Automating the United States payment system

Despite the advent of technology, the United States continues to write 66 billion checks each year while other GlO nations have successfully migrated to electronic payment. Although electronic alternatives promise future savings, the payment system is an evolutionary process, not a revolutionary process. Thus, a considerable cost savings can still be realized by improving the current check clearing process. This work discusses the evolution of the payment system, examines the costs, benefits, and the reasons behind check's enduring popularity. Electronic payment alternatives such as automated clearinghouses, credit/debit/smart cards, and home banking are scrutinized for their benefits and feasibility. Check collection improvement methods such as electronic check presentment and check truncation are also studied. One particular system offers end-to-end process efficiency improvement by combining technologies developed at MIT. This system proposes to capture check images using a high performance digital camera, recognize the courtesy amount using patented technology, and transfer the check images with the relevant account information for settlement with a proprietary secure transfer protocol. The cost savings are realized through reduction of encoding operators, elimination of paper check transportation, reduction of fraud, shortened settlement cycle, and improved customer service. This system shows significant promise as the banking solution of tomorrow, and has received a favorable response from both the Federal Reserve Bank and the private sector service providers.

Department dc:contributor.department

Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

1999

Author dc:creator

• Wang, Shih-Yu, 1976-

Advisor dc:contributor.advisor

• Amar Gupta.

• Electrical Engineering and Computer Science.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/57963

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/57963