Image Volume Ramp-up in ’06 Beats SVPCO’s Own Projections

A faster-than-expected ramp-up in transaction volume is forcing the country's largest image-exchange network to refigure its growth projections. The Image Payments Network, operated by SVPCO, a unit of New York-based The Clearing House Payments Co. LLC., handled 35.2 million check images in April, up 20.6% from March, according to statistics SVPCO released this week. In April 2005, the network handled just over 1.6 million images. At this rate of growth, the network will be processing 50 million items by June, predicts George Thomas, executive vice president of The Clearing House. “That's six months ahead of where I thought we'd be,” he says, when the company drew up their plan for 2006 late last year. Now, he says, network officials are preparing new estimates for the rest of the year to take account of the higher-than-expected growth. Daily items on the system averaged 1.7 million last month, a 38.7% jump from March, while the average daily dollar value came in at $6.2 billion, an increase of 34.4%. The total dollar value of items handled in April was $125.3 billion, up 16.9% from March. The average value per check was $3,560, continuing a trend toward lower-value items. The average per-check value last month was $3,664. When banks began trafficking images through the network early last year, they started with corporate checks to take advantage of swifter clearing times on the large-value items. Now, though, they're gaining enough confidence in image exchange to start sending consumer-check images through the network, says Thomas. “As banks perfect the process, they're moving those thresholds down to get checks at a lower value,” he says. In image exchange, banks of first deposit send electronic images of checks, rather than the paper originals, through networks to receiving banks for settlement. In cases where banks aren't equipped to settle on images, the images are converted back into paper as so-called substitute checks, or image-replacement documents (IRDs), as provided in the Check Clearing Act for the 21st Century (Check 21), which took effect in October 2004. IRDs have long been seen by experts as dominating image exchange, but SVPCO reported in February that the volume of images flowing through its network with IRD instructions had fallen to 20% of total traffic (Digital Transactions News, Feb. 9). Some 12 financial institutions and the Federal Reserve trade check images on SVPCO's network. The participating banks are: Bank of America, Comerica Bank, Fifth Third Bank, HSBC Bank, JPMorgan Chase Bank, KeyBank, LaSalle Bank, M&T Bank, National City Bank, Union Bank of California, Wachovia Bank, and Wells Fargo Bank.