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Back Office Conversion: Too Little Too Late?

NACHA’s introduction of back office conversion (BOC) in March 2007 was met with surprising interest among retailers, even as checks declined at point of sale. BOC’s introduction, however, was too late to produce meaningful volume for the ACH network, according to a new report, "Back Office Conversion: Too Little Too Late?" from Celent, a Boston-based financial research and consulting firm.

Key findings of the report include:

• Awareness of BOC solutions has risen to 45% of surveyed retailers through July 2007, just four months since its launch. This compares to 75% awareness of POP after seven years.

• 67% of retail treasury staff surveyed who were aware of BOC expressed interest in it, compared to 60% for POP.

• 6% of retailers report evaluating the business case for retail check conversion, and virtually all are doing so comprehensively, evaluating all eCheck options.

• Beginning in 2007, a growing percentage of retail checks presented for payment will be converted to ACH, approaching 60% of items presented by 2010.

• Check usage at point of sale will continue to decline, reaching just 4% of POS transactions in 2010. Consequently, the items available for conversion will continue to dry up.

• Converted retail checks will grow rapidly through 2009 to approximately 1 billion items annually, spawned by growing adoption of both BOC and POP applications. Volumes will fall, however, beginning in 2010, driven by declining check usage at point of sale.