National ACH

Real Buyers for Virtual Goods

2009-11-08T20:25:00.000-08:00

PlaySpan and consulting firm Frank N. Magid Associates conducted a study to determine consumer attitudes and behaviors regarding buying virtual goods.
Study results included:
• 12% of the those surveyed reported purchasing a virtual good within the year
• 46% of virtual world users and 33% of iPhone users have purchased virtual goods.
• Predominant age demographics for virtual goods purchases are males aged 12 to 24 and females aged 25 to 44.
• Racial breakdown of buyers is 16% Asian, Latinos 14%; Caucasians 12%, African-Americans 10%. and “Other” 15% "
• The majority of purchases are made directly through official item shops located either in game or virtual applications (29%), or a game or virtual world's official Web site (29%)
• 25% of buyers purchase virtual items on authorized secondary markets.
• 8% purchase on the grey market, unauthorized sellers of virtual items.
• 51% of buyers could not recall the amount they spent on virtual goods in the previous year. Of those who could recall, 27% said they spent less than $50 while 15% said they spent over $100.
Mike Vorhaus, President of Magid says "The fact that lots of people are reaching into their pocket to buy virtual goods is impressive, but even more impressive is that some of those consumers are spending considerable dollars. As this market grows, the majority of consumers will continue to spend $50 or more on virtual goods every year, and this will grow to be a multi-billion dollar market."

Cybercriminals Targeting Business Bank Accounts

2009-11-02T21:45:00.000-08:00

The FBI has released findings from its investigation on how cybercriminals are stealing money from the bank accounts of small-mid sized US companies.

The thieves then initiate a series of unauthorized bank transfers out of the company's online account in less than $10,000 to avoid banks' anti-money-laundering reporting requirements.

The funds are sent to "money mules", who are willing participants or naive individuals recruited over the Internet through work-at-home job scams. The mules pull the cash out of their accounts, keep a small percentage of it, and wire the rest to organized criminal groups operating in countries like Moldova, Russia and Ukraine.

The deputy assistant director of the FBI's Cyber Division said criminals involved in these online account takeovers have attempted to steal at least $85 million from mostly small and medium-sized businesses, and have successfully made off with about $40 million of that money.

Companies that bank online have few of the protections afforded to consumers. Individuals are usually are made whole by their bank. Businesses, however, often must absorb the losses.

The FBI says businesses should protect themselves by conducting online banking from a dedicated, locked-down computer that is not used for everyday web browsing or e-mail. Malicious software that thieves use to steal online banking user names and passwords is usually installed when the recipient of a spam e-mail opens a poisoned attachment or clicks a link that leads to a booby-trapped web site.

But, despite the best efforts of a business to protect itself, online banking still presents risk. Companies being victimized by this type of crime often have accounts at small and regional financial institutions which do not have adequate fraud detection technologies in place. These institutions rely on layers of customer protections, such as security tokens, which can easily be circumvented by cybercriminals.

Electronic Bill Payments for Utility Companies

2009-10-27T23:15:00.000-07:00

Electronic payment processing is continuing to expand within utility companies as more consumers are paying bills electronically rather than writing paper checks. ACH payments have long been popular for utility bill payments. ACH is a low cost method of accepting payments for utility companies, with fees of 20-30 cents per transaction.

Credit cards and debit cards are now increasingly popular as well. The credit card companies have special rates for utility bill payments. For example, MasterCard’s latest schedule utility payments would generate a flat $1.50 in interchange for a $200 transaction. This replaced the old rates where the same payment would have cost $4.74.

Acquirers, who pay interchange to the issuing banks, decide whether or not to pass savings on to their utility clients. Acquirers serving utilities make recommendations about what electronic transactions work best for unity companies. But, of course, the acquirers are most interested in their own profit margins.

Utility companies would prefer that consumers set up recurring payment models. Recurring payments are quite common for ACH payments. But, credit and debit cards still are generally initiated for one-time payments. Card transactions are most often paid directly on the biller’s websites or over the phone.

Prepaid Card Processors Hurting

2009-10-19T22:42:00.000-07:00

Prepaid cards are getting margins squeezed harder than ever. The economic situation has put pressure on processors to lower fees. And market forces are stiffening competition more than ever.

