BOC (Back Office Conversion) Is Posied to Take e-Payments Share In 2008

Implications: The introduction of Check 21 in 2004, has dramatically changed the payments landscape. Check 21 eliminated the legal barrier that had required the paper check for clearing and settlement and brought the capability for a digital image copy of the check to be the legal equivalent of the original check. Check 21 also paved the way for BOC (Back Office Conversion), which allows retailers to scan paper checks in the back office for conversion into ACH debits, which removes the need to submit checks into the banking system for clearing and settlement. Growth in BOC which officially launched in March 2007, outpaced growth of all other automated clearing house (ACH) transaction categories in 3Q07 with 840,743 transactions, a 238% increase from 2Q07 BOC transactions at 248,919. As retailers adopt BOC and integrate BOC we will potentially see more significant jumps in BOC volumes in 3Q08 and 4Q08. Soultran has emerged as the leader in the BOC market with over one-third of market share in 3Q07.

Analysis: Check 21 is seen as the catalyst for significant change in the payments landscape since its launch in 2004. Spinoffs from Check 21 include ARC (Accounts Receivable Conversion -lockbox transactions), POP (Point of Purchase conversion -retail/merchant transactions) and the new baby to the bunch, BOC (Back Office Conversion), which has forged ahead like a lion with plans to stampede through the e-Payments space in 2008 and beyond, while carving out market share along the way as retailers, corporates and financial institutions jump on the bandwagon.

1.  Soultran launched SPIN after retailers rebuffed having to foot the expense of installing imaging software and scanners on every aisle to benefit from electronic conversion of paper checks. Soultran handles the imaging, storing and destroying of checks for its clients and for corporates, Soultran sends electronic images to paying banks via image exchange networks such as ECCHO, SVPCO, Endpoint Exchange, Viewpoint Exchange, etc.

2.  With BOC (Back Office Conversion), a retailer can convert bundles of checks at once with a single scanner into electronic transactions for processing through the ACH (Automated Clearing Network) and Soultran's SPIN offers faster settlement time through the ACH and a cost savings of 50-70% less than traditional paper check processing

Takeaway:  Retailers and corporates can bank 24/7 without having to make the mad rush to their bank before the bank's "cutoff" time to make deposits. With a PC, scanner and an Internet connection and a bank that offers BOC services, retailers, corporates and financial institutions may be able to benefit from the significant growth projected for 2008 and beyond. Once BOC is integrated into their payments infrastructure, retailers and corporates can reduce their processing costs, speed up clearing and settlement times and offer clients quicker access to funds, along with the ability to bank 24/7.