Remote Deposit Capture (RDC) is an easy three-step process of scanning, verifying, and depositing a check. It has emerged as one of the best solutions to help merchants reduce the time and cost associated with the manual check deposit process. RDC has become a necessity because paper checks still form one of the most popular methods of payment, currently accounting for around 75% of initial B2B payments. The solution’s benefits have induced almost every bank to incorporate it in order to acquire new customers as well as to retain existing ones.
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RDC growth from 2004 to 2008 has been an impressive 70% per year. The initial adoption was among the banks and financial institutions as branch deposit capture. This was followed by the adoption of the bank’s commercial base wherein the major targeted segment was big businesses where banks held their core deposit and asset base.
As banks turned their focus to merchants, they targeted small and medium size businesses with annual revenue of $1 million to $25 million. While RDC adoption by this market segment lagged behind expectations at an estimated 2% in 2007, this segment of the market is beginning to see value in the solution and adoption is on the upswing, currently around 30%. The big unknown, the micro business segments with annual revenue of $25,000 to $1 million, represents 70% of all printed checks, and promises to be an attractive market if banks can learn how to crack it.
RDC solutions are currently sold through two channels. In the direct sales channel, banks directly sell the solution to merchants, whereas in the third-party channel, solution providers such as Profitstars, Fiserv, Netdeposit act as interface between merchants and banks.
The currently low adoption rate of RDC has created an opportunity gap in the market. The opportunity gap also arises from the inefficient channel of marketing RDC, the failure to deploy scanners to the end-users, and the lack of consumer training and awareness.
As most banks have realized that one size does not fit all, coming up with solution for businesses or merchants with low volume checks or low deposit amounts can create a niche segment for RDC adoption. Thus, innovative product offerings by banks will play a major role in the development of the RDC market. Moreover, the integration of industry participants, i.e., banks, scanner manufacturers, and application service providers, will help all market players provide more effective and cost-saving solutions.
The objective of the report is to provide the most effective channel and message, the target market, and provide an insight into the decision making process. Our report, A New Look at Merchant Remote Deposit Capture, Getting Merchants to Use the Service, will help Financial Institutions gain a better understanding of what they can do now to increase RDC penetration.
Scope of the report
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