For example, Wal-Mart charges just $3 for a its MoneyCard, a rate far below most competitors. Few card programs can compete, even though many are reducing monthly card maintenance and transaction fees in an effort to survive.

The government is also exerting pressure on card programs. Eight states have laws regarding card expiration dates and fees. The Electronic Fund Transfer Act being considered by Congress would give states even more power over regulating cards. Card programs will then have to deal with even more regulatory compliance, driving up costs for operating the programs.

It will take deep pockets to stay afloat as margins continue to shrink. Some processors are looking outside of the

for new opportunities. But, throughout the world, banking regulations are become stricter and the opportunities are limited.

Payment Processing for Airlines

2009-10-15T00:25:00.000-07:00

Airlines are increasingly offering alternative payment to avoid the high cost of accepting credit card transactions. For international payments, local bank transfers allow merchants receive money directly from consumers’ banking accounts. In addition to reduced fees, this international payment mechanism has no risk of chargebacks as is the case with credit card transactions.

Consumers that do pay by credit cards are being assessed additional fees by some international airlines to cover the cost of payment processing. For example, Qantas charges credit card holders $7.70 per passenger for domestic flights and $25 for overseas Jetstar charges $3 per sector per passenger for domestic flights and $5 per sector per passenger for international flights. Virgin Blue charges $3.50 per passenger per flight for domestic trips, and $6 per passenger per flight for international trips.

The airlines believe the surcharges for paying by credit card are justified. Airlines pay high rates for processing cards, particularly since airlines are considered high risk merchant accounts. And, credit card payments have inherent risks for fraud and chargebacks which add expenses above and beyond payment processing fees.

Expedited Bill Pay and Mobile Banking

2009-10-14T00:47:00.001-07:00

Accounting to Javelin Strategy and Research, the average fee for an expedited bill payment is $8.18. This represents an increase of 45% from 2007. Javelin expects the fees to drop slightly over the next few years staying relatively stable and generating just over $1 billion in fees for banks.

Since the recession began last use, the use of expedited bill-pay services has fallen off somewhat because consumers are being more cautious about extra charges. For example, 8% of consumers used last-minute bill pay in the last 30 days when surveyed this year, compared with 13% in 2008.

Javelin suggests banks and billers promote the expedidited payments to younger users via the mobile banking channel. Banks can decrease transaction costs by promoting online banking via mobile banking customers.

Mobile is the cheapest way to provide basic banking services. For example, it costs 75 cents to check balances through paper statements, $4.00 to check via a live bank teller, $1.25 through an interactive voice system, 17 cents to check online, and only 8 cents through mobile.

ACH Processing For Property Management

2009-10-14T00:47:00.000-07:00

If you are a property management company that is not offering recurring ACH processing, you are leaving money on the table.

Surprisingly, many property managers are still doing business the old-fashioned way by accepting paper checks as payments. And they are still taking paper checks to the bank. What a waste of time and effort.

It’s easy to make an ACH authorization form part of the rental paperwork. Along with the lease, the tenant signs the authorization form which gives permission to electronically debit a checking or savings account each month. Most tenants are familiar with direct debit and expect to be offered ACH payments as a matter of course. Tenants like not having to make out a check each month.

And ACH eliminates the risk of incurring a late fee for overdue rent. Property mangers receive money quicker with ACH since electronic payments are cleared faster through the Federal Reserve than paper items. In addition, NSF checks can be re-submitted automatically. This eliminates the time-and effort of collecting on paper checks by calling renters banks every day to determine if there is enough to cover the check.

Automated reporting of electronic payments makes it easy to download data directly into accounting programs. Reconciliation of accounts is fast, easy, and accurate.

Fees for processing payments are far less than a single first-class stamp. So inexpensive that no property manager can afford not to collecting all rents via ACH payments today. NSF checks can be re-submitted automatically. This eliminates the time-and effort of collecting on paper checks by calling renters banks every day to determine if there is enough to cover the check. Automated reporting of electronic payments makes it easy to download data directly into accounting programs. Reconciliation of accounts is fast, easy, and accurate. Fees for processing payments are far less than a single first-class stamp. So inexpensive that no property manager can afford not to collect all rents via ACH payments today.

