Published in Transform by Joe Devlin Click here for list of articles
  July 2001 Why replacing paper-based remittance systems with electronic remittance is so difficult-and how to go about pulling it off
IntroductionMain ArticleMixing PaymentsGauging EBPPThe Check & List Problem
B2BCase StudyVendorsGlossary 

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Banks and billers face a muddled environment of electronic and paper-based processes. The latest technology merges mixed payments and streamlines conventional transactions.


      Cheaper Alternatives that get us all Playing

Cheaper Alternatives that get us all Playing

"The fees you can charge for automating remittance can be absolutely sinful," rejoices Tom Houston of T. Houston Group. "And don't assume that smaller community banks can't get into this game. Sure the market for full fledged EBPP-based implementations by big companies like CheckFree is viable, but EBPP is a rich man's game, currently priced out of the reach of millions of small business and community banks.  Fortunately, you don't need expensive state-of-the-art equipment to provide better remittance systems."

Houston points out that half of all the community banks in the United States have implemeted in-house check imaging systems to speed up the process of handling remittances. This provides banks with a hugh opportunity because, " very few of the water and sewage companies, tax collection agencies, and cable television companies those banks service have this sort of technology in place. Community banks have got to start learning to sell the services they have mastered so well," says Houston.

Patrick Koster, marketing director of BankWare of Birmingham Alabama agrees. "Community banks are beginning to understand how they can use existing technology to help customers process payments more efficiently.  They sign up to handle remittance processing for the local water company and real estate management firm.  They set up lockboxes at the local post office for all their business customers.  Each morning a bank employee collects all the bills, checks and invoices delivered to those boxes.  The bank takes these paper documents, uses its high speed imaging system to capture and organize those documents efficiently, and then transmits summaries and images or all the captured documents to the corporate customer."   The end result is lower operating costs and faster payment delivery for both the bank and the biller. 

It is wonderful opportunity for those willing to seize it advises Tom Houston. "Remember it takes the big boys forever to get anything done.  In the year or two it's going to take for the big guys to work out the political hurdles faced by EBPP, smaller community banks will be working hard putting remittance solutions into place. Get those systems in place and working well today and it is going to be very hard for the big guys to convince your customers to move to their new fangled EBPP system tomorrow.

EBPP Solutions for Community Banks

Although Tom Houston strongly advocates use of image-enabled remittance systems at community banks, he realizes that some of those banks will want to make the bigger leap into the august EBPP world. 

"The key to pulling EBPP off at a smaller bank is to pool your resources with other like-minded institutions. "The cost for implementing EBPP ranges from $350,000 to $750,000 - too expensive for most community banks.  Because of the enormous start-up costs, most community banks will turn to service bureaus for these services. Another alternative is creating a 'co-op' of similar size banks to share the costs. It will cost about $3,000,000 to implement such a system for one hundred banks. That means the cost per bank drops is a quite affordable $30,000. In this range, most community banks can afford the technology, but they have to be willing to negotiate the difficult political issues associated with working closely with other community banks."

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