Posted by Mark Brousseau
An interesting article from http://www.politico.com/ about the DataTreasury patent infringement lawsuit:
Senate, old legal woes drawn into patent fight
By: Lisa Lerer
A fight over a Senate patent bill is turning as nasty as the no-holds-barred race for the Democratic presidential nomination, with old legal problems resurfacing involving executives of a small Texas company targeted in a controversial amendment.
The amendment, backed by the country’s largest financial services companies, would prevent Plano-based DataTreasury Corp. from collecting potentially billions of dollars in damages from scores of banks in an ongoing patent lawsuit over electronic check processing technology. But as both the patent bill and the lawsuit move forward, old allegations are swirling about DataTreasury’s founder, Claudio Ballard, and chief executive officer, Keith DeLucia.
Lobbying efforts typically focus on survey data and dry policy papers, making the reemergence of decades-old civil and criminal problems particularly unusual. Ballard, according to court records, was sued by his father for fraud in 1988 over management issues at the small computer company the two co-owned. The case has been dismissed. In 1991, DeLucia, then known as Keith Wickey, was convicted of robbing an armored car in Suffolk County, N.Y., and served some time and probation.
DataTreasury acknowledged the old legal problems but dismissed them as having little to do with the company’s current business. “This is a desperate smear by a group of companies that have tried every other trick in the book and failed. Now what they are trying to do is assassinate the character of DataTreasury’s officers,” says company spokesman Eric Wetzel. “This special interest legislation is a clear example of large corporate infringers aggressively going after small companies.”
The banks may be big, but this no David and Goliath story, say financial services lobbyists. The banks argue that the amendment will prevent what they see as akin to a lawyered-up bank heist. Bank lobbyists categorize DataTreasury as a “patent troll,” a slur used in the intellectual property world to describe small companies that hold patents but do not produce any products.
“DataTreasury is Exhibit A of what’s wrong in the system,” says Steve Bartlett, CEO of the Financial Services Roundtable, an association that represents the country’s 100 largest financial services firms. “The law is tilted so badly in favor of plaintiffs that have no products and yet extort billions of dollars.” DataTreasury holds patents on technology that allows banks to settle checks by transmitting electronic images rather than paper documents.
Traditionally banks depended on paper checks, flying massive numbers of slips around the country for processing. But after the Sept. 11 terrorist attacks grounded billions of dollars’ worth of checks in 2001, regulators changed federal law to allow banks to shred the paper.
DataTreasury saw opportunity in the new law. The company had benefited from a controversial 1998 court ruling that broadened the definition of a patent to include business processes. In June 1999 and February 2000, the company acquired two patents covering a method for processing checks electronically. Later, Bank of America Corp., Chase Manhattan Corp. and IBM announced the creation of a new national digital archive of check images called Viewpointe.
In its complaint, DataTreasury alleges that the banks stole its technology and distributed it throughout the industry. Some major financial institutions, most notably JPMorgan Chase and Merrill Lynch, settled for what the company considers a “significant sum.” Cases against Bank of America, Citigroup, Wells Fargo and 53 other financial institutions were put on hold pending the results of a U.S. Patent and Trademark Office reexamination of the patents. The patent office upheld the patents several months ago, and last Wednesday the court lifted the stay, allowing the cases to move forward.
While the cases were on hold, the banks worked Capitol Hill. In July, Sen. Jeff Sessions (R-Ala.) introduced an amendment in the Senate Judiciary Committee to essentially grant the banks immunity from the suit. The Roundtable, with help from in-house bank lobbyists, briefed staffers of each member of the committee. The amendment was approved on a bipartisan vote. The Roundtable considers passing the Sessions amendment a top legislative priority.
“It’s right up there because it’s real money,” Bartlett said. “If we were talking about millions or even hundreds of millions, it wouldn’t be, but this could cost billions.” DataTreasury shot back with its own lobbying campaign. The company’s legal counsel, well-known Texas trial firm Nix, Patterson & Roach, recommended prominent Democratic lobbyists John Raffaelli and Ben Barnes. Both signed on to lobby for DataTreasury and have met with the staff of several committee members. DataTreasury points to a Congressional Budget Office study estimating that the amendment would result in litigation against the federal government, seeking compensation for taking private property.
The CBO estimated that the government’s liability in that case, based on typical settlement payments, would be roughly $1 billion. Bank lobbyists say they are working to adjust the amendment to ensure that taxpayers will not foot the bill. “That would be a bit like putting lipstick on a pig,” Raffaelli said. “The fact is that this is a giveaway to the banks.” Raffaelli has met with Sessions about revisiting the amendment. “Jeff Sessions has been very classy about dealing with us on this issue,” he said.
The Commerce Department also came down against the amendment. “Limiting patent holders’ rights and remedies in this instance could reduce innovation in this technology area,” Nathaniel Wienecke, assistant secretary for legislative and intergovernmental affairs, wrote to Sen. Arlen Specter (R-Pa.). “As a general matter, the administration does not support exceptions to patent protection based on a particular technology.”
DataTreasury is quick to point out that commercial banks were the 12th-largest donor to members of Congress last year, according to the Center for Responsive Politics. And the Roundtable spent almost $6.9 million on lobbying last year. The company says the banks’ campaign contributions to Sessions have influenced him, a charge his staff has denied. But name partners at Nix, Patterson & Roach have given more than $1 million to mostly Democratic candidates. DataTreasury’s lobbyists are also active players on Capitol Hill.
Raffaelli’s firm, Capitol Counsel, made about $4.6 million in lobbying fees in 2007, according to congressional filings. Barnes’ firm, The Ben Barnes Group, made more than $2.6 million in lobbying fees last year, including $120,000 from Nix Patterson. Bank lobbyists are confident the amendment will survive on the Senate floor, reasoning that it would be highly unusual for the committee to drop an amendment that it already has adopted. But DataTreasury isn’t so sure.
“It’s a last-ditch effort by a group of banks whose backs are against the wall,” Wetzel said.
Monday, March 31, 2008
Why The Fuss Over Remote Capture?
By Mark Brousseau
Many people believe that the future of electronic payment processing includes a growing trend toward including accounts receivable, check and deposit capture at the point of presentment. So what are the benefits of this strategy? And what about its challenges?
“The strategy of moving image capture to the point of presentment provides numerous advantages,” Wally Vogel (wally_vogel@creditron.com), president of Creditron, Inc., told me. “Obviously, there is the reduction of payment document handling and forwarding, and the associated lag time. This improves cash control and offers faster funds availability.”
“Beyond that, image capture at the point of presentment allows for greater control and audit capabilities,” Vogel added. “As soon as the document is scanned, it is captured and logged, and can be tracked through various processes for depositing, accounts receivable updates, and handling change of address requests and customer service inquiries, among other functions.”