New ACH Network Code for International Payment Processing

2009-10-05T00:51:00.000-07:00

IAT is the new ACH network code for international ACH transactions. IAT standard class entry (SEC) code replace the CBR and PBR SEC codes that are currently in use today. Effective September 18, 2009, all consumer and corporate international transactions made via the ACH Network will be required to use the IAT SEC code.

The purpose of the IAT is to simplify identifying of identifying international transactions and assuring that such transactions include specific data elements required by the Bank Secrecy Act’s (BSA) “Travel Rule” and make compliance with OFAC rules easier. IAT was developed to respond to OFAC’s request to align the NACHA Rules with OFAC compliance obligations and to make it easier for RDFIs to comply with those obligations.

In the current environment, many U.S. financial institutions are receiving international payments that cannot be properly identified. These unidentifiable payments enter the U.S. through correspondent banking relationships and are often difficult to trace or accurately process as international payments. The new IAT code supports the end of anonymity and promotes traceability of international electronic payments.

The introduction of the IAT code impacts all U.S. financial institutions, including those that do not currently send or receive international payments as any financial institution is a potential receiver of an IAT transaction.

Expedited Bill Payment Fees Expected to Rise

2009-09-28T22:16:00.000-07:00

Expedited bill payment services surcharge consumers who make immediate payments on last minute bills to avoid late charges. Research firm Javelin Strategy recently announced results from its latest report on electronic bill payments. On the average, billers charge surcharges of $8 for expedited payments. These are hefty fees but still are much less than late-charges for bills which run from $20-49.

The study says about 30% of consumers made expedited payments in 2008. But, as the economic downturn continues, more consumers are expected to use expedited payments as a way to avoid late fees. The increase in demand could result in increased fees for expedited payments. Javelin estimates that charges could easily double to $16 within the next few years.

Synergistic Research reports 21% of consumers founded expedited payment fees reasonable. Another 41% found fees a little high but were willing to pay them in emergencies. And 19% complained that fees exploited customers’ situations. Another 17% said the fee were “unjustified at any level.”

Higher fees and increased consumer demand can represent an opportunity for banks to generate more revenues. The challenge for banks will be to get consumers to pay bills through online-banking sites rather than through the site of the biller. Consumer’s preference has been to pay bills on billers’ sites rather than through online banks.

Banks should consider marketing expedited payments those most apt to use the service. These include younger consumers, mobile-phone users, technologically savvy customers, and environmentally conscious consumers.

Check 21 Electronic Image Exchange Replaces Substitute Checks

2009-09-21T21:42:00.000-07:00

Electronic imaging exchange created by Check 21 legislation has been available for almost 5 years. Congress passed Check 21, formally, the Check Clearing for the 21st Century Act, in October 2003, and it took effect Oct. 28, 2004 as a way to keep the check-processing system working in the event of a serious disruption that prevents paper checks from getting from depository to paying banks.

During that time, electronic check payments have soared, and the volume of image replacement documents have rapidly decreased. According to by the Electronic Check Clearing House Organization (ECCHO), the number of image-replacement documents totaled 160.5 million in June, down 43% from 283.3 million items in June 2008.

ECCHO data is compiled from national image-exchange networks and settlement services, including the Federal Reserve, The Clearing House Payments Company, SVPCO, and the National Clearing House Association.

Image exchange items received totaled 1.15 billion in June, up 34% from 852.5 million a year earlier. In the same period the average number of images received per day grew 28% to 52.1 million, or 71% of all transit checks, from 40.6 million. The combined dollar value of image and IRD items received rose 7% to $1.56 trillion in June from $1.46 trillion a year earlier.

Electronic Bill Payments Continues to Soar

2009-09-17T05:00:00.000-07:00

Research firm Aite Group predicts that electronic bill payments will account for 11.4 billion transactions in 2009 compared with 10.3 billion payments made by other means. By 2012 forecasts are that various electronic channels will capture 64% of consumer bill payments versus 32% for mail and 4% for in person payments.

Findings show that consolidator bill payment sites had a compound annual growth rate of 20.3% from 2004 through 2008. Forecasts are for13.1% growth rate for 2008 through 2012. However, most consumers consumers still prefer to pay bills directly by biller’s website rather than going through online bill payment system at their banks.

