Nonbanks Win Big Share of Electronic Invoicing
Iida, Jeanne, American Banker
Most corporations that send payments and associated documents electronically rely on banks for the service, but a third are using nonbank competitors, according to a recent survey.
The results of the survey, performed by EDI Group Ltd., Aurora, Colo., were outlined at the recent Financial Electronic Data Interchange Conference, sponsored by the National Automated Clearing House Association and the Treasury Management Association.
EDI Group surveyed 370 U.S. corporations that actively use standard formats to send payments and related information -- a service called financial electronic data interchange.
Relatively few banks offer financial EDI, and profits from the business have been elusive.
But banks could increase their fee income substantially by sending nonpayment data -- remittance advice, purchase orders, invoices -- as well as payments on behalf of customers.
Network providers, such as GE Information Services and Advantis, the joint venture between Sears, Roebuck and Co. and International Business Machines Corp., cooperate with banks in some aspects of financial EDI and compete with them in others.
Among the banks that have emphasized their financial EDI services are First Interstate Bancorp, Chase Manhattan Corp., Harris Bankcorp., a unit of Bank of Montreal, PNC Financial Corp., First Chicago Corp., and NBD Bancorp.
The Bankers EDI Council, a committee of the National Automated Clearing House Association, has lobbied the Federal Reserve for the ability to send remittances and other nonpayment data over the automated clearing house system. …