Paper and Electronic Checks in a Single Stream

National City Integrates Paper and Electronic Payment Systems

While paper checks have been converted into electronic ACH debits for over five years, for clients this has meant that checks have been identified on checking account statements only as (unidentified) debits. For business clients, check conversion could make it appear that a check appears to be consistently outstanding. When corporate checks are converted to debits, commonly used treasury management services such as ARP (Account Reconcilements Plans) and Positive Pay, become unusable.

According to National City (www.nationalcity.com), it is the first bank in the U.S. to comprehensively link these two payment system vehicles. Any paper check converted to an ACH debit is now captured as soon as it is presented. It is recognized as a payment that was formerly a check and is then processed and reported as a check. On checking account statements, the item is reported in the "Checks" section, complete with check number, and then identified as a "Converted Item" which is also reported in the "Debits/Charges" section. Clients also know the check was paid when accessing online banking or voice response units. Any business check presented on an account that has controlled disbursement, account reconcilement, Positive Pay or stop payments is also passed to those systems for reporting and review.

"Because of the many changes in the banking payments system, we understand that our check could be changed from its original paper form to either ACH debit or to an image exchange item," said Denise Shatter, CTP, corporate treasury director for Sterling Jewelers. "When that happens, we need it captured and reported through the Positive Pay and reconcilement systems."

"Check conversion - like Check 21 - is in place to help increase payment system efficiencies," said Mary Ann Francis, senior VP and manager of Global Trade and Treasury Product Management at National City. "Even though check conversion rules indicate only consumer checks may be converted, we know that hundreds of our business clients have checks converted because it is hard to distinguish various check types. We also know that our consumer customers may be puzzled over the disappearance of their original paper checks."

Copyright Association for Work Process Improvement Feb 2005
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