With more billers converting consumer checks into electronic transactions, retail banks are getting more calls from customers confused or disconcerted by the process.
Though billers say most customers are unconcerned, the potential for confusion has prompted one trade group to create a public education coalition, which it has invited financial companies to join.
"This is a preemptive move," said Michael Herd, a spokesman for Nacha, the electronic payments association in Herndon, Va. "We want to put the information out there in case the financial institutions are getting calls" about accounts-receivable conversions.
In such conversions, billers use a scanner to read the critical data on the checks they get from customers. The information is then used to create an automated clearing house debit, which technically is an entirely new transaction.
That means the original check will never be submitted to the bank or recorded on a monthly statement. In its place is an electronic transaction that consumers did not explicitly authorize. This is often where the confusion begins.
"I get about 90 calls a day about this," more than on any other topic, said a Citibank call center operator last month.
Nacha approved accounts-receivable conversions in March 2002, and after a slow start, they are starting to take off. Mr. Herd said 55 million checks were converted in the first half, versus 24 million a year earlier. Last week Nacha issued a bulletin advising financial institutions to be prepared for customer questions. On Tuesday it followed up by announcing the creation of the Check Conversion Education Coalition.
"Consumers are beginning to experience the ARC conversion process when they pay their bills, and it is natural that some will have questions," said Alan Koenigsberg, a vice president and ACH senior product manager with J.P. Morgan Chase & Co. and a co-chairman of the coalition.
About 50 banks are now offering accounts-receivable conversion services to their lockbox customers, compared with less than two dozen in May, according to Nacha. Large billers that use it include American Express Co., AT&T Corp., and Capital One Financial Corp.
Billers have been notifying customers about the conversions by sending out notices with their statements. Some have also been alerting them on the statement itself.
For example, Wells Fargo & Co. ran an early test of conversion in 2001 for its credit card unit and was overwhelmed with calls from consumers.
When the unit began a broader implementation in May of last year, it sent out inserts and put notices on statements. The result: Fewer than 1% of the customers involved called with questions.