Consumers reported they did not like paying to pay their bills through their bank. They were already paying bills and did not like the additional charges placed on them by their banks.

The banks lost a good window of opportunity at the beginning of electronic bill payment when they were trying to squeeze money out of their consumers. Consumers wisely decided not to use their banks, instead, opting to pay directly at the biller’s site.

It would have been wiser for banks to give away the bill payment service in exchange for new revenues to be gathered from promoting other products when consumers came to pay their bills at the bank sites. The banks, in their eternal greed and lack of concern about consumers, ultimately are the losers for online bill payment. It is unclear how a bank can now capture consumers back to paying bills on a bank site when behavior has already been ingrained in consumers’ habits to go elsewhere to pay bills.

Check 21 vs ACH

2009-08-28T03:44:00.001-07:00

Let's compare Check21 and ACH clearing times.

The electronic ACH system is designed to be float neutral, not float-less. As a float-neutral system, ACH transactions are future-dated to allow all of the parties an opportunity to post them on the same day. Under the ACH rules, the earliest that most ACH transactions can be posted is the next business day after origination. Checks, on the other hand, suffer no such restrictions and can be collected as fast as they can be presented.

Many paper checks are currently cleared on the same day that they are deposited through evening exchanges around 9 p.m. Generally, if all of those same-day checks were converted to ACH transactions, they would not clear for at least one day and many would not make the application cut-off on the deposit day and so would not be originated until the second day, for clearance the third day. In this scenario, paper is much faster than electronics.

By contrast, the application of electronic check processing and image can accelerate the number of items that can be cleared the same day with exchange cut-offs beyond 9 p.m. The technology of check images can be much faster than either traditional paper check collection or other electronic check conversion options available to banks.

Where is the Money in Remote Deposit Capture?

2009-08-24T08:08:00.000-07:00

Sales organizations are trying to convince agents that Check21 remote deposit can be a profitable product to sell. Remote deposit capture is a volume driven business. The product is priced at a flat rate per transaction. There are no discount fees associated with the product.

Research firm Celent says there are about about 14.5 millionUS merchants who are qualified for remote depoisnt capture. Celent predicts about 3.2 million merchants

Independent sales organizations face competition from banks who offer free or low cost scanners and low per transaction fees. Banks offer the product as a loss-leader in order to entice businesses to establish direct deposit accounts or get other financial services.

Sales organizations can follow the same strategy. Offer remote deposit to get a foot in the door. Then, cross-sell the merchant other products and services that have higher margins and create more profit.

Sales agents have to hustle to find merchants that have enough transactions to make the cost of sales payoff in profits. Industries that direct sales organizations should target include government, property managers, doctors’ offices and health-care providers, and car dealerships.

The good news about selling remote deposit capture is that once a merchant is established, it doesn’t change payment processing provider. Small profits from a lot of customers can add up to substantial and stable income over the course of time.

Merchants Decrease Payment Processing Costs with ACH

2009-08-10T01:31:00.000-07:00

ACH is the least expensive payment processing options for merchants. When a buyer chooses to pay by ACH, merchants save big. Rather than paying credit card companies over 2% of the sales price, merchants add that 2% of bottom line profits.

ACH has become a generic term referring to payment processing where money is direct debited from a buyer’s checking or savings account. ACH payments for ecommerce are classified web transactions and are frequently called electronic checks or echecks.

Merchants that offer multiple payment options experience a sales lift for each alternative payment option. Echecks are the most popular alternative payment option and increase sales 8-20%, depending upon industry and product being sold. Therefore, it certainly is wise to offer ACH as a payment option.

But, with ACH, merchants profit two ways. First merchants increase sales. Secondly, merchants getting paid via ACH rather than credit cards save on payment processing costs.

For the vast majority of ACH transactions, fees are assessed on a flat per transaction fee. Compare this with credit card processing where merchants must pay transaction fees plus a percentage of the sales price.

Federal Reserves Rocks Pushes for Same Day ACH Settlement

2009-07-01T06:30:00.000-07:00

The US Federal Reserve Banks announced plans for financial institutions to clear and settle certain automated clearing house (ACH) transactions in one day. This will be the first material change to the settlement schedules for the Federal Reserve in 35 years.

