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Using e-cheques to reduce credit interchange fees: Case study of Carnegie Mellon University

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Facing increasing interchange fees when collecting student payments via credit card, Pittsburgh-based Carnegie-Mellon University sought a solution that would help them avoid rising costs, streamline and integrate with their current process and still satisfy their important constituents. Working with its trusted cash management provider, The Bank of New York Mellon, the University's decision makers concluded that it could meet most, if not all of its goals, for process improvement and expense reduction by introducing e-check — or Web-based ACH transactions — to its portfolio of payment options. Using The Bank of New York Mellon's Masterfile Payment System, Carnegie Mellon University introduced the new e-check option just over two years ago. Since then, the University has been able to eliminate credit card payments altogether, thus avoiding significant interchange fees and transition its payers to other more cost effective payment methods including ACH, Wire and Lockbox remittances. This article explores how Carnegie Mellon University succeeded in migrating many of its payers to e-checks, including a look at how they designed the system, communicated the change to payers, how the introduction of e-checks affected the use of various other payment alternatives, and what they would do differently if given the opportunity

Keywords: ACH; credit interchange fees; e-checks; e-cheques; electronic payments; tuition payments

Document Type: Research Article

Publication date: October 1, 2007

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  • Journal of Payments Strategy & Systems publishes peer-reviewed articles and case studies analysing best practice, emerging issues and new thinking in how to develop a profitable, customer-focused payments strategy. It examines major issues facing the corporate, wholesale and retail payments industry from a business, risk and operational perspective.

    Edited by renowned payments expert Alec Nacamuli and guided by an eminent Editorial Board, each quarterly 100-page issue provides practical, detailed analysis of developments and trends in the payments business, regulation, new entrants and technologies and how to bring them all together to define your payments strategy, as well as actionable advice and ‘lessons learned’ from fellow professionals on how payment processing systems can be leveraged to maximise profitability, security and efficiency and minimise risk. It contains no advertising and no advertorial.

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