With the proper systems in place, Vogel added, document images can be viewed from any authorized inquiry station on the network for customer purposes, within minutes of receiving the document. This means that data completion from image can be completed in a remote office or in a centralized location, providing greater flexibility while maintaining strict control and a complete audit trail for each transaction, wherever it is processed.
“One of the significant challenges of image capture at the point of presentment is the need to standardize rules, processes and practices across remote offices. Otherwise, users may not get the full advantage of remote capture,” Vogel said. “This may require a thorough business analysis and a willingness to unify business processes.”
What do you think? E-mail me at m_brousseau@msn.com.
Many people believe that the future of electronic payment processing includes a growing trend toward including accounts receivable, check and deposit capture at the point of presentment. So what are the benefits of this strategy? And what about its challenges?
“The strategy of moving image capture to the point of presentment provides numerous advantages,” Wally Vogel (wally_vogel@creditron.com), president of Creditron, Inc., told me. “Obviously, there is the reduction of payment document handling and forwarding, and the associated lag time. This improves cash control and offers faster funds availability.”
“Beyond that, image capture at the point of presentment allows for greater control and audit capabilities,” Vogel added. “As soon as the document is scanned, it is captured and logged, and can be tracked through various processes for depositing, accounts receivable updates, and handling change of address requests and customer service inquiries, among other functions.”
With the proper systems in place, Vogel added, document images can be viewed from any authorized inquiry station on the network for customer purposes, within minutes of receiving the document. This means that data completion from image can be completed in a remote office or in a centralized location, providing greater flexibility while maintaining strict control and a complete audit trail for each transaction, wherever it is processed.
“One of the significant challenges of image capture at the point of presentment is the need to standardize rules, processes and practices across remote offices. Otherwise, users may not get the full advantage of remote capture,” Vogel said. “This may require a thorough business analysis and a willingness to unify business processes.”
What do you think? E-mail me at m_brousseau@msn.com.
Saturday, March 29, 2008
Barron's High On Fiserv
Posted by Mark Brousseau
An interesting article on Fiserv in Barron's:
Fiserv Is Largely Immune To Banking's Plagues
By JACK WILLOUGHBY
THERE ARE SOME BANK-RELATED companies whose earnings are likely to rise this year.
One of them is Fiserv, a Brookfield, Wis.-based supplier of systems and services that provide banks with the wherewithal to post checks, open new checking and savings accounts, and keep track of loans. Because banks are its main clients, Fiserv (ticker: FISV) has seen its shares dragged down by about 20% since the summer of 2007, to 48.17 last week. But as a founder and former CEO George Dalton says, "No matter how troubled the bank may be, its customers still have to write checks, make payments and pay mortgages."
Under 48-year-old CEO Jeff Yabuki, the company -- which has absorbed more than 100 enterprises over the years -- has sold off a mortgage-credit-reporting business, most of its health-management businesses and a majority of its investment-services group to pay down debt and refocus on its financial-services core.
It's also taken steps to solidify its already-substantial hold on that marketplace: Last year, Yabuki, the former chief operating officer for H&R Block, purchased electronic bill-payment leader CheckFree for $4.4 billion. The acquisition not only gets Fiserv into a fast-growing market, but allows it to sell its own wares to the big banks and corporations that CheckFree serves.
The company, says Yabuki, is "becoming a pure play in the provision of technology-processing to financial institutions." Fiserv last year got 75% of its $3.9 billion in revenue from these core services.
That also lets Fiserv participate in any forthcoming banking recovery without the same risks posed by a bank's credit portfolio.
FISERV'S SAGGING STOCK PRICE offers "an appealing entry point to an industry-leading financial-services processor poised to boost organic growth and margins," according to a report from John Kraft, an analyst at D.A. Davidson who has a Buy rating on the stock. He has a 65 price target on the shares, more than 30% above their recent value.
Fiserv stock now trades at about 14 times expected 2008 earnings of $3.42 a share, about in line with competitors such as Fidelity National Information Services, Metavante Holdings and Jack Henry & Associates. But that multiple doesn't reflect expectations that Fiserv's earnings will rise by almost 19% in 2009 due in part to economies achieved in the CheckFree purchase. The market is valuing the shares at about 12 times '09 earnings of $4.06 apiece -- below Metavante's 13.4 and Jack Henry's 16.6 but very near Fidelity's 11.9.
That's a pretty cheap multiple for a company that holds a commanding 34% share of the core processing business -- taking deposits and making loans -- that banks and credit unions do. Fiserv's customers, who renew its services at a healthy 90%-plus rate, usually sign three-to five-year contracts and pay a fee based either on the assets under management or the volume of transactions.
Although the number of banks almost halved from the early 1990s to about 8,700 by 2006, banking assets doubled to $12 trillion in that time. That provides plenty of opportunities for Fiserv. The drastic consolidation in the industry -- with all those legacy network systems to sort through -- also increases the need for technology solutions like those Fiserv provides.
Small banks or credit unions with limited technology groups outsource almost all of their transaction-processing chores to Fiserv, while others use a narrower selection of its systems.
The very biggest banks usually have their own systems -- however, Fiserv has begun to make inroads with them as well, and estimates that 88 of the largest 100 banks already use more than one Fiserv product. The CheckFree acquisition should help Fiserv improve its penetration still further.
The deal also offers both organizations a chance to diversify. Bank of America, for instance, previously accounted for nearly one-fifth of CheckFree's revenue, a portion that would be about 5% of the combined company's sales. And Fiserv can market its own suite of offerings to these bigger customers as well as CheckFree's electronic bill-payment and Internet services to its own customers.
CHECKFREE SHOULD CONTRIBUTE NOT only to Fiserv's revenue growth this year and next but also to margins, as Yabuki squeezes out costs. Kraft of Davidson estimates that operating margins should increase to 20% in '09, from 18%.
The Bottom Line:
Fiserv shares look cheap. Baring a long recession or major acquisition problems, they could rise by 30% or more in the next year.
Yabuki says the CheckFree merger is proceeding smoothly -- reflecting, in part, the fact that Fiserv, the product of the combination of a subsidiary of Midland Bank of Milwaukee and an affiliate of Freedom Savings and Loan many years ago, has done scores of these deals.
Yes, Fiserv is vulnerable if a sustained recession forces banks to curtail tech spending drastically, or if some of the expected synergies with CheckFree don't materialize.
But Yabuki argues that analysts and investors are unfairly painting Fiserv "with the same brush that's used on the banking system. Their basic idea," the CEO says, "is that the banks, our clients, would stop spending on technology in a slowdown. But they forget that the kind of processes we offer are really nondiscretionary."
