The number of corporate electronic payments transmitted along with data on what was being paid rose 30% above the year-earlier level in the first half, according to the National Automated Clearing House Association.

Experts believe that the growing corporate interest in such so-called electronic data interchange services will spur more financial institutions to accept these types of transactions.

About 30 banks currently provide financial EDI services to their cash management clients.

The clearing house association, based in Herndon, Va., tracks three types of electronic transactions, differentiating them according to the amount of additional information that can be sent along with each type of transaction.

The most sophisticated of the payments, known as CTX transactions, grew in number by 126% in the first two quarters of 1993, according to the association. Less complex transactions, known as CCD+ and CTP, showed flattening growth rates of 25% and 21%, respectively.

CTX, which uses a computer-to-computer communications standard known as X.12 that is rapidly becoming the accepted form for payment data, allows almost 10,000 characters of addenda information with each payment.

|The Format of Choice'

This compares with CCD+, which is by far the most accepted format for electronic payments, which allows only 80 characters per payment.

"CTX is moving from being a startup payment format to the format of choice for corporations engaging in electronic data interchange," said Stephen Lewis, director of network communications at the clearing house association, which has representatives from 40 automated clearing houses.

Mr. Lewis said the CTX format, which experts said is the format on which future EDI acceptance hinges, is expected to show active growth in the coming years because of the wealth of information that can be sent along each electronic payment.

"If a company were invoiced for 50 different items from another company, there can be a single payment accompanied by addenda records explaining what the payment covers" he said.

Easier Record Keeping

In addition, since CTX is in the X.12 format that most corporations' computers can automatically read, information about CTX payments credited or debited to the corporation's account can be downloaded directly from the bank's computers to those of the corporation. This can eliminate large amounts of a company's manual record keeping.

Although the total volume of of CTX transactions is still relatively small - about one-tenth of the quarterly traffic of 2.8 million CCD+ transactions - the increased interest in more standardized EDI products bodes well for bankers who have been hesitant to invest in technology that would be rendered obsolete as standards changed, experts said. The financial benefits of electronic payment systems for companies are significant, experts said. According to the Denver-based EDI Group, it costs about $8.33 to make a paper-based company-to-company payment versus about $3 for an electronic transaction over the clearing house network.

Although many banks offering EDI services have had trouble thus far making money from the business, many experts feel that profit opportunities will arise as CTX becomes more accepted and greater numbers of corporations begin to demand the service.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.