Check-ACH Coalition Issuing Survey to Help Shape Emerging Proposal

A banking group that is exploring how to merge electronic image exchange with the automated clearing house network expects to distribute a survey on Tuesday to financial institutions seeking to find out what their plans are for image exchange and what barriers are slowing down their movement toward receiving and settling on check images. The group, called the Check ACH Coalition, expects to have results from the survey in two weeks, and plans to use them to inform the work of a number of Coalition committees hammering out business requirements, rules, technological needs, and an economic case for the processing of checks as both images and as ACH files. The Coalition hopes to elicit comment and data from a broad range of banks, and especially from paying banks that have not yet adopted image exchange. Among other things, the group hopes the survey results will allow it shape its recommendations in ways that will help paying banks speed adoption of image exchange. “The Coalition is seeking to support image exchange, it is not seeking to replace image exchange,” said Viveca Y. Ware, director of payments and technology policy at the Independent Community Bankers of America, during a conference call the Coalition held Monday to discuss its progress. The ICBA, a trade group representing small banks, is making its mailing list available for the survey, along with NACHA, the rules-setting body for the ACH, and the Electronic Check Clearing House Association (ECCHO), which has established rules for image exchange. All three associations have representatives in the Coalition, whose membership has swelled to 65 financial institutions and groups since it formed this summer with four founding members, Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and Zions Bancorporation. Robert Alpert, director of risk advisory services for consultants KPMG LLP, which is serving as project office for the Coalition and is supervising the survey, said during the call that a total had not yet been arrived at for the number of surveys the group will distribute. “We're looking to get directional information,” he said. During the call, representatives of several key committees stressed repeatedly that the group is seeking to be inclusive of as wide a range of financial institutions as possible and is working toward a solution whose business case will appeal to a similarly diverse array of banks. The proposal to marry the ACH and check imaging, which a number of major banks first proposed this spring (Digital Transactions News, May 26), has been criticized by some smaller institutions that fear the idea could sweep aside their interests in favor of those of larger banks, especially when it comes to such matters as pricing and access to image archives. In particular, some bankers have questioned whether paying banks will be required to participate in the scheme or will be allowed to opt out. This issue, one of the most controversial confronting the group, has not been resolved, Coalition representatives said. “We're not far enough along to say it'll be an opt in or opt out,” said Ware. One reason an opt-out would be problematic is that it could undermine the rationale for merging image exchange and the ACH. The ACH reaches nearly all banks. End-to-end image exchange, on the other hand, is limited by the number of paying banks that have been able to adopt the technology needed to receive and settle on images. Banks that haven't installed this technology must settle on so-called substitute checks, allowed under the Check Clearing Act for the 21st Century (Check 21), which are paper printouts of images. The proposal would allow both consumer and business checks to be converted to ACH transactions (the ACH currently allows conversion only of consumer checks) and would use the ACH rails to overcome the lack of universality of image acceptance at paying institutions. Each check would also be imaged by collecting banks, however, and these images would be archived and associated with each ACH file for lookup later by paying banks.