WASHINGTON -- The Food Marketing Institute here said it will support efforts by the Federal Reserve and the National Automated Clearing House Association to streamline electronic check conversion and returned check-collection programs.
The Federal Reserve issued a "commentary" last month on Regulation E that would change the rules for customer authorizations of electronic payments and payment of returned checks. The commentary would give retailers the option of receiving customer authorization at the point of sale.
"It's allowing NACHA and the members of NACHA the opportunity for greater flexibility," said Ted Mason, FMI's director of electronic payment systems network services and emerging technologies. "It was rather rigid under the old check conversion system. If NACHA follows through with a very liberal interpretation of the rules of the commentary, the individual retailers may then have latitude in designing the programs to meet their customers' needs."
Now that the Federal Reserve offered this guidance for NACHA, it is up to that organization to craft rules that allow for the leeway. Currently, the suggestions in the commentary are not allowed under NACHA rules.
This federal effort is important in reducing the cost of payments at the front end, said Mason. Paper checks are often handled in-store five or more times before reaching the bank. The newly released federal commentary could improve check-handling efficiency and cost as well as enhance customer convenience at the register, he added.
Paper checks are one of the highest-costing tenders that pass through supermarket checkouts. "Anything that we can do to eliminate those costs is of prime importance to the members of the EPS community," Mason said.
Now, the commentary affects only a couple of retailers who have tried some of the existing check-conversion technology, Mason told SN. There aren't any high-volume stores that have adopted this technology, he said.