The recent action was caused by the increasing threat of bilateral exchanges developed among the largest ACH players (e.g. Wells Fargo and Bank of America, Citigroup and Capital One with certain institutions). These exchanges, made possible because of new , Check 21 legistlation cause big drops in the volume of transactions clearing and settling through the ACH network.

Direct relationships between banks for clearing and settlement create an inefficient payment system and drives up prices. As network revenue drops because fewer transactions are cleared, the cost per unit for all remaining ACH transactions increases The Federal Reserve has expressed concerns that lack of NACHA regulations and rules in bilateral exchanges reduces the ability to monitor transactions for illegal activies.

The new plan calls for ACH deposits made by 2:00 pm to be settled by the close of business that day rather than on the first business day after they are originated. The expedited clearing will make ACH more competitive with check-image exchange networks and bilateral image exchanges between banks.

Faster settlement times provide quicker funds availability and earlier returns for credit risk management. Despite the obvious benefits, some banks are worried about same-day credit eroding profits from lucrative wire business by driving down the price of wire transfers.

The plan will not require file format changes for submission of transactions. The fast ACH service maintains the existing formats for the standard entry class codes and complies with NACHA rules.

Remote Deposit Capture and Third Party Checks

2009-06-29T06:33:00.000-07:00

Third-party checks are a $300 billion business, according to 2006 data from Boston based researcher Aite Group . The majority of third party checks are payroll checks. About half the checks are cashed at banks. The other half are cashed at grocers, convenience stores, check cashers, and other retail locations.

NACHA, the governing body for the ACH Network does not permit third party checks to be cleared and settled through the ACH network. But the checks can be processed electronically via remote deposit capture, using technology which complies with Check 21 legislation. Check 21 allows images of third party checks to be cleared and settled through the Federal Reserve , completely bypassing the ACH network.

Third party checks represent a good niche market for Check 21 remote deposit capture. But, like ACH processing, remote deposit capture is a volume driven business. With profits of only a few cents per transaction, it takes a lot of transactions to make any money.

Although remote deposit capture itself is not hugely profitable, banks are using the service as an incentive to capture more direct deposit account business. Many banks will provide free scanners or lease the scanners for a few dollars per month. For the banks, the profits come cross-selling additional products to commercial customers as well as from money generated from the float of the new deposits.

Pre-Paid Cards Boom or Bust ?

2009-06-24T22:52:00.000-07:00

In the United States, open loop (bank issued) pre-paid cards have experienced only moderate success. When the cards were first brought to market, expectations were of far greater success. There was a lot of hype about the benefits of the cards in meeting the needs of the “unbanked”, defined as those without direct deposit accounts.

Mercator Advisory Group divides pre-paid cards into 12 segments, including prepaid segments in 12 categories. These include payroll, travel, campus, in-store and distributed gift, transit, utilities, open money and financial services, and digital media.

Pre-paid cards are most profitable for card-issuing programs if the cards are reloaded on a regular basis. Therefore, the best application for card profitability comes from payroll or for government run entitlement programs such as social security or welfare.

Estimates are an average open-loop pre-paid card user pays $12.50 in fees each month. What card holders are charged for varies from program to program. The most annoying fee assessments are those that make card-holders pay extra for every point of sale purchase, customer service call, balance inquiries, card load, and for exceeding the amount on the card.

Card holders resent being charged fees to access their money. The old argument that cards fees are less than the costs of cashing a paper check at a check cashing establishment no longer hold water. Walmart now cashes checks for a flat $3 and loads the funds onto a pre-paid card.

It’s cheaper for a worker to use Walmart than to accept a payroll card through his place of employment. The average pre-paid card program simply cannot compete. Profits will continue to be squeezed and force many card-programs out of business.

Electronic Check Processing is the Norm

2009-06-22T23:08:00.000-07:00

Despite years of predictions that paper checks would go the way of the dinosaur, paper check transactions are still alive and well. But, there’s little doubt that the number of checks being written is declining. Many people under 30 have never written a paper check and scoff at the notion.
As the Federal Reserve drives up the cost of processing paper checks, the cost of processing checks electronically is steadily decreasing. The older generations may continue to write checks but the checks will be processed as electronic images.
SVPCO Image Payments Network is the nation's largest check image exchange network in the US. In 2008, it, handled a record 5.6 billion check images, nearly twice the number exchanged across the network in 2007. SVPCO was clearing an average of 27.4 million check images daily, according to network reports.
Research firm Celent estimates two-thirds of small businesses receive five or fewer check payments a day. As check imaging prices continue to drop and check scanners get cheaper, even the smallest of merchants will begin converting paper checks to electronic transactions using Check 21 remote deposit capture technology.
Paper checks will continue to exist for many years to come. But few merchants will ever deposit paper checks in the bank, preferring the convenience of submitting them electronically.

