NACHA Greets Debut of BOC with Cautious Expectations

Today, the much-heralded back-office conversion electronic-check code goes live on the automated clearing house network. But rather than throw a huge birthday party, executives of the ACH's governing body, NACHA?The Electronic Payments Association, and banks are marking BOC's debut in a decidedly low-key manner. BOC will allow retailers and other merchants that accept checks at the point of sale to convert consumer checks into electronic debits by scanning them in their back offices for submission into the ACH network. NACHA sees the new code as a supplement to its existing retailer e-check code, point of purchase, or POP. Herndon, Va.-based NACHA refuses to predict BOC volumes. “The retailers who are considering ramping up [are keeping] this close to the vest until they get it off the ground,” says Daniel L. Miner, senior director of network development and risk management. “They are a little shy about sharing [data].” A NACHA spokesperson notes that accounts receivable conversion, or ARC, the e-check code for converting checks received at lockboxes into ACH files, had a slow start after its March 2002 launch. “In the first year ARC grew very incrementally,” he says. “We're not going to be in any rush to judgment about BOC.” Dennis Simmons, chairman of NACHA's Electronic Check Council and president of the Dallas-based the SouthWestern Automated Clearing House Association, predicts that even national merchants will take a conservative, “store-by-store” approach to BOC. “In this first time to market, they want to make sure things are working soup to nuts,” he says. One factor that could give BOC a fast start is the employment of existing scanning and imaging equipment used for remote deposit capture, the process of depositing receipts by electronic uploads from non-bank locations, for BOC. Merchants and third-party back-office service providers could readily deploy that equipment for BOC transactions when appropriate under so-called “least-cost routing” options for check conversion. “More doors will be opened,” says Mark Tizzard, payment strategies director at Charlotte, N.C.-based Wachovia Corp. and vice chairman of the Electronic Check Council. Many banks and retailers have looked forward to BOC as a better retailer e-check option than the existing POP code. POP requires retailers to get signed customer approval for check conversion, and retailers that use POP generally equip all of their lanes with check scanners. BOC's requirements call for just one scanning site per location, and signs and receipt notices rather than an up-front customer OK will constitute sufficient notice. Nonetheless, POP, after a couple of slow years, has seen strong growth in recent quarters (Digital Transactions News, Dec. 27, 2006). Much of that growth has come from some large national retailers such as Wal-Mart Stores Inc. Some merchant processors are designing new e-check and imaging services that include but aren't confined to BOC. One such processor is Minneapolis-based U.S. Bancorp's Nova Information Systems, which is pitching its Electronic Check Service to portions of its large merchant base. “Our ECS product with back-office image uploads continues to generate a lot of interest with multi-lane retailers and with our bank partners,” Nova vice president of marketing Michelle Graff says in an e-mail. “BOC has definitely been a great conversation starter that allows us to introduce the benefits of real-time check processing without the expense of installing imaging devices in every lane.” Graff says. Harrisburg, Pa.-based Ollie's Bargain Outlet has implemented ECS in all 48 of its stores, and other retailers are testing the service.