Fiserv, which has bought back more than 36 million of its shares over the last three years, does have Wall Street fans. "This is a stock that could easily benefit from both earnings and multiple expansion, even in a slow economy," says Clark Shields, business-services analyst for T. Rowe Price, a buyer of the stock. He thinks the shares could rise more than 15, to north of 65, in the next 12 months. That kind of near-term gain isn't in the cards for most banks.
An interesting article on Fiserv in Barron's:
Fiserv Is Largely Immune To Banking's Plagues
By JACK WILLOUGHBY
THERE ARE SOME BANK-RELATED companies whose earnings are likely to rise this year.
One of them is Fiserv, a Brookfield, Wis.-based supplier of systems and services that provide banks with the wherewithal to post checks, open new checking and savings accounts, and keep track of loans. Because banks are its main clients, Fiserv (ticker: FISV) has seen its shares dragged down by about 20% since the summer of 2007, to 48.17 last week. But as a founder and former CEO George Dalton says, "No matter how troubled the bank may be, its customers still have to write checks, make payments and pay mortgages."
Under 48-year-old CEO Jeff Yabuki, the company -- which has absorbed more than 100 enterprises over the years -- has sold off a mortgage-credit-reporting business, most of its health-management businesses and a majority of its investment-services group to pay down debt and refocus on its financial-services core.
It's also taken steps to solidify its already-substantial hold on that marketplace: Last year, Yabuki, the former chief operating officer for H&R Block, purchased electronic bill-payment leader CheckFree for $4.4 billion. The acquisition not only gets Fiserv into a fast-growing market, but allows it to sell its own wares to the big banks and corporations that CheckFree serves.
The company, says Yabuki, is "becoming a pure play in the provision of technology-processing to financial institutions." Fiserv last year got 75% of its $3.9 billion in revenue from these core services.
That also lets Fiserv participate in any forthcoming banking recovery without the same risks posed by a bank's credit portfolio.
FISERV'S SAGGING STOCK PRICE offers "an appealing entry point to an industry-leading financial-services processor poised to boost organic growth and margins," according to a report from John Kraft, an analyst at D.A. Davidson who has a Buy rating on the stock. He has a 65 price target on the shares, more than 30% above their recent value.
Fiserv stock now trades at about 14 times expected 2008 earnings of $3.42 a share, about in line with competitors such as Fidelity National Information Services, Metavante Holdings and Jack Henry & Associates. But that multiple doesn't reflect expectations that Fiserv's earnings will rise by almost 19% in 2009 due in part to economies achieved in the CheckFree purchase. The market is valuing the shares at about 12 times '09 earnings of $4.06 apiece -- below Metavante's 13.4 and Jack Henry's 16.6 but very near Fidelity's 11.9.
That's a pretty cheap multiple for a company that holds a commanding 34% share of the core processing business -- taking deposits and making loans -- that banks and credit unions do. Fiserv's customers, who renew its services at a healthy 90%-plus rate, usually sign three-to five-year contracts and pay a fee based either on the assets under management or the volume of transactions.
Although the number of banks almost halved from the early 1990s to about 8,700 by 2006, banking assets doubled to $12 trillion in that time. That provides plenty of opportunities for Fiserv. The drastic consolidation in the industry -- with all those legacy network systems to sort through -- also increases the need for technology solutions like those Fiserv provides.
Small banks or credit unions with limited technology groups outsource almost all of their transaction-processing chores to Fiserv, while others use a narrower selection of its systems.
The very biggest banks usually have their own systems -- however, Fiserv has begun to make inroads with them as well, and estimates that 88 of the largest 100 banks already use more than one Fiserv product. The CheckFree acquisition should help Fiserv improve its penetration still further.
The deal also offers both organizations a chance to diversify. Bank of America, for instance, previously accounted for nearly one-fifth of CheckFree's revenue, a portion that would be about 5% of the combined company's sales. And Fiserv can market its own suite of offerings to these bigger customers as well as CheckFree's electronic bill-payment and Internet services to its own customers.
CHECKFREE SHOULD CONTRIBUTE NOT only to Fiserv's revenue growth this year and next but also to margins, as Yabuki squeezes out costs. Kraft of Davidson estimates that operating margins should increase to 20% in '09, from 18%.
The Bottom Line:
Fiserv shares look cheap. Baring a long recession or major acquisition problems, they could rise by 30% or more in the next year.
Yabuki says the CheckFree merger is proceeding smoothly -- reflecting, in part, the fact that Fiserv, the product of the combination of a subsidiary of Midland Bank of Milwaukee and an affiliate of Freedom Savings and Loan many years ago, has done scores of these deals.
Yes, Fiserv is vulnerable if a sustained recession forces banks to curtail tech spending drastically, or if some of the expected synergies with CheckFree don't materialize.
But Yabuki argues that analysts and investors are unfairly painting Fiserv "with the same brush that's used on the banking system. Their basic idea," the CEO says, "is that the banks, our clients, would stop spending on technology in a slowdown. But they forget that the kind of processes we offer are really nondiscretionary."
Fiserv, which has bought back more than 36 million of its shares over the last three years, does have Wall Street fans. "This is a stock that could easily benefit from both earnings and multiple expansion, even in a slow economy," says Clark Shields, business-services analyst for T. Rowe Price, a buyer of the stock. He thinks the shares could rise more than 15, to north of 65, in the next 12 months. That kind of near-term gain isn't in the cards for most banks.
Plan Would Empower Fed
Posted by Mark Brousseau
An interesting article in yesterday's New York Times:
Treasury Dept. Plan Would Give Fed Wide New Power
By EDMUND L. ANDREWS
WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.
The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.
Democratic lawmakers are all but certain to say the proposal does not go far enough in restricting the kinds of practices that caused the financial crisis. Many of the proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation.
According to a summary provided by the administration, the plan would consolidate an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms.
While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.
The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings.
The plan would give the Fed some authority over Wall Street firms, but only when an investment bank’s practices threatened the entire financial system.
And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security.
Parts of the plan could reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. The plan would merge the S.E.C. with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.
The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.
The proposal began last year as an effort by Henry M. Paulson Jr., secretary of the Treasury, to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system.
His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders.
“I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every 5 to 10 years,” Mr. Paulson will say in a speech on Monday, according to a draft. “I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible.”
Congress would have to approve almost every element of the proposal, and Democratic leaders are already drafting their own bills to impose tougher supervision over Wall Street investment banks, hedge funds and the fast-growing market in derivatives like credit default swaps.
But Mr. Paulson’s proposal for the Fed echoes ideas championed by Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee.
