Banks Begin to Use SVPCO to Handle Check Images for Client Banks

Some of the big banks that connect to the SVPCO Image Payments Network are starting to use the system to send and clear items electronically for other banks they serve in a move that could increase volume on the image-exchange network and allow member financial institutions to earn more fee income. Wells Fargo & Co. and Wachovia Corp. are among those using the network for these so-called correspondent clearing arrangements, SVPCO says, and others are expected to follow suit. “Most everyone I know is looking at it,” says Susan Long, who heads the Image Payments Network as a senior vice president at The Clearing House Payments Co. LLC, the New York-based parent of SVPCO. “I think it's going to be a very popular use of the network.” In these arrangements, a network participant with correspondent banking relationships can receive image files not only for its own routing and transit numbers but for those of its client institutions as well. By the same token, it can send checks deposited with its clients to other network members for clearing. Pricing for the arrangements is up to the connecting banks involved, but SVPCO says a member sending such items on behalf of client banks could earn fee income from them for the use of its network connection, while participants receiving these images can earn fees from the sending member. Because the arrangements involve items for financial institutions beyond the 22 with links to the Image Payments Network, the new image flows are expected to expand volume significantly for what is already a rapidly growing network. SVPCO reported last week its network handled 255.3 million items in September, up from 80.2 million in September 2006. The network also maintains links to two other image-exchange systems, one operated by the Federal Reserve and Endpoint Exchange, a network owned by Milwaukee-based processor Metavante Corp. SVPCO, whose network is the largest image-exchange system in the country, designed its system to handle large volumes of what the company calls payloads, or electronic bundles of check images. This has encouraged connecting financial institutions to look at ways of using the system beyond direct exchanges of check images. “Banks are saying, we've made this strategic investment [in the network], so how do we maximize it,” says Long. As a result, Long says, SVPCO has now “formalized” the correspondent clearing arrangement as a product, with network-produced information sheets on how the arrangement works and how to prepare files to flow through the network, which participants in the network can pass on to client institutions. “We've made it easy for them,” she says. “We're talking about it, saying you can do this through the network.” While she's not prepared to release projections for 2008, Long says it should be a big growth year for the Image Payments Network. “We don't see any slowdown in sight,” she says.