Electronic cheque processing solutions: Choosing the right option for retail payments

Abstract

The cheque payments industry is undergoing a major change, driven by significant technological advances in electronic cheque processing options and growing merchant demand for these solutions. Because traditional cheque processing methods are expensive, labour-intensive and increasingly subject to fraud, the question for merchants today has shifted from 'Should I consider an electronic cheque method?' to 'Which electronic cheque method should I choose?' Although the slow but steady decline in cheque payments is well documented, cheques still comprise a significant portion of merchant transactions. Recent First Data/TeleCheck research indicates that, within the American population, a core base of cheque writers exist for whom cheques are the preferred method of payment. Merchants cannot afford to lose business by refusing to accept cheques, but instead must make cheques as effective and efficient as possible. This paper is written for individuals involved in managing cheque processing in the traditional retail space, and aims to provide an objective, analytical framework that will help merchants to evaluate electronic cheque processing options: point-of-purchase (POP) cheque conversion, back-office conversion (BOC) and Check 21.