Both see the Fed overseeing risk across the entire financial spectrum, but Mr. Frank is likely to favor a stronger Fed role and to subject investment banks to the same rules that commercial banks now must follow, especially for capital reserves.
The Treasury plan would let Fed officials examine the practices and even the internal bookkeeping of brokerage firms, hedge funds, commodity-trading exchanges and any other institution that might pose a risk to the overall financial system.
That would be a significant expansion of the central bank’s regulatory mission.
When Fed officials agreed this month to rescue Bear Stearns, once the nation’s fifth-largest investment bank, they pointedly noted that the Fed never had the authority to monitor its financial condition or order it to bolster its protections against a collapse.
In two unprecedented moves, the Fed engineered a marriage between JPMorgan Chase and Bear Stearns, lending $29 billion to JPMorgan to prevent a Bear bankruptcy and a chain of defaults that might have felled much of the financial system.
For the first time since the 1930s, the Fed also agreed to let investment banks borrow hundreds of billions of dollars from its discount window, an emergency lending program reserved for commercial banks and other depository institutions.
But Mr. Paulson’s proposal would fall well short of the kind of regulation that Democrats have been proposing. Mr. Frank and other senior Democrats have argued that investment banks and other lightly regulated institutions now compete with commercial banks and should be subject to similar regulation, including examiners who regularly pore over their books and quietly demand changes in their practices.
In a recent interview, Mr. Frank said he realized the need for tighter regulation of Wall Street firms after a meeting with Charles O. Prince III, then chairman of Citigroup.
When Mr. Frank asked why Citigroup had kept billions of dollars in “structured investment vehicles” off the firm’s balance sheet, he recalled, Mr. Prince responded that Citigroup, as a bank holding company, would have been at a disadvantage because investment firms can operate with higher debt and lower capital reserves.
Senator Charles E. Schumer, Democrat of New York, has taken a similar stance.
“Commercial banks continue to be supervised closely, and are subject to a host of rules meant to limit systemic risk,” Mr. Schumer wrote in an op-ed article on Friday in The Wall Street Journal. “But many other financial institutions, including investment banks and hedge funds, are regulated lightly, if at all, even though they act in many ways like banks.”
Mr. Paulson’s proposal is likely to provoke bruising turf battles in Congress among agencies and rival industry groups that benefit from the current regulations.
Administration officials acknowledged on Friday that they did not expect the proposal to become law this year, but said they hoped it would help frame a policy debate that would extend well after the elections in November.
In a nod to the debacle in mortgage lending, the administration proposed a Mortgage Origination Commission to evaluate the effectiveness of state governments in regulating mortgage brokers and protecting consumers.
The bulk of the proposal, however, was developed before soaring mortgage defaults set off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.
This plan would consolidate a large number of regulators into roughly three big new agencies.
Bank supervision, now divided among five federal agencies, would be led by a Prudential Financial Regulator, which could send examiners into any bank or depository institution that is protected by either federal deposit insurance or other federal backstops. It would eliminate the distinction between “banks” and “thrift institutions,” which are already indistinguishable to most consumers, and shut down the Office of Thrift Supervision.
Any effort to merge the Commodity Futures Trading Commission with the S.E.C. is likely to provoke battles.
Yet another proposal would, for the first time, create a national regulator for insurance companies, an industry that state governments now oversee.
Administration officials argue that a national system would eliminate the inefficiencies of having 50 different state regulators, who have jealously guarded their powers and are likely to fight any federal encroachment.
Arthur Levitt, a former S.E.C. chairman who has long pushed for stronger investor protection, said his first impression of the plan was positive. Even though the S.E.C.’s powers might be reduced, Mr. Levitt said, the plan would create a broader agency to regulate business conduct in all financial services.
“It’s a thoughtful document,” he said. “I’m intrigued by the fact that it puts an emphasis on investor protection, and that it establishes an agency specifically for that purpose, which would operate across all markets. I think that’s a very constructive first step.”
An interesting article in yesterday's New York Times:
Treasury Dept. Plan Would Give Fed Wide New Power
By EDMUND L. ANDREWS
WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.
The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.
Democratic lawmakers are all but certain to say the proposal does not go far enough in restricting the kinds of practices that caused the financial crisis. Many of the proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation.
According to a summary provided by the administration, the plan would consolidate an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms.
While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.
The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings.
The plan would give the Fed some authority over Wall Street firms, but only when an investment bank’s practices threatened the entire financial system.
And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security.
Parts of the plan could reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. The plan would merge the S.E.C. with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.
The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.
The proposal began last year as an effort by Henry M. Paulson Jr., secretary of the Treasury, to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system.
His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders.
“I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every 5 to 10 years,” Mr. Paulson will say in a speech on Monday, according to a draft. “I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible.”
Congress would have to approve almost every element of the proposal, and Democratic leaders are already drafting their own bills to impose tougher supervision over Wall Street investment banks, hedge funds and the fast-growing market in derivatives like credit default swaps.
But Mr. Paulson’s proposal for the Fed echoes ideas championed by Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee.
Both see the Fed overseeing risk across the entire financial spectrum, but Mr. Frank is likely to favor a stronger Fed role and to subject investment banks to the same rules that commercial banks now must follow, especially for capital reserves.
The Treasury plan would let Fed officials examine the practices and even the internal bookkeeping of brokerage firms, hedge funds, commodity-trading exchanges and any other institution that might pose a risk to the overall financial system.
That would be a significant expansion of the central bank’s regulatory mission.
When Fed officials agreed this month to rescue Bear Stearns, once the nation’s fifth-largest investment bank, they pointedly noted that the Fed never had the authority to monitor its financial condition or order it to bolster its protections against a collapse.
In two unprecedented moves, the Fed engineered a marriage between JPMorgan Chase and Bear Stearns, lending $29 billion to JPMorgan to prevent a Bear bankruptcy and a chain of defaults that might have felled much of the financial system.
For the first time since the 1930s, the Fed also agreed to let investment banks borrow hundreds of billions of dollars from its discount window, an emergency lending program reserved for commercial banks and other depository institutions.
But Mr. Paulson’s proposal would fall well short of the kind of regulation that Democrats have been proposing. Mr. Frank and other senior Democrats have argued that investment banks and other lightly regulated institutions now compete with commercial banks and should be subject to similar regulation, including examiners who regularly pore over their books and quietly demand changes in their practices.
In a recent interview, Mr. Frank said he realized the need for tighter regulation of Wall Street firms after a meeting with Charles O. Prince III, then chairman of Citigroup.
When Mr. Frank asked why Citigroup had kept billions of dollars in “structured investment vehicles” off the firm’s balance sheet, he recalled, Mr. Prince responded that Citigroup, as a bank holding company, would have been at a disadvantage because investment firms can operate with higher debt and lower capital reserves.