Can You Make Money Selling Remote Deposit Capture?

2009-06-16T06:04:00.000-07:00

Remote deposit capture is finally moving into small-mid size businesses. The allure of being able to scan checks to electronic transactions and avoid trips to the bank is understandable attractive to business owners.

Wausau Financial Systems in an effort to bring remote deposit capture to smaller businesses has aggressively been recruiting independent sales organizations (ISO) to sell the product. The squeeze of margins on credit card processing has driven many an ISO to seek alternative product offerings to boost declining revenues.

But, can an ISO really make money selling remote deposit capture? on the float in the accounts and from selling merchants other products or services.

If an ISO already has customers who will benefit from remote deposit, it pays to offer the service. Without an existing customer base, an ISO will work hard to low-value business.

Remote deposit capture is a volume driven business where ISOs make a few cents per transaction. There’s hardly money in accounts processing less than 500 checks per month. And the real money is with accounts processing thousands of transactions per month.

It’s not cheap for a merchant to being using remote deposit capture. The biggest expense is buying a scanner. Prices are coming down, but a good scanner still costs upwards of $500.

The biggest competition to the ISOs is banks who can offer merchants free or low cost scanners in exchange acquiring direct deposit accounts. Offering remote deposit capture as a loss leader makes good sense for banks. Banks make money direct deposit accounts from float and from cross-selling more profitable products to the merchant. But, for the average ISO, remote deposit capture is not worth pursuing.

Debit Cards Strong but Credit Cards Weak

2009-05-15T05:57:00.000-07:00

Not surprisingly, US buyers are shunning the use of credit cards and embracing debit more than ever.

MasterCard’s total U.S. debit and credit card purchase volume for the first quarter dropped from $206 billion in 2008’s first quarter to $192 billion, a dip of 6.8%. However, the number of transactions rose 2.5% to $3.33 billion.

Separate from credit cards, U.S. debit volume rose 5.3% to $79 billion from $75 billion in 2008. Debit purchase transactions were up 10.8% to 1.95 billion from 1.76 billion in last year’s first quarter.

U.S. credit card purchase transactions dropped 6.7% drop from 1.49 billion last year. Credit card purchase volume dropped to $113 billion in the first quarter, down 13.7% from $131 billion a year earlier.

MasterCard’s U.S. credit card base was reduced by 14% to 239 million from 278 million in 2008’s first quarter. The debit card base increased 9.5% to 127 million from 116 million a year earlier.

Visa Inc. reported that U.S. debit dollar payment volume exceeded that of credit for the three months ended Dec. 31. This reversed the trend of several years where credit card volume was higher than debit because of credit’s higher tickets.

Visa’s credit card transactions have been falling, as has the size of the average sale. Visa’s total $409 billion U.S. debit and credit card purchase volume represented a 1.1% drop from last year.

Credit card purchase volume fell 6.9% to $203 billion from $218 billion a year earlier. Visa’s U.S. credit card base slid 8.5% to $334 million from $365 million. Visa’s U.S. debit card base increased 12.9% in 2008 to 333 million cards from 295 million in 2007.

ACH Processing for Property Management

2009-05-15T05:53:00.000-07:00

If you are a property management company that is not offering recurring ACH processing, you are leaving money on the table. Get smart. Make ACH the method of payment for every new tenant.

Make an ACH authorization form part of the rental paperwork. Along with the lease, the tenant signs the authorization form which gives permission to electronically debit a checking or savings account each month.

Most tenants are familiar with direct debit and expect to be offered ACH payments as a matter of course. It is so much more convenient that remembering to make out a check each month and the potential for incurring a late fee if they forget.

Automated reporting of electronic payments makes it easy to download data directly into accounting programs. Reconciliation of accounts fast, easy, and accurate.

