30 Billion And Dropping

By Mark Brousseau

During a presentation at this week’s BAI TransPay conference at the Gaylord Texan Resort & Convention Center in Grapevine, TX, Richard Oliver, executive vice president, Retail Payments Office at the Federal Reserve Bank, provided key results of the Fed’s latest three-year study of non-cash payments. The information helps define the markets for vendors, a leading provider of distributed capture solutions told me today. Oliver said there were about 30 billion checks written in 2006. The breakdown:

51 percent of the checks were written by consumers
... 32 percent of these were consumer to business remittance checks
... 6 percent were consumer to business remittance at point of sale (remote remittance)
... 13 percent were consumer to business point of sale (Back Office Conversion eligible)

25 percent of the checks were written by businesses to other businesses (includes governments)
... 16 percent were business to business (wholesale remittance)
... 5 percent were business to business remittance at point of sale
... 3 percent were business to business point of sale

17 percent of the checks were business to consumer (payroll, refunds, etc.)

7 percent were consumer to consumer casual

Note: the numbers don't add up to 100 percent because of Federal Reserve Bank rounding. Another key statistic that Oliver provided was that 2.6 billion checks were converted to ACH in 2006.

What do you think? E-mail me at m_brousseau@msn.com.

Punitive Fees Under Threat

By Mark Brousseau

Bank revenues generated by punitive fees, such as for overdrafts, may be under threat, analysts from New York-based First Manhattan Consulting Group (FMCG) write in the January/February issue BAI Banking Strategies.

FMCG estimates overdraft fees alone total almost $20 billion per year and have been growing quickly as many banks have allowed customers to overdraft in more complicated ways – such as through debit, online bill payment and automated teller machine (ATM) withdrawals.

But FMCG believes the growth of fee revenues will slow as punitive fees begin to draw the attention of Congress and as legislation is adopted that requires banks to notify customers before imposing an overdraft fee.

What do you think? E-mail me at m_brousseau@msn.com.

Bank Relationships Are Key

By Mark Brousseau

A bank’s commitment to the customer relationship is the most important quality that finance executives from midsize companies look for in a cash management bank, according to Treasury & Risk’s 2008 Middle Market Survey. The price of cash management services and the quality of customer service were second and third most important, respectively.

In last year’s survey, the finance executives at midsize companies ranked the price of cash management services most important, followed by the bank’s commitment to the relationship.

What do you think? E-mail me at m_brousseau@msn.com.