The Federal Reserve System and the National Automated Clearing House Association have launched the second phase of their effort to promote electronic bill payment services.
The two formed their alliance in March in an attempt to expand transaction volume.
The first phase of the project, conducted over the summer, broadly explained the goals to the banking industry. The second phase involves direct mail campaigns aimed at the over 20,000 corporations.
In this phase, the clearing house group and the Fed are encouraging direct electronic payments to such corporate billers as mortgage and insurance companies, utilities, and charity groups.
It is hoped that electronic bill payment can help reduce the use of paper checks. The banking industry handled over 60 billion checks last year.
Individually, the two partners have worked for years to promote the automated clearing house network, which was created by the federal government to replace checks in the case of recurring payments.
But 20 years later, check volumes are still growing - and thus officials from the public and private sectors have finally joined forces.
"We hope it makes a significant difference in raising awareness among corporations and nonprofit organizations about the benefits of using the ACH," said Paul Connolly, first vice president of the Federal Reserve Bank of Boston.
Mr. Connolly said the joint effort is "rather new for us," and may lead to "future efforts with Nacha and other payment system participants."
The clearing house group, based in Herndon, Va., promotes uniform rules for the ACH network.
Linda Garvelink, a senior director with the association, said the effort targets the approximately 20 billion bill payments made by consumers. This segment is potentially lucrative, since only about 850 million, or 4%, are made electronically.
The program has proceeded "reasonably well," said Joseph Elstner, a spokesman with the Federal Reserve Bank of St. Louis.
"There are quite a few people involved in trying to get the word out, and I think we are having a good amount of success."
The third phase of the joint effort is expected to begin early next year with a focus on the consumer.
The national effort has several local models, most notably that launched in 1991 by the Cleveland Fed and the Mid-America Automated Payments System.
That program boosted the number of participating households in the Fed's fourth district from 15,775 in 1992 to nearly 104,000 last year.
Ohio State University has offered a direct payment program - with the help of Checkfree Corp. of Columbus - since 1985. Ohio State's program is tailored for alumni donations, and has between 750 and 800 participants.
"We use it to give friends and parents of the institution an easy way to give a gift to our university," program director Jann Cutcher said. "It gives them the opportunity to make a monthly contribution a lot easier."