Senator Charles E. Schumer, Democrat of New York, has taken a similar stance.
“Commercial banks continue to be supervised closely, and are subject to a host of rules meant to limit systemic risk,” Mr. Schumer wrote in an op-ed article on Friday in The Wall Street Journal. “But many other financial institutions, including investment banks and hedge funds, are regulated lightly, if at all, even though they act in many ways like banks.”
Mr. Paulson’s proposal is likely to provoke bruising turf battles in Congress among agencies and rival industry groups that benefit from the current regulations.
Administration officials acknowledged on Friday that they did not expect the proposal to become law this year, but said they hoped it would help frame a policy debate that would extend well after the elections in November.
In a nod to the debacle in mortgage lending, the administration proposed a Mortgage Origination Commission to evaluate the effectiveness of state governments in regulating mortgage brokers and protecting consumers.
The bulk of the proposal, however, was developed before soaring mortgage defaults set off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.
This plan would consolidate a large number of regulators into roughly three big new agencies.
Bank supervision, now divided among five federal agencies, would be led by a Prudential Financial Regulator, which could send examiners into any bank or depository institution that is protected by either federal deposit insurance or other federal backstops. It would eliminate the distinction between “banks” and “thrift institutions,” which are already indistinguishable to most consumers, and shut down the Office of Thrift Supervision.
Any effort to merge the Commodity Futures Trading Commission with the S.E.C. is likely to provoke battles.
Yet another proposal would, for the first time, create a national regulator for insurance companies, an industry that state governments now oversee.
Administration officials argue that a national system would eliminate the inefficiencies of having 50 different state regulators, who have jealously guarded their powers and are likely to fight any federal encroachment.
Arthur Levitt, a former S.E.C. chairman who has long pushed for stronger investor protection, said his first impression of the plan was positive. Even though the S.E.C.’s powers might be reduced, Mr. Levitt said, the plan would create a broader agency to regulate business conduct in all financial services.
“It’s a thoughtful document,” he said. “I’m intrigued by the fact that it puts an emphasis on investor protection, and that it establishes an agency specifically for that purpose, which would operate across all markets. I think that’s a very constructive first step.”
Thursday, March 27, 2008
Check News of the Day
Posted by Mark Brousseau
Someone alert the scanner manufacturers ...
City man uses toilet-paper check to try to settle water-bill dispute
By John HillPress & Sun-Bulletin
BINGHAMTON -- A Binghamton man was escorted out of the county office building Wednesday after he tried to pay his water bill with a check -- neatly written on three squares of floral print, two-ply toilet paper.
North Side resident Ron Borgna has been wrangling with the City of Binghamton for 17 months over an outstanding water bill. That, plus a recently proposed 42 percent hike in city water rates, led Borgna to write a check for $2,509.66 on toilet paper to demonstrate his disgust with the water department.
The disagreement began with a $422.90 water bill Borgna received in September 2006. The amount was about four times Borgna's normal bill.
Borgna's water meter and plumbing were tested, but no problem could be discovered. The meter was over-registering by 1 percent, but city regulations allow a water meter to register between 98.5 and 101.5 percent of actual water usage.
City officials said that because his meter was within the legal limits, Borgna would have to pay the bill.
Borgna, who plans to appeal a judgment against him earlier this month in small claims court, said he decided to pay the bill, which now includes subsequent bills and late fees, to avoid property tax problems. After a year, outstanding city water bills are transferred to a homeowner's property tax bill, which is collected by Broome County.
So Borgna brought the toilet-paper check, along with a bank statement proving he had the money in his account, to the county Office of Real Property Tax Services Wednesday afternoon to pay the bill.
After Real Property Tax Services Director Kevin P. Keough refused to accept the homemade check, he took Borgna to the county legal department. There, Broome County attorney Robert Behnke also said the county would not accept the check.
An argument that ensued in the sixth-floor county law office grew testy but involved no physical confrontation. It ended with Borgna being peacefully escorted out of the building by a Broome Security officer.
Bill Ullmann, an attorney with the Federal Reserve Bank in Kansas City, said the IRS has in the past accepted a check written on a T-shirt as payment for a tax bill. But, because toilet paper is easily destroyed, it may have been difficult to clear the check.
"I can understand why someone would be hesitant to accept a check written on toilet paper," Ullmann said.
Borgna said he may try to pay the $2,509.66 -- for the original bill, late fees and subsequent water and sewer bills -- with change.
"I don't know where I'm going to get $2,000 in nickels and dimes," Borgna said.
Someone alert the scanner manufacturers ...
City man uses toilet-paper check to try to settle water-bill dispute
By John HillPress & Sun-Bulletin
BINGHAMTON -- A Binghamton man was escorted out of the county office building Wednesday after he tried to pay his water bill with a check -- neatly written on three squares of floral print, two-ply toilet paper.
North Side resident Ron Borgna has been wrangling with the City of Binghamton for 17 months over an outstanding water bill. That, plus a recently proposed 42 percent hike in city water rates, led Borgna to write a check for $2,509.66 on toilet paper to demonstrate his disgust with the water department.
The disagreement began with a $422.90 water bill Borgna received in September 2006. The amount was about four times Borgna's normal bill.
Borgna's water meter and plumbing were tested, but no problem could be discovered. The meter was over-registering by 1 percent, but city regulations allow a water meter to register between 98.5 and 101.5 percent of actual water usage.
City officials said that because his meter was within the legal limits, Borgna would have to pay the bill.
Borgna, who plans to appeal a judgment against him earlier this month in small claims court, said he decided to pay the bill, which now includes subsequent bills and late fees, to avoid property tax problems. After a year, outstanding city water bills are transferred to a homeowner's property tax bill, which is collected by Broome County.
So Borgna brought the toilet-paper check, along with a bank statement proving he had the money in his account, to the county Office of Real Property Tax Services Wednesday afternoon to pay the bill.
After Real Property Tax Services Director Kevin P. Keough refused to accept the homemade check, he took Borgna to the county legal department. There, Broome County attorney Robert Behnke also said the county would not accept the check.
An argument that ensued in the sixth-floor county law office grew testy but involved no physical confrontation. It ended with Borgna being peacefully escorted out of the building by a Broome Security officer.
Bill Ullmann, an attorney with the Federal Reserve Bank in Kansas City, said the IRS has in the past accepted a check written on a T-shirt as payment for a tax bill. But, because toilet paper is easily destroyed, it may have been difficult to clear the check.
"I can understand why someone would be hesitant to accept a check written on toilet paper," Ullmann said.
Borgna said he may try to pay the $2,509.66 -- for the original bill, late fees and subsequent water and sewer bills -- with change.
