The DCT Pilot enables financial institutions to truncate low-value consumer checks and collect them as ACH debits. Responding to an industry need to handle deposited checks more efficiently and at a lower cost than standard check processing, the pilot relies on existing infrastructure, using the ACH Network's truncated check ("TRC") Standard Entry Class Code.

"Financial institutions have long been interested in implementing more efficient procedures that will streamline the check process, and the DCT Pilot will explore one important alternative," said Janet O. Estep, NACHA president and CEO."DCT literally could transform the collection of low-value consumer checks by removing them from the payment cycle at the point of deposit, and the pilot will assess DCT's benefits moving forward."

NACHA structured the DCT Pilot to identify and quantify cost savings for both originating and receiving financial institutions and determine any customer impact. During the pilot, NACHA will collect data from all participants to assess these factors and to determine next steps for developing a full ACH Network check truncation application.

Currently, six financial institutions have officially signed agreements to participate in the pilot: Bridge Community Bank, Mechanicsville, Iowa; Community Savings Bank, Edgewood, Iowa; First National Bank of Cold Spring, Cold Spring, Minnesota; First State Bank of Kensington, Kensington, Minnesota; Mount Vernon Bank & Trust, Mount Vernon, Iowa; and Sandy Spring Bank, Olney, Maryland. Embraced by community banks and attractive to financial institutions of all sizes, the DCT pilot leverages the core strengths of the ACH Network, specifically its efficient processing of payments.

"Community banks are nimble. This allows them to drive innovation, evolve as the industry does, and quickly respond to new opportunities," said Cary Whaley, vice president, payments and technology policy, Independent Community Bankers of America (ICBA). "Bridge CCommunity Bank demonstrates that point as a driver in the DCT pilot."

"Retailers have embraced the conversion of checks to ACH to simply save money. The DCT Pilot demonstrates that banks have the same ability to grab this savings on low-dollar consumer checks," said Bob Steen, chairman of Bridge Community Bank."Small checks are the vast majority of checks presented, and the cost of an ACH item versus a forward check image is easy math. Virtually all financial institutions can send and receive checks and ACH items, and DCT merges the two for an easy business case."

ACH unit clearing costs are one-half to one-third the cost of clearing paper checks. In analyzing a more common mix of image and physical check clearing, collecting banks still can save around $0.07 per item compared to paper and image clearing alternatives.[1]

Nearly every low-value consumer check that can be converted electronically qualifies for DCT. Checks eligible for DCT include those that do not bear auxiliary on-us fields and are not on the list of ineligible items detailed in the NACHA Operating Rules.