And no, I do not mean the traffic in getting to work, or being without electricity for 12 hours because of a hurricane or more than 100 hours due to an ice storm - although I can relate to all of these nuisances, some more recently than others!

In this third issue of TPAtlanta, a digital newsletter dedicated to the Georgia Transaction Processing Industry and its people (brought to you by Trans Atlantic Systems), we will expand upon one of our industry's genealogical foundations that we first portrayed in last month's issue.

Have you ever wondered why your seemingly great technological concept or one of your company's market-tested, break-through products does not take off like you anticipated?

Why do some inventions seem to take the world by storm such as the Sony Walkman? And yet others seem to fail, often lying dormant for decades, until their time comes and their use grows quickly, even explosively. The fax machine is a prime example.

Some innovations achieve slow penetration at first, and then their adoption grows more quickly, but later slows down again. In the Transaction Processing world, the use of ATMs seems to have followed this pattern. It took almost 20 years for ATMs to become accepted by a majority of bank customers!

A broad social psychological & sociological hypothesis called the Diffusion of Innovations Theory describes the patterns of adoption, to explain the mechanisms, and to assist in predicting whether and how a new invention will be successful. Rather than expound on this theory in detail, I want to use a real world example as an illustration, hopefully providing some insights that all of us in the Transaction Processing Industry can relate to.

Last month, I referred to a collaborative research project known as The Atlanta Payments Project or the Committee On Paperless Entries (COPE Study), as a major cornerstone for our industry here in Georgia, if not for the entire country, as well. The collective bright minds of this very forward thinking group of TP professionals outlined an approach to make the industry more efficient in processing the myriad of paper-based transactions that seemed to be growing exponentially.

While the basic principles of converting paper documents into digital transactions established by the COPE Study were outlined some three decades ago, it is only recently that electronic transactions have finally surpassed paper as the leading instrument in the Transaction Processing Industry.

Surveys conducted by the Federal Reserve confirmed that electronic payment transactions in the United States finally exceeded check payments for the first time, just two years ago. The number of electronic payment transactions totaled 44.5 billion in 2003, while the number of checks paid totaled 36.7 billion. Previous research by the Federal Reserve found that the number of checks paid in 2000 was 41.9 billion transactions, compared with 30.6 billion electronic payments. Electronic payments consist of credit cards, debit cards and automated clearinghouse (ACH) transactions, like direct debit.

Furthermore, the work of the Atlanta Payments Project team some 30 years ago even served as the foundation for a major legal and regulatory change in the Transaction Processing Industry that is still less than a year old. The Check Clearing for the 21st Century Act (Check 21) was signed into law on October 28, 2003, and became effective on October 28, 2004. Check 21 is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation (see June's TPAtlanta profile of Checkfree). The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving them in paper form. A substitute check is now the legal equivalent of the original, and includes all the information contained on that document. Check 21 is not appreciably different in intent or in form, from what was recommended in the COPE Study a long time ago!

I guess it sometimes takes the course of an entire career for some good ideas to make it to the market place, at least in a regulated industry. We at Trans Atlantic Systems would like to help you get your ideas off the ground a little quicker!

From companies like Alogent which is directly involved in taking advantage of the provisions of Check 21 for their customers, to companies like Vesdia, which deal in micro-payments that were never paper-based in the first place, the Georgia Transaction Processing Industry is full of great success stories.

We invite you to share with us some of your company's experiences in getting products adopted, as we try to learn from one another how to win in the Technology Diffusion game.

Thank you!

Calvin D. Johnson, Publisher
publisher@tpatlanta.com
Trans Atlantic Systems, Inc.