Mellon Global Cash Management is accelerating the implementation of an electronic check conversion application in its retail lockbox sites after what it said was a successful pilot program.
The Mellon Financial Corp. division said it expects to be using accounts receivable conversion technology in its entire national lockbox system by the end of the third quarter. Previously it had planned to have the technology up and running by yearend.
Under ARC paper checks are scanned at the lockbox and the magnetic ink character recognition information is used to create an automated clearing house transaction. This is both faster and more economical than processing paper checks. The checks themselves are later destroyed.
“The results of the pilot, which exceeded our expectations and was virtually error-free, clearly indicate the ARC conversion process offers a host of benefits to billers,” said Robert Stasik, an executive vice president and the head of Mellon Global Cash Management, Mellon Financial’s treasury services business. He said the ARC pilot allowed the company to reduce return items by 30%.
Mellon, of Pittsburgh, is one of many banks and large billers adopting accounts receivable conversion. American Express, AT&T Corp., and Wells Fargo & Co.’s card unit are all using it in several regional lockboxes. Bank One, Northern Trust, and Wachovia Corp., and several other banks have begun offering ARC as a service for lockbox clients. The shift is among the factors behind continued growth of ACH.
