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SAN FRANCISCO – Federal Reserve numbers may show check volume is on the decline, but results of a survey conducted by Western Payments Alliance indicate the western U.S. will not only process a greater volume of checks in 2003, they also expect investments in the Automated Clearing House and debit card technology to accelerate electronic payments over the next five years. WesPay President/CEO Gerard Milano said the survey “clearly demonstrates that financial institutions continue to proceed along parallel tracks – they’re anticipating greater check processing volume in the short-term, but significant returns on their technology investments in later years in the form of lower-cost ACH and debit card transactions.” The survey of credit unions, banks and thrifts found that 45.9% of respondents said check volume will increase in 2003; another 25.2% said it would remain the same. The survey also found that: * expense reduction is the number one payments issue facing financials – 41.3% ranked it first. Customer or member retention was second (23.8%), followed by check conversion to electronic transactions (17.5%). * payments fraud outscores changing payments technology as the greatest payments risk issue facing financial institutions. Thirty-nine percent of respondents said it was their top concern. Changing payments technology came in at 24.9%. * digital image check technology is already a major factor at financial institutions – 41.6% of the survey respondents indicted they have installed digital image technology. In two years or less, another 28.8% said they expect to have digital technology in place, and in two to five years, another 14.4% plan to implement digital image check technology. Only 11.2% said they have no plans to implement a digital image program. * 73.2% of those respondents who indicated they’ve already implemented a digital image check program said they’ve already begun realizing the benefits. Although changing payment technology came in a distant second behind payments fraud as the issue respondents consider most critical facing financials, findings still show that WesPay members consider technology will transform the payments industry in the intermediate term. ACH and debit card transactions tied for first as the transaction type likely to grow the fastest over the next five years. Web and telephone transactions followed, then image replacement, paper checks and wire transactions, respectively. While respondents said they continue to invest in ACH technology, their investments in check clearing technology are stagnant: 71.5% said investment in check clearing technology will stay the same; 5.4% said it would decline by less than 10%, and 1.5% said it would decline by more than 10%. Only 13.1% said they would increase investments in check clearing technology by less than 10%, while 8.5% said they will increase their investments by more than 10%. When asked about the impact of the “Check Clearing for the 21st Century Act,” 38.9% of the survey respondents said it was very important to the payments industry, and 35.1% said it was somewhat important. Twenty-two percent said they weren’t familiar with the measure, and 2.8% said it was not very important. -

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