More Than Six Months Out, the Buzz Builds for BOC

It doesn't go live until next March 16, yet the new back-office conversion (BOC) electronic-check payment option already is attracting a good deal of interest from payment processors and their customers looking to reduce volumes of paper checks and speed customer service. “We believe this new conversion code will definitely be a hit,” Tim Wilcox, Commercial Capture Express product manager at Fidelity National Information Services Inc., a Jacksonville, Fla.-based bank and card processor, told this news service's sister publication Digital Transactions magazine for an upcoming story on BOC. BOC is a new standard entry class (SEC) code approved by NACHA?The Electronic Payments Association, the Herndon, Va.-based organization that governs the automated clearing house. BOC will allow merchants to scan checks in their back offices to convert the payments to ACH debits, with the goal of reducing the amount of paper checks submitted by banks and allowing for faster settlement. BOC will supplement the ACH's current e-check option at the checkout counter, POP, for point of purchase. POP, which went into effect in 2000, also takes out the paper but in the eyes of retailers has some significant drawbacks. Retailers using POP typically equip most or all of their lanes with check scanners at considerable expense, and because checks are returned to the customer during the sale, every clerk must be trained in order to answer questions about the process. BOC addresses those drawbacks in several ways. Dispatching the scanning to the back office will speed checkout times and, even if a store has back-up scanners, the number of scanning devices could decline considerably in multi-lane stores. “The higher interest is from larger-volume clients,” says Wilcox. Customer notification requirements also will be less onerous. Stores implementing BOC must have signs saying checks could be converted to electronic transactions, and consumers have the right to opt out. But processors expect their retailer clients will have to train many fewer employees about scanning, and they'll be taking fewer questions from confused customers. “We've explored retail and using POP, and we really got a lot of push-back,” says Jeff Thorness, president and chief executive of Allen, Texas-based processor ACH Direct Inc., whose base of 4,000 merchants includes many recurring billers. “It really became kind of a difficult program to sell. We see a significant change with that with BOC.” NACHA, meanwhile, is in the midst of a big BOC education program for financial institutions and merchants. Many materials produced for the campaign will be distributed through a new NACHA Web site, www.electronicpayments.org.