ECP (New Keys to an Old Kingdom)
Did you know there is an organization whose basic charter is to improve check handling? The U.S. Financial Services Technology Consortium (FSTC) is a group of banks, computer manufacturers, and advisers working on Interbank Check Imaging (ICI) projects. This group's primary charge is to find better ways of managing and processing checks, and their most active initiative is Electronic Check Presentment (ECP).
ECP is a concept which we are hearing more and more about at U.S. Financial Services conferences these days. It is generally positioned as a check replacement concept. While this is an interesting thought, and obviously helps to build conference interest and attendance, it may well be that ECP will help to give the "Paper Check" a longer life, rather than eliminate it.
First, let's review why there are so many checks in the marketplace. Consumers like checks because of the float they are able to enjoy, the predictability of how the transaction will flow, and the documentation a check provides. However, the two most important reasons why checks are so popular are seldom discussed. The first is that the check has been around a long time and represents a payment method consumers find comfortable. Second is that the ideal alternative to checks has not yet been discovered. To say that "yet" another way, "We have always done it that way."
In addition, a lot of organizations, from check printers to banks, depend on checks for a high percentage of their income. And with 3,200 collection agencies in the U.S., the consumer's ability to manage money and business' opportunity to make money supporting check activity may disappear, if and when paper checks become obsolete.
How does ECP change this accepted paradigm?
Overall, the best answer is that ECP can speed along the information handling portion of the paper check process. From point-of-deposit imaging to truncations opportunities, checks can become faster and easier to process with ECP. Banks can enjoy MICR line transmission from the collecting bank in advance of paper, and can archive the paper check at bank of first deposit or an alternate agent. Also, ECP can help to create fewer adjustments and improved research, each of which will reduce cost of handling.
