SVPCo.’s Image Exchange Goes Live with KeyBank, Chase

A network built by New York-based Small Value Payments Co. (SVPCo.) to allow banks to exchange check images has begun operations with exchanges between KeyBank and J.P. Morgan Chase. The network began with volume at a “controlled” level to allow each bank to test operations, according to an announcement from The Clearing House, SVPCo.'s parent company. Volume is expected to build steadily between the banks, and more institutions are expected to go live on the network in the coming months. “We expect a number of other SVPCo. owner banks and aggregators to start exchanges shortly,” said Susan Long, a senior vice president at SVPCo., in a statement. Some of the biggest banks in the country, including Bank of America, Citibank, and Wells Fargo, are owners of The Clearing House and are likely to trade check images through SVPCo.'s new network. Altogether, these banks control 58% of all U.S. commercial bank deposits and more than 60% of the estimated 41 billion checks written annually in the U.S. Earlier this year, SVPCo. projected volume of 200,000 images a day on its network this year, building to 6 million next year and 14.4 million in 2006 (Digital Transactions, May-June 2004). With its initial flow of image volume, SVPCo. joins Endpoint Exchange, an Oklahoma City, Okla.-based network owned by Metavante Corp., Milwaukee, as the only national image-exchange networks in operation, though at least two others, including one operated by the Federal Reserve, will switch on shortly. Earlier this year, SVPCo. expected its network to go live in June, but delayed the launch to accommodate merger-related operations issues among some of its banks. In image exchange, banks send electronic images of checks rather than the paper itself through a network to payor banks for clearing and settlement. Banks began working on image-exchange networks in earnest after the Check Clearing for the 21st Century Act (Check 21) was signed into law last year. This law, which takes effect Oct. 28, encourages check imaging by conferring on so-called image-replacement documents?paper printouts of check images?the same legal status as the paper originals. Banks can connect to SVPCo.'s network directly or through the SVPCo. gateway. They can also link to the exchange via correspondent banks, check processors acting as aggregation nodes on the network, and the Federal Reserve.