52.3 percent increase over Q3 2006. Nearly 22 percent of P major billers. Its mission: to get companies that regularly send bills and collect payments to steer more customers toward electronic options. “As an industry, we recognize the opportunity to take an enormous amount of paper out of the waste cycle,” says Craig Vaream, a JPMorgan Chase vice president and co-chair of the Alliance. Alliance initiatives include a consumer-focused multi-media campaign, slated to debut in spring, which stresses the ecofriendliness of foregoing paper bills and checks. This device resembles Darth Vader, but fear not: it enables ACH check conversion. 38 STORES / FEBRUARY 2008 consumers surveyed by Financial Insights in early 2007 said they had a check converted at POS during the previous three months. Industry observers point to several factors for POP’s new-found popularity, including improved risk-management solutions and Wal-Mart’s decision to implement POP throughout the chain. Wal-Mart’s initiative is supported by TeleCheck Services, the check services unit of First Data and an early pioneer of POP. The service builds on an existing POS configuration that included WWW.STORES.ORG http://WWW.STORES.ORG
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