Several large banks are collaborating on a study to determine the cost of writeoffs that esult fom delays in the check-collection process.

The study is aimed at demonstrating that sending check payment infromation electronically to a payor ban the same day a paper check is deposited saves that bank significant sums of money by reducing the number of bad checks that a receiving bank accepts.

The study is funded by the Electonic Check Clearing House Organization, or Eccho, a group of banks that have agreed to transfer transaction information electronically, in advance of the paper check.

The payor bank can then decide whether to authorize payment of a check, even before it has received the paper item.

Winning over Other Banks

The study will help determine how much money these electronic notices of nonpayment - also called Rnotes - could save a bank. The study's results will be used by the clearing house organization to market its service to other banks.

Several banks, including charter Eccho member Wells Fargo Bank, have studied their own costs from writeoffs.

In general, banks have found that "these are significant, and much largerr than people thought," said David Walker, a consultant with J.D. Carreker & Associates, a Dallas-based firm that is acting as a consultant to Eccho.

For a bank with a large check clearing operation, writeoffs could amount to six figures annually, Mr. Walker said. Banks that have studied their losses have determined they could avoid 30% to 50% of their losses if they used accelerated presentment, he added. Mr. Walker said the results of the study will be made public in November.

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