"I don't know where I'm going to get $2,000 in nickels and dimes," Borgna said.
Tuesday, March 25, 2008
Small Banks Seek Lockbox Solutions
By Mark Brousseau
Demand from community and mid-sized banks for image-based lockbox solutions is on the upswing, says Bob Pangrac (rpangrac@creditron.com), national account manager for bank lockbox providers at Creditron. The reason? Smaller banks are looking to defend their commercial account base from large “national banks,” which Pangrac says are now showing up in regional and small markets with cash management services such as wholesale and retail lockbox processing.
“Previously, the cost of an image-based payments solution was cost-prohibitive for a smaller financial institution,” Pangrac told me. “With the introduction of Microsoft-based solutions, smaller banks can now afford a solution that will provide new revenue streams for the bank.”
But why not outsource?
One reason is that banks can keep more of the revenue from their lockbox services, Pangrac said. Another factor is that in-house systems offer better cost-controls than outsourced providers. Finally, in-house systems allow banks to clear exceptions “as they happen” or at the end of the day, rather than waiting for them to arrive from the outsource provider. “With an in-house system, exceptions can be handled the same processing day, benefiting the bank and the bank’s customer – retail or commercial – alike,” he explained.
As an example, Pangrac recounts the story of a $250 million bank that sensed that they were experiencing holdover with their lockbox provider. “By bringing their lockbox processing in-house, they seldom have holdover, which translates into more efficient customer service, deposit management, and cash management. The bank can also handle their ‘on-us’ accounts, such as the bank-branded Visa card, and their home and car loans,” Pangrac said.
So what functions are smaller banks looking for in image-based lockbox systems? Pangrac said ease of use tops the list, followed by ease of account setup, an R&D path for electronic payments, and the ability for customers to research items and receive invoices via the Web.
Are you a small bank that has successfully deployed an image-based lockbox solution? E-mail me at m_brousseau@msn.com.
Demand from community and mid-sized banks for image-based lockbox solutions is on the upswing, says Bob Pangrac (rpangrac@creditron.com), national account manager for bank lockbox providers at Creditron. The reason? Smaller banks are looking to defend their commercial account base from large “national banks,” which Pangrac says are now showing up in regional and small markets with cash management services such as wholesale and retail lockbox processing.
“Previously, the cost of an image-based payments solution was cost-prohibitive for a smaller financial institution,” Pangrac told me. “With the introduction of Microsoft-based solutions, smaller banks can now afford a solution that will provide new revenue streams for the bank.”
But why not outsource?
One reason is that banks can keep more of the revenue from their lockbox services, Pangrac said. Another factor is that in-house systems offer better cost-controls than outsourced providers. Finally, in-house systems allow banks to clear exceptions “as they happen” or at the end of the day, rather than waiting for them to arrive from the outsource provider. “With an in-house system, exceptions can be handled the same processing day, benefiting the bank and the bank’s customer – retail or commercial – alike,” he explained.
As an example, Pangrac recounts the story of a $250 million bank that sensed that they were experiencing holdover with their lockbox provider. “By bringing their lockbox processing in-house, they seldom have holdover, which translates into more efficient customer service, deposit management, and cash management. The bank can also handle their ‘on-us’ accounts, such as the bank-branded Visa card, and their home and car loans,” Pangrac said.
So what functions are smaller banks looking for in image-based lockbox systems? Pangrac said ease of use tops the list, followed by ease of account setup, an R&D path for electronic payments, and the ability for customers to research items and receive invoices via the Web.
Are you a small bank that has successfully deployed an image-based lockbox solution? E-mail me at m_brousseau@msn.com.
Using Credit Cards For Traffic Fines
Posted by Mark Brousseau
An interesting article in today's York Daily Record:
Credit card payments taking off
By EUGENE PAIK
Daily Record/Sunday News
About three months since they were first accepted, credit card payments at District Justice Richard E. Martin's office [in York, PA] have surged in popularity.
“Not a day goes by when there aren't credit card sales,” said Patty Albright, Martin's office manager.
She said $3,130 in January was paid with credit, which includes the 3 percent fee added to each credit card transaction. In February, it was $5,450, she said.
So far this month, there has been about $2,500 paid with credit cards.
In December, the county began accepting credit cards at Martin's office to address increasing demands for credit payments at some district justice offices.
“It’s mostly citizens who have traffic citations who ask to pay by credit card,” said Freya Sponseller, manager for District Justice Dwayne A. Dubs’ office in Hanover, where credit card payments are expected to be implemented in mid-April.
Despite the demand, the county resisted providing the service because it had trouble finding a provider that would not charge the county.
The 3 percent fee prevents taxpayers from paying for operating costs.
Martin's office accepts MasterCard and Visa, and it uses a swipe format similar to machines found in grocery stores, restaurants and shops.
The results were better than the office imagined, Albright said, even though clerks were uncertain if people were open to paying the added charge. Most have been willing to pay more money for the convenience of credit, she said.
As planned, the payment system will expand to five other district justice offices in the county.
The offices of Dubs and district justices Linda L. Williams, Nancy L. Edie, Scott J. Gross and Harold D. Kessler are slated to accept credit card payments in mid-April, York County Treasurer Barbara Bair said.
Further expansion is uncertain at this point, she said.
An interesting article in today's York Daily Record:
Credit card payments taking off
By EUGENE PAIK
Daily Record/Sunday News
About three months since they were first accepted, credit card payments at District Justice Richard E. Martin's office [in York, PA] have surged in popularity.
“Not a day goes by when there aren't credit card sales,” said Patty Albright, Martin's office manager.
She said $3,130 in January was paid with credit, which includes the 3 percent fee added to each credit card transaction. In February, it was $5,450, she said.
So far this month, there has been about $2,500 paid with credit cards.
In December, the county began accepting credit cards at Martin's office to address increasing demands for credit payments at some district justice offices.
“It’s mostly citizens who have traffic citations who ask to pay by credit card,” said Freya Sponseller, manager for District Justice Dwayne A. Dubs’ office in Hanover, where credit card payments are expected to be implemented in mid-April.
Despite the demand, the county resisted providing the service because it had trouble finding a provider that would not charge the county.
The 3 percent fee prevents taxpayers from paying for operating costs.
Martin's office accepts MasterCard and Visa, and it uses a swipe format similar to machines found in grocery stores, restaurants and shops.
The results were better than the office imagined, Albright said, even though clerks were uncertain if people were open to paying the added charge. Most have been willing to pay more money for the convenience of credit, she said.
As planned, the payment system will expand to five other district justice offices in the county.
