NACHA Payments Conference 2006: Three-Way Fight: ARC, Image Exchange and Cards

Which is the better payments technology -- accounts receivable conversion (ARC), check image exchange or cards? Naturally, it all depends on which side of the table you're on.

In a lively, good-natured debate, fans of these three payments choices went head-to-head with each other, extolling the virtues of their technology of choice.

According to Sean Goldrick of Chicago-based LaSalle Bank, ARC is the way to go due to its low cost, efficiency and fast turn-around rate. "ARC is the cleanest format," he said. "It reduces operating expenses, labor costs and overhead for banks and corporates."

Susan Goold of The Clearing House, however, fully backed image exchange. She contended that no matter what some are saying, checks would still be around for years to come. "The check is still the instrument of choice for all markets," she said. "I don't believe we'll have a checkless future because of the sheer volume of checks. The users are there, so let's be efficient about dealing with these million of checks."

Furthermore, at least versus conversion, Goold said image exchange offers more in that the image of the original check is maintained for those who want to see it.

Cards, however, can offer the most convenience, claimed Stan Sienkiewicz of the Federal Reserve Bank of Philadelphia. He pointed to the recent explosion in electronic payments use among consumers, the majority of which are being done with cards. "And talk about ease of use," he added, comparing card payments at the point of sale with the onerous task of writing a check. "Consumers drive payments, and, more often than not, they're choosing cards."

This choice, he said, occurs for a variety of reasons, including reward programs with credit cards and the immediacy of the transaction one has with a debit card. Factor in the growing use of payroll cards, and that is yet another point against checks, Sienkiewicz opined.

Although she claimed ARC was more of an interim technology, Goold said there was certainly enough volume to go around and that it could actually be in the same corner as image exchange. At the same time, she acknowledged there were still some kinks that needed to be worked out on the exchange side, like the printing of image replacement documents (IRDs). "IRDs are a crutch to enable folks to transition to image," she explained. "That's good in a sense. IRDs will continue to be a headache but they'll disappear faster than checks."

As for cards, LaSalle Bank's Goldrick was quick to point out the constant battle within the card industry over interchange fees. "This puts pressure on banks, corporates and consumers," he said. Goold further added to Goldrick's argument, saying that paying bills with a credit card essentially defeats the purpose of doing so since the user eventually has to submit another form of payment anyway.

In the end, it appeared all three technologies would continue to co-exist, at least in the foreseeable future or until the next great payments innovation comes along.