Check 21 Act Will Help US Firms To Boost Profits
The Check 21 Act, effective from October 28, 2004, is an opportunity for US firms to increase their transaction efficiency and profits, given the ability to monitor and streamline cash flow, according to observers. Bankers are unsure how quickly check imaging will take off, but larger institutions are tipped to start by imaging high-value checks, to earn interest more quickly and avail of fraud protections. Within a few years, banks are expected to save USD 2 billion per year by using check imaging in place of paper checks, with Celent Communications expecting paper check volume to dive in as few as three years.Figures from the Federal Reserve confirm paper check volume in the US to be falling rapidly from a high in the mid-1990s, to unprecedented lows, as ACH, card and electronic payments gain traction. During Q1 2004, the Fed cleared 3.64 billion checks, a 5.8 per cent drop on the previous quarter, and the second biggest drop in a single quarter in the past 15 years. Check volume processed at the Fed is at its lowest since 1989, at 59 million paper checks per day at an average value of USD 953, down from 62 million in Q4 2003, in what was the sixth consecutive quarterly drop in the past nine quarters.
In 2004, paper check volume is predicted to drop another 5 per cent as consumers take to online banking and e-payments, with PIN- and signature-secured debit card transactions alone growing by almost 20 per cent in 2003, according to the Nilson Report. Over 495 million debit card payments are now made in the US every month, with NACHA also reporting in March 2004 that ACH transactions rose by almost 900 per cent after consumer payments were introduced to the mix. The Fed is also promoting e-checks as a way to cut the risk of identity theft, with at least six people handling each paper check during processing. Related Links:
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