The offices of Dubs and district justices Linda L. Williams, Nancy L. Edie, Scott J. Gross and Harold D. Kessler are slated to accept credit card payments in mid-April, York County Treasurer Barbara Bair said.
Further expansion is uncertain at this point, she said.
Thursday, March 20, 2008
Changing Scanner Business Case
By Mark Brousseau
There's no question that the business case for distributed scanners is changing, says Don McMahan, vice president of sales and regional general manager, US&C, Document Imaging, Graphic Communications Group, for Eastman Kodak Company.
"Since introduction, distributed scanners have provided a way for all organizations to take advantage of dedicated document capture solutions," McMahan told me. "These technologies were previously only available to organizations whose budgets could support both costly equipment as well as trained personnel to operate it."
"That said, the benefits of distributed scanners are also being realized within the broader market. Even larger firms that have centralized scanning operations have recognized the additional benefits in implementing distributed capture," McMahan explained. "Why should having a budget for production scanning capabilities and skilled personnel be detrimental to continued growth and success? Combining an existing deep bench with distributed scanning at the right points within an organization can enhance efficiencies many times."
McMahan said that equipping field offices with distributed scanners enables employees at these locations to quickly share documents they receive with the main facility for processing. These technologies immediately alleviate the cost and hassle with overnight mail, including delivery delays, or losing documents altogether.
"Furthermore, capturing information at the point of acceptance enables companies to quickly get it into their document management systems. This promises faster access to information, decision making, and by extension, increased customer satisfaction ultimately making the business more efficient and profitable," he said. "Technical innovations equate to enhanced capabilities, ease of use, and improved system connectivity for distributed scanning. We’re observing how distributed capture is not only changing how document capture better serves current end users, but also the landscape of who the average end users will be in the future."
McMahan said Kodak expects to see more pre-packaged solutions for a variety of vertical industries. The continued advancements in imaging hardware and software will move distributed capture beyond the primary benefits of document scanning towards highly specialized applications for information management solutions, he added. Many of these solutions will be equally at home in both distributed and centralized scanning operations.
There's no question that the business case for distributed scanners is changing, says Don McMahan, vice president of sales and regional general manager, US&C, Document Imaging, Graphic Communications Group, for Eastman Kodak Company.
"Since introduction, distributed scanners have provided a way for all organizations to take advantage of dedicated document capture solutions," McMahan told me. "These technologies were previously only available to organizations whose budgets could support both costly equipment as well as trained personnel to operate it."
"That said, the benefits of distributed scanners are also being realized within the broader market. Even larger firms that have centralized scanning operations have recognized the additional benefits in implementing distributed capture," McMahan explained. "Why should having a budget for production scanning capabilities and skilled personnel be detrimental to continued growth and success? Combining an existing deep bench with distributed scanning at the right points within an organization can enhance efficiencies many times."
McMahan said that equipping field offices with distributed scanners enables employees at these locations to quickly share documents they receive with the main facility for processing. These technologies immediately alleviate the cost and hassle with overnight mail, including delivery delays, or losing documents altogether.
"Furthermore, capturing information at the point of acceptance enables companies to quickly get it into their document management systems. This promises faster access to information, decision making, and by extension, increased customer satisfaction ultimately making the business more efficient and profitable," he said. "Technical innovations equate to enhanced capabilities, ease of use, and improved system connectivity for distributed scanning. We’re observing how distributed capture is not only changing how document capture better serves current end users, but also the landscape of who the average end users will be in the future."
McMahan said Kodak expects to see more pre-packaged solutions for a variety of vertical industries. The continued advancements in imaging hardware and software will move distributed capture beyond the primary benefits of document scanning towards highly specialized applications for information management solutions, he added. Many of these solutions will be equally at home in both distributed and centralized scanning operations.
Monday, March 17, 2008
Trade Show Giveaway Blunders
By Mark Brousseau
At almost every trade show, including TAWPI’s Forums & Expo (yes, that was a shameless plug!), exhibitors give away countless promotional items in hopes of influencing attendees’ decisions to buy their products and services. It’s easy for exhibitors to rack up a considerable tab for these give away items (or tchotchkes, as marketing types refer to them).
But do they work? That depends on how effectively exhibitors use them, says Candy Adams in an article in the March issue of Exhibitor Magazine. Without proper planning and execution, giveaways can be a waste of money, Adams writes. She passes along the following 12 common giveaway blunders:
1. Choosing your giveaway before setting objectives.
2. Misunderstanding your target audience.
3. Selecting giveaways in a vacuum.
4. Giving the same gift to all levels of customers or prospects.
5. Giving away items banned by show management.
6. Not considering the total cost of your giveaways.
7. Distributing low-quality items.
8. Winning the Tacky and Tasteless Award.
9. Omitting your message or logo.
10. Creating an unrelated contest.
11. Just laying your company’s giveaways out on the counter for any passing booth beggar.
12. Making your promotion a one-time show.
Have you seen a company that used giveaways especially well? E-mail me at m_brousseau@msn.com.
At almost every trade show, including TAWPI’s Forums & Expo (yes, that was a shameless plug!), exhibitors give away countless promotional items in hopes of influencing attendees’ decisions to buy their products and services. It’s easy for exhibitors to rack up a considerable tab for these give away items (or tchotchkes, as marketing types refer to them).
But do they work? That depends on how effectively exhibitors use them, says Candy Adams in an article in the March issue of Exhibitor Magazine. Without proper planning and execution, giveaways can be a waste of money, Adams writes. She passes along the following 12 common giveaway blunders:
1. Choosing your giveaway before setting objectives.
2. Misunderstanding your target audience.
3. Selecting giveaways in a vacuum.
4. Giving the same gift to all levels of customers or prospects.
5. Giving away items banned by show management.
6. Not considering the total cost of your giveaways.
7. Distributing low-quality items.
8. Winning the Tacky and Tasteless Award.
9. Omitting your message or logo.
10. Creating an unrelated contest.
11. Just laying your company’s giveaways out on the counter for any passing booth beggar.
12. Making your promotion a one-time show.
Have you seen a company that used giveaways especially well? E-mail me at m_brousseau@msn.com.
Thursday, March 6, 2008
Parascript Goes To India
Posted by Mark Brousseau
An interesting article on Parascript from the Indus Business Journal.
Colo. software company checks into Indian market
Check-recognition product for payment processors
BY CHRIS NELSON
BOULDER, Colo. – Parascript LLC – a U.S.-based company that specializes in image-analysis and pattern-recognition technology – has set its sights on the Indian market. The Boulder-based company recently introduced its universal check-recognition and verification software, CheckPlus International, to banks and other payment processors for use in India.
