I'll be publishing more detailed notes and observations from the NACHA Payments 2007 conference over the next few days, but for now, here are the highlights:
Lots of talk about mobile – both mobile banking and mobile payments. The consensus is that mobile payments (at the point of sale) are still a few years away, but momentum is growing behind accessing account info and making person-to-person payments on the go. (See my recent posts on mobile achived here.)
Conversion vs. Convergence
The keynote, by Pete Kight CEO of CheckFree, was a call to action for the bankers to avoid commoditization by providing truly value-added services to their large corporate customers. He suggested that the only way to do so is to deliver "convergence" – holistic, cross platform payment solutions with value-added fraud protection and security, exceptions processing, and reporting. Kight took pains to emphasize that conversion of paper checks to electronic ACH transactions (via remote capture and back office conversion) is only an incremental step, not an end solution. Kight hinted that if the FIs can't deliver the services corporates want, corporates may go out and build it themselves and plug in (commodity) payment services from whichever FIs offer the cheapest price. If that doesn't scare the banks into more innovative solutions I don't know what will!
Back Office Conversion
NACHA's pre-conference PR efforts touted that we'd be hearing success stories about the first thirty days of Back Office Conversion (BOC). Instead there was conspicuous silence regarding actual implementations. Plenty of banks and software providers were promoting the benefits but no one was citing actual results. I learned from EPN that the number of actual BOC transactions through their network the first few weeks was a small fraction of the number of ARC transactions during the first few weeks after it was introduced.
B2B Solutions Still Lacking
Companies are still waiting for a workable solution to their remittance woes. NACHA has a variety of efforts underway but true straight-thru-processing (STP) remains a dream for all but the largest corporates that have a tight supply chain with customers and vendors intercommunicating via EDI. I am beginning to feel disillusioned and depressed by the lack of progress on B2B payments. If half the effort (and funding!) that is going into image solutions was devoted to passing remittance data through the payments system we'd be well on our way.
ACH vs. Cards
NACHA reports that ACH transactions have been growing at double-digit rates over the last few years (14.5% growth 2006 vs. 2005) with most of the recent growth a result of check conversion transactions (ARC, POP, etc.) and ACH transactions via phone and the internet. B2B payments are the next opportunity for transaction growth, particularly among smaller companies that are less inclined to utilize EDI. But credit card associations and issuers are also aggressively pursuing B2B transactions via purchase card solutions. Although ACH is much cheaper for merchants banks rely on their high-profit card businesses, which may threaten development of meaningful ACH innovation.
I'll be posting my notes and observations in the coming days, so check back soon. In the meantime, Breakout Session audio and presentations are available on the NACHA website here.