ARC Demand Remains Strong

By Mark Brousseau

If you think soaring check-image exchange volumes have tempered interest in Accounts Receivable Check (ARC) Conversion, think again. ARC remains one of the most popular payment methods, registering steady volume increases every quarter, says US Dataworks, Inc. President and COO Mario Villarreal (mvillarreal@usdataworks.com). Industry statistics from NACHA back Villarreal up.

“Organizations with historically high volumes of B2B transactions – such as insurers and BPO providers – are showing the most interest in ARC,” Villarreal told me, noting that ARC remains the most cost-effective and operationally efficient way to handle payments.

Strong demand for ARC also is being driven by the number of low-volume B2C processors that are outsourcing their in-house operations to third-party providers who use ARC as part of their clearing.

But ARC’s growth isn’t coming at the expense of image exchange, or vice versa. In fact, users are recognizing the benefits of combining ARC and Check 21 in their operations.

“Image exchange has been used to enhance ARC because it completes electronic deposits that aren’t eligible for ACH conversion,” Villarreal told me. “The complementary relationship between image exchange and ARC commoditizes deposits, leading to a need for least cost routing/best fit clearing.”

And it’s this least cost routing/best fit clearing approach that really has Villarreal excited.

He said that most organizations recognize the immediate financial benefits of leveraging both ARC and check image exchange for clearing. But he thinks more education needs to occur on the additional benefits that can be realized when organizations break down their silos and eliminate disparate payment channels and hubs, to combine transactions and process them electronically.

“It’s not just about being able to process an ARC transaction,” Villarreal said. “It’s about what else your system can do to optimize payments processing. For example, an enterprise payments solution allows organizations to consolidate business processes and gain operational efficiencies.”

Despite the strong growth of ARC, Villarreal notes there are holdouts: “They tend to be processors who have high volumes of B2B transactions that aren’t eligible for ACH conversion. But as these processors take on more consumer work, they inevitably have to search for ARC solutions.”

What is happening to your organization’s ARC volumes? Post your comment below.