The software that the company has made available for use in India is essentially an updated version of CheckPlus International, which the company developed from the original CheckPlus software. Designed for use among banks, financial institutions and payment processors, CheckPlus enables efficient processing of digitized check images and “makes sense” of the data found on checks, according to Yuri Prizemin, Parascript’s director of product marketing.
“Parascript’s technology extracts meaningful data from documents and turns it into actual information,” he said. “CheckPlus offers a streamlined approach to processing checks and other financial documents because it incorporates three important technologies – check recognition, forms recognition and signature verification – into a single product.”
Already being used in nine international markets – including France and Portugal – CheckPlus International allows payment processors to meet country-specific check formats, backgrounds and writing styles while accurately interpreting information on documents, according to ParaScript. India, which is home to at least 29 different languages and hundreds of dialects, presented Parascript with a problem that it had not encountered in other nations, according to Prizemin.
“India is a unique country in that it is home to so many languages,” Prizemin said. “So we started with an English-language version of CheckPlus International, but have plans to expand it to other languages in the future.”
Depending on the country, CheckPlus International is also able to read a check’s payee line, the so-called magnetic ink character recognition, or MICR line (the band of computer-generated numbers printed at the bottom of a check; it was developed in 1956 by the American Bankers Association to facilitate the processing of checks); and checksum. The latter is a computed value that enables a financial institution to check the validity of something; typically, checksums are used in data transmissions to detect if the data has been transmitted successfully.
The technology can also perform signature presence detection and verification on personal and business checks, making it easier for financial institutions to quickly identify random and skilled forgeries.
Prizemin said Parascript has long recognized the need to expand to other international markets aside from those that it already operates in, so when the company’s partners in India asked it to develop a version of CheckPlus International specifically for the subcontinent, it acted quickly.
“They told us that us they needed a technology solution [to handle electronic check processing] in India,” he said. “From our perspective, we knew that we could do this because we had already built the basic fundamental technology base layers in CheckPlus and CheckPlus International; we knew that we could adapt both programs for use in multiple international markets. So, we simply added some modules to CheckPlus International for use in India.”
Thus far, only one of Parascript’s partners in India – Aperta Ltd., a payment-processing company headquartered in the United Kingdom with locations worldwide – has permitted the company to acknowledge it publicly.
In a statement, Aperta technical director Martin Wylupke said CheckPlus International enhances the products that Aperta markets to its banking and service partners in India, when used in conjunction with Aperta’s check-image processing application.
CheckPlus works by automatically locating and recognizing eight standard field types that are typically found on business and personal checks, cash tickets, deposit slips, money orders and image-replacement documents, which were mandated by the federal Check Clearing for the 21st Century Act (better known as Check 21) of 2003.
Those field types include the currency amount, payee line, check date, check number, MICR line, the location of the payor block on personal and business checks, and verification of the payor’s signature on personal and business checks.
Adopted Oct. 28, 2004, Check 21 is a Congressionally approved law that allows the recipient of a paper check to create a digital version, thereby eliminating the need for further handling of the physical document. It essentially promotes an image swap among or between financial institutions, rather than the decades-old practice of exchanging paper checks, which in turn accelerates clearing cycles and reduces processing and labor costs.
An interesting article on Parascript from the Indus Business Journal.
Colo. software company checks into Indian market
Check-recognition product for payment processors
BY CHRIS NELSON
BOULDER, Colo. – Parascript LLC – a U.S.-based company that specializes in image-analysis and pattern-recognition technology – has set its sights on the Indian market. The Boulder-based company recently introduced its universal check-recognition and verification software, CheckPlus International, to banks and other payment processors for use in India.
The software that the company has made available for use in India is essentially an updated version of CheckPlus International, which the company developed from the original CheckPlus software. Designed for use among banks, financial institutions and payment processors, CheckPlus enables efficient processing of digitized check images and “makes sense” of the data found on checks, according to Yuri Prizemin, Parascript’s director of product marketing.
“Parascript’s technology extracts meaningful data from documents and turns it into actual information,” he said. “CheckPlus offers a streamlined approach to processing checks and other financial documents because it incorporates three important technologies – check recognition, forms recognition and signature verification – into a single product.”
Already being used in nine international markets – including France and Portugal – CheckPlus International allows payment processors to meet country-specific check formats, backgrounds and writing styles while accurately interpreting information on documents, according to ParaScript. India, which is home to at least 29 different languages and hundreds of dialects, presented Parascript with a problem that it had not encountered in other nations, according to Prizemin.
“India is a unique country in that it is home to so many languages,” Prizemin said. “So we started with an English-language version of CheckPlus International, but have plans to expand it to other languages in the future.”
Depending on the country, CheckPlus International is also able to read a check’s payee line, the so-called magnetic ink character recognition, or MICR line (the band of computer-generated numbers printed at the bottom of a check; it was developed in 1956 by the American Bankers Association to facilitate the processing of checks); and checksum. The latter is a computed value that enables a financial institution to check the validity of something; typically, checksums are used in data transmissions to detect if the data has been transmitted successfully.
The technology can also perform signature presence detection and verification on personal and business checks, making it easier for financial institutions to quickly identify random and skilled forgeries.
Prizemin said Parascript has long recognized the need to expand to other international markets aside from those that it already operates in, so when the company’s partners in India asked it to develop a version of CheckPlus International specifically for the subcontinent, it acted quickly.
“They told us that us they needed a technology solution [to handle electronic check processing] in India,” he said. “From our perspective, we knew that we could do this because we had already built the basic fundamental technology base layers in CheckPlus and CheckPlus International; we knew that we could adapt both programs for use in multiple international markets. So, we simply added some modules to CheckPlus International for use in India.”
Thus far, only one of Parascript’s partners in India – Aperta Ltd., a payment-processing company headquartered in the United Kingdom with locations worldwide – has permitted the company to acknowledge it publicly.
In a statement, Aperta technical director Martin Wylupke said CheckPlus International enhances the products that Aperta markets to its banking and service partners in India, when used in conjunction with Aperta’s check-image processing application.
CheckPlus works by automatically locating and recognizing eight standard field types that are typically found on business and personal checks, cash tickets, deposit slips, money orders and image-replacement documents, which were mandated by the federal Check Clearing for the 21st Century Act (better known as Check 21) of 2003.
Those field types include the currency amount, payee line, check date, check number, MICR line, the location of the payor block on personal and business checks, and verification of the payor’s signature on personal and business checks.
Adopted Oct. 28, 2004, Check 21 is a Congressionally approved law that allows the recipient of a paper check to create a digital version, thereby eliminating the need for further handling of the physical document. It essentially promotes an image swap among or between financial institutions, rather than the decades-old practice of exchanging paper checks, which in turn accelerates clearing cycles and reduces processing and labor costs.
Subscribe to:
Posts (Atom)
