FTNI Blog

Rural Mutual Insurance Company knows a thing or two about managing a remote workforce accepting payments. Founded in 1934 to serve the needs of Wisconsin farmers, Rural Mutual has grown to become the largest business insurer in the Wisconsin, and one of the Top 50 property and casualty insurance providers in the country with 78,000 policies in force.

Checks may not be the next new thing—in fact, check use is on the decline—but believe it or not, remote deposit capture (RDC) can help you drive strategic integration and streamline receivables processes within your organization.

Originally published in Payments Business Magazine (May/June 2015 Issue)

Integrated Systems Lead to Faster Reconciliation of Checks, Which Means Lower Costs and Speedier Remittance

I am waiting for the day when I can pay for everything—groceries, trips, my mortgage—by waving my hand over a sensor on my watch. We’re moving in that direction; at some point, as the cost of smart phones drops and the technology for mobile payments catches up to consumers, technology will advance to the point that both making payments and reconciling remittances become swift and painless.

Part 2 of the 3-part True Straight Through Blog Series

To sum up the payments problem: Clients are using multiple payment types (check, ACH, credit card) to cater to customers, and they’re using multiple technologies from different third-party vendors (check scanning, auto-ACH, web, mobile) to streamline receivables. The resulting mash-up of different systems and legacy software results in increased complexity, inefficiencies with separate file integrations, reporting, reconciliation points, and costs for maintenance, training, and support. The payments industry has siloed what it wanted to streamline.

As we take a look at recent trends, data and what we are seeing with our own customers, a few things are certain. As the payments landscape changes, we see more payment types and channels being added but not many (if any) being phased out. This translates into increased complexity of payments processing for businesses today and into the future.

Checks Remain Strong but Move toward Electronic Imaging

For example, checks are still in wide use and are not going away as many had predicted in the past. The volume of checks is lower than other payment types, but businesses are still relying on them for both accounts payable and receivables. However, trends show consumers are adopting new methods to enhance the way these checks are processed. Nearly one in six checks are now deposited as an electronic image rather than paper and we expect this trend to continue growing significantly in the future.

Fraud Continues to be a Concern

One of the reasons that businesses and consumers still rely on checks could have to do with fraud concerns. Fraudulent transactions accounted for $6.1 billion in value, representing 31.1 million unauthorized transactions in 2012. Of this amount, card fraud substantially outpaced both check and ACH fraud rates, representing 92% of all unauthorized transactions. That clearly poses a concern for businesses who want to provide convenience to their customers but avoid fraud loss. Businesses must continue to focus on security, such as providing end-to-end encryption to ensure the transaction is secure from initiation to posting through to reconciliation. This becomes even more important with the imminent proliferation of mobile payments.

Mobile Payments Abound

Mobile payments are on their way to becoming the new norm. In North America, mobile transactions accounted for nearly one-fifth of all transactions last year, making up approximately $37 billion in volume. Both businesses and consumers alike are embracing the mobile trend and increasingly leveraging mobile remote deposit capture (mRDC), in addition to credit card and ACH-facilitated mobile payments, for more traditional payment remittances. More than one in eight Americans have used their mobile devices to deposit checks. Furthermore, of the 17% of checks paid as electronic images in 2012, 93% of them came from business customers.

No doubt, smartphone payment usage will only continue to increase as the number of smartphone users is anticipated to be nearly 160 million by 2014 in the U.S. alone. mRDC will likely be the next big wave of growth in mobile payments, with 48 million smartphone users expected to use mobile deposit features by 2016. This could provide significant cost and time advantages to businesses who embrace this trend.