By Al Edwards, Business co-ordinator
United States Ambassador Sue Cobb speaks to Bank of Nova Scotia Jamaica Limited managing director, William "Bill" Clarke. They were at the Terra Nova Hotel, St. Andrew on Monday, attending the launch of an Automated Clearing House facility for local banks. - Junior Dowie/Staff Photographer
AN AUTOMATED Clearing House (ACH) has been established to accommodate the electronic processing and clearing of cheques among six commercial banks and the Bank of Jamaica. The ACH is a creation of a new company, Automated Payments Limited, a firm wholly owned by the six commercial banks.
The ACH was formally launched on Monday at the Terra Nova Hotel, St. Andrew by Bank of Nova Scotia Jamaica (BNSJ) managing director, William "Bill" Clarke and USAID's mission director, Mosina Jordan. The six commercial banks, The Bank of Nova Scotia Ja. Ltd., First Caribbean International Bank (Ja) Ltd., RBTT (Ja) Ltd., National Commercial Bank of Jamaica Ltd., First Global Bank (Ja) Ltd., and Citibank N.A., together with the Bank of Jamaica are responsible for the creation and enforcement of rules and regulations of the new Jamaica Clearing Bankers Association (JCBA).
The Bank of Jamaica maintains their usual oversight of the overall clearing process. The project to develop the ACH system was funded by the commercial banks with assistance from New Economy Project of the United States Agency for International Development (USAID) and is operated by J.E.T.S. Ltd., on behalf of Automated Payments Ltd., (APL), The ACH, a computerised transaction processing facility set up by the commercial banks to process debit and credit payments, accepts transactions from each of the participating banks and routes them to their destination bank. Previously, banks exchanged the physical cheques and the "paying bank" processed them to create a file which was then used to post funds to respective accounts.
Now, while the banks continue to exchange the physical items, the ACH eliminates the need for the "paying bank" to reprocess the paper items since this work would already have been done at the collecting bank. The ACH instead presents each with a file of their "on-us" cheques which may be posted directly to the accounts.
By removing the redundant processing steps and electronically speeding up the exchange of cheques islandwide the ACH facilitates a reduced "hold period" on Jamaica dollar cheques deposited to commercial bank accounts, a benefit already being enjoyed locally with the reduction of the "hold period" to three banking days earlier this month.
While the system has not completely eliminated the physical exchange of cheques, it allows the bank processing a cheque to create an electronic file and to exchange it electronically with another receiving bank.
The ACH, according to the JCBA, comes against the background of a recognised need to improve Jamaica's payment system. Central to this was a need to reduce the need to process paper cheques that traditionally caused delays in inter-bank transactions.
Similar facilities operating in the USA and elsewhere have had considerable success in facilitating paperless entries in their own countries as well as from one geographic region to another.
In Jamaica, the ACH has been introduced on a phased basis beginning with the inter-bank transfer and settlement of cheques.
In phase two, the ACH will provide direct deposit of payrolls, dividends, pensions and annuities expense reimbursements, etc. It will also allow for the electronic crediting of funds to a customer's bank account.
Also to come, is Electronic Data Exchange (EDI) "the electronic transfer of business information in a standardised, computer-readable format such as the exchange of orders and invoices directly between computers.
Cheque truncation and imaging use of cheques as source information to create an electronic payment at the point of deposit will also be facilitated by the ACH.
The JCBA and ACH represent the latest in a range of co-operative ventures undertaken by the island's commercial banks for the benefit of customers islandwide.
