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A Compelling Business Case
for BOC Adoption, Now.
By implementing BOC/ACH, Retailer realizes an overall savings of 59.9%.
EXECUTIVE SUMMARY
US Dataworks, Inc. (UDW), a leading provider of transaction solutions for payment
processors, engaged Meta Software to conduct a business case analysis of back office
check conversion (BOC) on behalf of a retail department store chain (hereinafter
referred to as the “Retailer”). The findings were derived from an analysis of one
of the six wholly owned regional department store chains of the Retailer and then
extrapolated to determine the enterprise-wide benefit.
BOC, a check conversion technique where payments are collected at the point of
purchase by retailers and deposited electronically, is one of the emerging trends
that promise to transform the payment landscape. The basic process involves collecting
checks in the normal manner at the cash register and consolidating the register receipts
for next day processing and presentment. However, instead of encoding the checks for
a physical deposit, the collected checks are scanned in the back office for electronic
presentment to the bank. The primary advantage of BOC versus traditional check processing
is reduction in bank check fees, accelerated access to funds and reduction in losses
from returned items.
This study found that the Retailer could reduce bank fees by 97%, improve access to
funds by 54% and reduce losses from returned items by 20% through implementation of
BOC via conversion into an ACH payment (BOC/ACH). By implementing BOC/ACH, Retailer
realizes an overall savings of 59.9%. The projected annual benefit for the Retailer
would be $4.4 million, enterprise-wide.
Since the conversion of checks into ACH payments at retail stores has not yet been
formally incorporated into the National Automated Clearing House Association (NACHA)
Rules, this study also analyzed the impact of BOC via image exchange (BOC/IEX), as
this approach can be implemented today under the recently passed law, Check-21.
Interestingly enough, this study found that BOC/IEX annual benefits, while smaller
than BOC/ACH, are still significant and will range between $2.9 and $3.5 million,
enterprise-wide, depending on the assumed industry adoption rate of check image
exchange by 2006.
In summary, there exists a compelling business case for BOC adoption by retail department
stores, today, via check image exchange (Check-21) and, further down the road, an even
more compelling case for BOC implemented via conversion into an ACH payment type when
such is included in the NACHA Rules.
To view the BOC Meta White Paper in it’s entirety, click
here (2MB PDF).
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