The National Automated Clearing House Association is asking vendors to bid for a contract to market low-cost remittance handling software to banks.
The request for proposals, released on April 15, is intended to boost banks' capabilities in financial electronic data interchange, where payments and remittance information are handled electronically.
"We're pretty excited about this effort," said William B. Nelson, executive vice president of the association of bank-owned clearing house networks. It is based in Herndon, Va.
While financial electronic data interchange is now a small business, many bankers believe it will grow as more corporations use it to cut costs.
Competitive Situation
Banks now handle payments in such systems, but compete with so-called value-added network companies for the transmission of remittance data.
When remittance data is carried electronically through the banking system, it normally is transmitted through the Automated Clearing House payment network.
As a result, the Automated Clearing House, along with approximately 50 of the country's biggest cash management banks, has targeted remittance data as a key growth market.
A Two-Part Process
But these banks need the cooperation of other institutions to make such services widely available.
Specifically, if a bank sends an electronic transaction through the Automated Clearing House, it needs to be sure that the bank that receives the payment can convert the remittance data into paper statements or computer files for delivery to a customer.
Mr. Nelson said that only 730 of the more than 11,000 banks in the country can do this. The request for proposals aims to boost this total.
Mark Stuparich, chairman of the Bankers EDI Council of the National Automated Clearing House, said that banks currently have to spend at least a few thousand dollars to buy software that forwards remittance information to customers.
The request for proposals asks vendors to develop basic financial electronic data interchange software and communications capabilities that costs between $25 and $50 a month.
Few Customers Needed
At that price, the technology would be affordable to banks that have only one or two customers using financial electronic data interchange, Mr. Stuparich said.
He added that the National Automated Clearing House will work with the winning vendor or vendors to market the technology to banks.
If this effort is successful, the National Automated Clearing House could then consider requiring all participants in its system to forward remittance data to their customers, Mr. Nelson said.
"We can't even consider that until cost-effective solutions are available," he added.
Responses to the request for proposals are due by June 15, and a selection should be made in the summer, Mr. Nelson said.
