Check/Check 21 Services

First Bank moves one step closer to paperless check processing

April 2010

Returned checks expose your financial institution to risk on a daily basis, which makes accelerated returns processing an attractive solution. The Federal Reserve Banks offer two options that can serve as a stepping stone for moving toward paperless check processing. Both options — the FedReceipt^® Plus for Returns Service image cash letter (ICL) and the portable document format (PDF) delivery of return substitute checks — can expedite your return item processing, helping to reduce risk and improve customer service.

The March 2010 FedFocus featured a story about how Abacus Federal Savings Bank (Off-site Link) implemented the FedReceipt Plus for Returns Service ICL option to stay ahead of the competition and adapt to the ever changing processes in the payments business.

This month, we are highlighting First Bank (Off-site Link), headquartered in Clewiston, Florida, which recently implemented the PDF delivery option. Due to its lower return item volume — an average of 20 returns per day among five branches — First Bank found this to be an excellent method to automate the way it receives returns.

Business challenge

Prior to moving to the PDF delivery option, First Bank relied on a courier to deliver its return items, which often meant that weather delays and traffic issues caused the courier to deliver items sporadically in the afternoon. And, if the volume was particularly low, the courier may have held the return items until the next day.

“We were looking to streamline our returns process and found PDF delivery to be an excellent option,” indicated Susan Constable, vice president of electronic data processing at First Bank of Clewiston. “This service provided us the ability to automate return receipts and process them faster. Additionally, we were able to eliminate reliance on our courier,” noted Constable.

Solution

The PDF delivery option can be the ideal solution for return item receipt if your organization does not already have image processing software for incoming returns. The only requirement is to have access to either the FedLine Web^® or FedLine Advantage^® access solution to receive the PDF file.

The PDF delivery of return substitute checks option provides a PDF file of incoming returns (chargebacks) that can be downloaded via a FedLine^® access solution. The return items can be viewed with Adobe Acrobat^® Reader. A substitute check can be printed, as needed, using a printer with double-sided capabilities and a MICR ink cartridge. Pre-printed IRD paper is not required for the PDF option.

Additionally, this option is an excellent alternative if you use a processor for your forward items processing, but want to continue to handle your own chargebacks. This way, you can receive your own return items for processing without changing your current outsourcing arrangement and without purchasing an integrated image processing platform. PDF delivery is also being successfully used by financial institutions across the country that are currently not yet able to receive a x9.37 image file format, but want to automate the transportation piece of return item processing.

Benefits to First Bank

Since First Bank was already a FedLine^® access solution Subscriber, it was ready to convert from its existing processes to PDF delivery of return substitute checks after just a few modifications. “This conversion was simple. Our only investment was in the MICR toner cartridge,” said Constable.

After implementation, First Bank no longer relied on the courier, so returns were consistently received in the morning, typically between 8:30 a.m. and 9 a.m. ET. Staff has also been able to minimize most manual tasks associated with receiving paper returns — they no longer need to photocopy every return and physically store these items.

Positioned for the future

After implementing the PDF delivery of return substitute checks option, First Bank of Clewiston is well positioned to benefit from streamlined returns processing and has eliminated its reliance on courier delivery.

Are you ready to take the next step?

Whether your institution implements the ICL or PDF option, you will benefit from faster, more efficient processing of return items, moving your institution one step closer to realizing the benefits of paperless check processing.

For more details, visit the FedReceipt Plus for Returns Resource Center where you’ll find the agreement, requirements, Q & A and other critical information needed to implement this service. If you need additional information, contact your account executive.

“Adobe Acrobat Reader” is a registered trademark of Adobe Systems Incorporated.

Testimonials are reflective of individual experiences. All customers may not experience the same results.

The Federal Reserve Banks do not sponsor or endorse any of the non-Federal Reserve Bank-related products, parties or entities discussed in this publication.

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