Fees for processing payments are far less than a single first-class stamp. So inexpensive that no property manager can afford not to collecting all rents via ACH payments today.

18.2 Billion ACH Payments in 2008

2009-05-15T05:51:00.000-07:00

According to NACHA, there was over18.2 billion, ACH transactions processed during 2008. Total amount of consumer ACH payments was $939 billion.

Internet-initiated ACH debits (WEB) grew by 19.7% in 2008. Almost $2.1 billion in payments were made over the internet.

More than 1 billion EDI-formatted addenda records were transmitted across the ACH Network in 2008, a 14.6% increase over the previous year.. Businesses use EDI to send and receive invoice and other payment-related information.

The volume of CTX payments, increased by 16.1% in 2008. Meantime, the volume of CCD payments carrying an addenda record increased by 17.9%.

Back Office Conversion (BOC) increased 1,772%. The dramatic increase was because 2008 was the first full year BOC was offered.

Consumer check writing has been declining at a rate of 4% per year. The annualized volume of POP in 2008 was 101 million.

The Federal government deposited over 1 billion direct deposit transactions in 2008, an increase of 10.2%. According to the Financial Management Service, the Federal government saves $0.925 for every direct deposit that replaces a check payment.

Electronic Transactions for Invoicing and Bill Payments

2009-05-15T05:49:00.000-07:00

Electronic bill presentment and payments have been around for years. Many customers, particularly young ones, prefer to be billed and pay electronically. But, billers are pushing hard to get more consumers on-board with electronic invoicing and payments.

In the most common application for electronic invoicing, bills are sent to consumers by email. Customers can then go to a secure website to pay the bill. Bill pay from online banking is also becoming more popular but has not gained the momentum originally expected by the banks.

Given the increased costs of postage and paper, it’s easy to understand why billers are pushing for end-to-end electronic transactions. Increased cash flow and quicker access to working capital derived from electronic payments are strong financial incentives for any biller.

Billers are beginning to charge fees to consumers who want to receive paper invoices by mail. Billers are also automatically cutting off paper bills for consumers who want to view invoices online.

Rather than charging consumers for paper invoices, the billers can give consumers a rebate for switching to electronic transactions. For example, give the consumer $5 to switch. The biller would make up the rebate in cost savings the first month. A 30 day ROI is a good investment decision.

Bill Me Later Losses High

2009-03-18T06:16:00.000-07:00

Bill Me Later, which eBay bought for $820 in cash, suffered high credit losses 4th quarter 2008. Credit losses were 8.75% for the last quarter, compared to 6-8% losses for the earlier quarters.

Bob Swan, CFO of eBay said “The Bill Me Later team has been tightening their credit decisioning criteria. The increase is much less than at other credit issuers and in line with our expectations.”

Bill Me Later issues credit for each transaction, in lieu of providing an open credit line. Swan said this was the reason eBay can control the extension of credit. Swan plans to expand the payment option internationally.

BillMeLater is accepted by about 1,000 online merchants, including many major retailers selling high-ticket merchandise.

E-Bay has lots of money. PayPal remains exceptionally profitable.Active accounts worldwide grew to 70.4 million, up 23% over the same period in 2007.

No Hiding from Cybercrime

2009-03-11T11:46:00.000-07:00

For $30 cyber criminals can a blank credit card, complete with the holographic security markings used by legitimate credit card companies. It’s remarkably easy to obtain equipment to encode someone’s stolen identity information onto the card. Software to verify that the victim’s credit is good, so that anyone using the phony card will not raise suspicions at the checkout counter is readily available.

It’s hugely profitable for organized crime to sell fraudulent cards. It’s even a social experience for crooks as they log on to forums to discuss the pros and cons of various scams.
Government agencies claim they are making strides in combating international cybercrime. Don’t believe it. As fast as the authorities can run, the criminals always outdistance them. They have better technology, endless supplies of money, and sophisticated international networks. Cut off an arm in one country, ten more arms spring up in other countries.

Don’t think the government will protect you. As a consumer, you can pretend you are safe. But, it’s all an illusion. These days most consumers are simply cogs being used to power the world-wide criminal enterprises who are the real winners of our cyber economy.

More ACH and Electronic Check Information