Much of the talk about image settlement has focused on how banks can accelerate the clearing process by sending images to each other, and scant attention has been paid to how the checks arrive at the banks.
But under an agreement announced last week, Brink's Co. plans to install image scanners at its 105 cash vaults around the country to convert paper checks into images on behalf of its corporate and banking clients. The Richmond, Va., company, known primarily for its armored-car cash delivery service, will send the images to banks electronically through NetDeposit Inc.'s system.
By moving the point of capture away from the banks and closer to the merchants' cash registers, where checks enter the processing stream, Brink's could extend the benefits of the Check Clearing for the 21st Century Act to retailers and merchants by allowing their deposits to be processed more quickly.
"It's one more piece of the puzzle. We're pushing distributed capture out as close as we can to the source of the checks," said Royce Brown, the president and chief operating officer of NetDeposit, a unit of Zions Bancorp. of Salt Lake City. "What is going to drive the market is the corporates, the merchants."
The remote-capture capability is similar to those being marketed by banking companies, including First Horizon National Corp. and Bank of America Corp. The banks' services allow corporate clients to convert checks into images at their own sites and then transmit the images to the bank, instead of making regular deposit trips to a branch.
The Brink's service could make remote-capture services available on an outsourced basis to more merchants and increase the number of checks that are converted earlier in the clearing process.
Several small-scale "proof of concept" pilot tests will be set up with Brink's corporate clients. "My hope is to have something up and running by the launch of Check 21" on Oct. 28, said Guy Weissberg, the executive vice president of Brink's cash logistics unit.
Brink's calls itself the nation's largest provider of outsourced cash vault services to banks. It does not disclose the names of its financial customers, or even the number of banks it works with, citing security concerns, but Mr. Weissberg said each of its vaults serves on average five to 10 institutions, and some support more.
It also provides a deposit service to many of its corporate clients; when deposit bags arrive at its facilities Brink's either delivers the bag, unopened, to the merchant's bank or opens the bag and counts the funds on the customer's behalf.
For banks that outsource their cash vault operations, Brink's counts and reports the deposit on behalf of the corporate customers, then processes and forwards the cash to the Federal Reserve Banks.
The hurdle in this process is the checks that arrive in deposit bags; they must be segregated from the cash and delivered to the customer's bank for clearing.
"Checks have always been an impediment" to seamless processing, Mr. Weissberg said, because Brink's does not provide item processing. Instead, it turns the checks over to the bank (or its item processing outsourcer), while Brink's manages the cash portion of the deposit.
But once the check-scanning service is available, Brink's will be able to transmit images from its cash vaults to the banks. "This allows us to provide a seamless solution for the checks and the cash," Mr. Weissberg said. "We can balance the deposit in its entirety up front."
Neither Mr. Brown nor Mr. Weissberg expects a huge rush of companies embracing this type of imaging capability initially, but Mr. Weissberg said the NetDeposit service will allow Brink's to start small, then build out its capabilities as demand warrants.
With the growing use of lockbox conversions, debit cards, and Internet payments eating away at check processing volumes, "the cost benefit equation is changing every month, every quarter," he said. "It's going to be a moving target. Having a transitional strategy is going to be key."
Stessa Cohen, a retail banking analyst at the Stamford, Conn., research and consulting firm Gartner Inc., said the service could prove popular among merchants, because it will accelerate their receivables and reduce the expense of processing paper.
"Anything that makes it cheaper for the retailers, they're going to go for," Ms. Cohen said. "To some extent, a pipe is a pipe. It doesn't matter if it's a correspondent bank or a clearing house or Brink's" that provides the service.
