Abstract
NEW RESEARCH REPORT BY MERCATOR ADVISORY GROUP
This report provides a primer on Remote Deposit Capture (RDC). It reviews the
state of the industry, the impact of RDC on check processing trends, and
provides an overview for 10 RDC service suppliers.
This report finds that Remote Deposit Capture continues to experience growing
pains even as it has been seriously evaluated by a majority of financial
institutions in the United States. RDC already accounts for approximately 13.5
billion items processed on an annualized basis and as a result, Mercator
Advisory Group estimates that 44% of all check volume is now cleared through
imaging. This means that the check processing tipping point, when the number
of imaged checks exceeds the number of paper checks, is approaching very fast.
When selecting an RDC supplier, Mercator Advisory Group finds that it is
critical the financial institution (FI) know exactly which target market it
will focus on, since suppliers have created RDC solutions that are very target
specific. Requirements for RDC services range from the very basic to the
fairly complex, from retail stores to corporate venues to bank branches. While
each processing requirement has at least one vendor that can satisfy its
needs, selecting the most sophisticated solution with an expectation that it
can address all market needs would be a mistake. RDC market suppliers have
created a jargon all their own and Mercator Advisory Group has found that even
the same term, used by two different suppliers, may mean totally different
things. For instance, the definition of a "thin-client" can very from supplier
to supplier.
The incredible pace of consolidation in the financial services industry has
already impacted RDC, as witnessed by the broad product portfolio deployed by
Certegy/CheckFree/Carreker. Tim Sloane, Director of the Debit Service
for Mercator Advisory Group and the author of this report indicates that this
consolidation is unlikely to be over; "Financial institutions should select
a vendor that fits their current and future requirements, while recognizing
that there will almost certainly be continued consolidation in the industry
since there are too many small, undifferentiated suppliers in the market. In
RDC, as in all payments infrastructures, scale matters and it matters a
lot."
Highlights of the report include:
- While still in its infancy, Remote Deposit Capture is being seriously
considered by a majority of banks in the United States.
- On an annualized basis, approximately 13.5 billion items, or 44% of all
check volume are cleared through imaging. The tipping point of the number of
paper checks and the number of imaged checks has almost been reached.
- RDS service requirements range from the basic to the quite complex,
mirroring the demands of their originating users. However the requirements of
retailers, corporations and banks are met by at least one vendor currently in
the marketplace.
- There are too many players in the RDC space with duplicative offerings of
commoditized services. Look for extensive consolidation in the space as
vendors try to wring efficiencies from their services and generate additional
profits by eliminating margin-squeezing competitors.
- With that inevitable consolidation in mind, financial institutions and
merchants can only select RDC providers best addressing their current and
anticipated future needs knowing that a new, larger and more expensive
provider may be in their future.
View Cart
