IMGCAP(1)]
Anticipating a surge in "native electronic payments," which do not involve paper payments, the Clearing House Payments Co. LLC is reorganizing and ending its original business of processing paper checks, reports CardLine sister publication American Banker. The New York-based provider of check, electronic check, automated clearinghouse and wire wire-transfer services expects to close its last paper paper-exchange site by yearend. Though the majority of payments occur digitally, billions still originate as paper checks and later convert to an e-transactions, says Rossana Salaris, Clearing House senior vice president of payment products. A key part of the Clearing House's work is aimed at addressing changes that will make wire transfers more useful for business-to-business payments. Today businesses make about 70% of such payments with paper checks, mainly because corporate customers need to attach invoice data telling recipients the payment purpose. By the end of next year the , Clearing House and the Federal Reserve banks will have completed their joint overhaul of the wire-transfer network, enabling banks' corporate clients to incorporate remittance information in wires. The change would lead to a surge in wire payments by businesses, Salaris predicts. "Once it catches on, it's better for the companies, it's better for the banks," she says. The shift away from check payments, and especially business check payments, will have a long period of slow growth followed by an acceleration and ultimately a leveling off as the industry moves to electronic payments, contends Aaron McPherson, research manager of payments at IDC Financial Insights, a Framingham, Mass.-based research firm. "The problem is not having remittance data. The problem is making it machine-readable, making it human-readable and integrating it with all the software that is already out there," he says.
