Businesses Should Look for Ways to Boost Electronic Funds Transfer
Loomis, James, American Banker
For over 20 years banks have had the capability to provide electronic banking services to customers.
In the consumer markets, Americans have embraced many elements of electronic banking. People comfortably access cash via their automated teller machine cards, receive their salaries via automatic deposit, purchase goods with credit cards, and are beginning to use debit cards.
Yet when it comes to corporate banking, some 99% of all transactions are still conducted on paper.
Electronic banking or financial electronic data interchange can be defined as the exchange of payments and payment-related information (remittance data) in a standard format between trading partners electronically.
Electronic Payments Doubled
Most financial institutions and corporations channel payments through the National Automated Clearing House, the principal electronic network for electronic funds transfer.
According to the National Automated Clearing House Association, the number of financial EDI payments sent over the network more than doubled last year.
This increase is partially attributed to a revolution in low-cost, in-house, personal-computer-based software that makes ACH origination more accessible to financial institutions.
While corporations with large information systems staff may budget and schedule an EFT conversion, project implementation can take from 12 to 18 months.
They may need to rewrite their entire accounts payable systems to incorporate bank required data formats.
In addition, many companies still require paper backup and a continuation of their paper audit trail. Other companies may require a major reengineering effort in order to bring their banking on-line.
One logical solution for corporations that are caught between total EFT and the world of paper is a system that allows them to do both. …