The space has become a veritable jungle of acronyms that leaves some companies confused about which set of letters would give them the best return. Others don't want to rock the boat with customers. Still others are not impressed by the technology available. And then there is just plain inertia–all of which have meant a slower move to checkless than many bankers had expected.

Only about 7% of the checks cleared today are cleared as images, although the dollar value is substantially higher than 7%, notes Craig Vaream, vice president and ACH product executive for JPMorgan Chase's treasury services unit. While scanners are clearly built to handle stacks of checks, many companies cherry-pick their large checks for remote deposit, perhaps to minimize bank charges and capture float.

There has been no rush to implement remote deposit, because each company has complex issues to consider, notes Stephanie Schmitt, vice president and remote deposit product manager at U.S. Bank. Those issues include geography, internal organization, negotiated availability schedules, current lockbox arrangements, customer relationships and complexity of remittance detail capture. Treasury executives have to assess the impact of truncation on these established routines for processing check payments.

Jennifer Holme, director of Citigroup's global receivables and electronic check deposit operations, concurs: "The legacy processes have been embedded and perfected, so there is natural resistance to disrupting those processes. Even big companies usually start small, with remote deposits from a single location or into a single account. As they gain comfort with the new process and prove its value, they roll it out to more locations and more accounts."

But for those who take the plunge, remote deposit clearly is proving its value. Citi, which pioneered remote deposit even before Check 21 legislation was passed, now has more than 75 Fortune 500 clients using it, Holme reports. She points to great uptake in international markets as savvy corporate treasuries create a "virtual branch" on their desktops into which they consolidate checks from multiple locations, dispensing with costly couriers or multiple bank deposits and funds concentration transfers.

s discrete products mature, strategies are getting more sophisticated, and banks are scrambling to find software and processes that can cost-effectively route each check through the most efficient channels, reports Gary Sefcik, Mellon Bank's vice president for consumer receivables. While early software focused on determining eligibility for conversion since not all checks can be converted to ACH transactions, the emphasis is now shifting to intelligent channel selection. For example, local items that qualify for same-day availability would get next-day availability if they were converted under ARC at a retail lockbox, so usually they should be imaged and cleared as checks, he explains. Items coming from a distance that ordinarily would clear as checks with two-day availability would be ARC'ed to gain a day.

Services like Wells Fargo's Smart Decision allow companies to send a single file of checks to the bank through remote deposit. The bank, following rules set by the company, then converts some items under the ARC rules (or the BOC rules beginning next March) and clears some items through image exchange or through IRDs if the paying bank can't do image exchange. "With checks and ACH converging, treasury staffs are paying more attention to how they want their deposited checks to clear," agrees Stephanie Sturgis-Griffin, senior vice president and group product manager for wholesale Internet and treasury solutions at Wells.

Besides intelligent clearing channel selection, the other significant trend in check processing today is a focus on how to handle remittance documents. Large corporations with wholesale payments don't just want to deposit a check from a remote location, reports Ray Fattell, senior vice president and head of product management in the U.S. for global transaction banking at HSBC Bank USA, N.A.; they want remittance data captured electronically so that payment information and corresponding data can post automatically.

HSBC, which recently won a TAWPI (The Association for Work Process Improvement) award for technological innovation for its integrated lockbox operation that combines ARC and Check 21 clearing, offers a template companies can use to enter remittance data themselves and send it to the bank via remote deposit capture. But Fattell admits that remote deposit solutions do not currently support scanning of lengthy and complex documents that can accompany corporate checks. "That solution is still evolving," he says.

Most remote deposit applications only scan and transmit black-and-white images of the checks and deposit tickets, which is great for improving availability but does not include remittance documents. When customers need to capture data not on the check, they often do that in-house (e.g., the HSBC template) even when checks are remotely deposited in a lockbox account.

PNC is piloting a product, Remittance Onsite, with three Fortune 500 companies that allows companies to take all the paper from a payment that misses the wholesale lockbox, image it in color and send it to the bank, where it can be processed just as if it had come into the lockbox. "We enjoyed working with PNC to develop the product, and we're finding it is everything we hoped it would be," reports Kristi Minnick, manager of treasury business systems for $5 billion Wesco Distribution Inc., one of PNC's pilot companies. According to Minnick, the PNC tool managed to capture true, clear images and keep check and remittance documents together. "The pilot is going so well that we've decided to cut it short and roll out this product to all our customers soon," reports Bert Sciulle, senior vice president and group manager for receivables products.

Between truncation and conversion, a quiet revolution is taking place. "The check area is undergoing significant change," reflects George Stein, managing director for check services in Deutsche Bank's Global Transaction Banking ?? 1/2 Cash Management group. "In the U.S., check payments and ACH payments are converging, and check staffs and ACH staffs at far-sighted banks already are working collaboratively to prepare for a convergence of platforms, processes and personnel. We all see the benefits of getting rid of paper and making payment processing more electronic, but getting there will take a lot of work and banks will need to commit the required investment. There will be a major reengineering of how banks process payments, particularly in the U.S."