IRD Volume Drops for First Time As Image Clearing Keeps Rising

Image clearing of check payments is nearing 60% of all image-exchange volume, while the total volume of paper substitute-check volume cleared is now falling for the first time, lending credence to arguments by industry observers that conversion to end-to-end image clearing is proceeding more quickly than some bankers had thought. Total image-exchange volume reached 440 million items, up 9% over October and nearly nine-fold over November 2005, according to the latest statistics compiled by the Electronic Check Clearing House Organization (ECCHO). The Dallas-based rules-setting organization for image exchange says the annualized November volume of 5.3 billion items accounts for almost 15% of all check volume cleared in the U.S. Of this total image-exchange volume, paying banks cleared 58.6% as images, with the remainder being handled as substitute checks, the paper printouts of check images provided for under the Check Clearing Act for the 21st Century (Check 21). Banks that aren't equipped to receive images from banks of first deposit can clear the substitute checks, also known as image-replacement documents (IRDs). Paying banks cleared 182.2 million substitute checks in November, down from 186.3 million in October, the first such monthly decline noted since ECCHO began compiling figures in January 2005. It was frustration with the growing volume of this paper that led to recent moves by some major banks to accelerate end-to-end image clearing. One such action was the creation of an organization called the Check-ACH Coaltion, which hoped to move things along by merging image exchange with the automated clearing house. But last week this group announced it was giving up on this idea (Digital Transactions News, Jan. 30), in part because of the steady progress in the market toward image clearing. The ECCHO report also notes that the number of routing-and-transit numbers (R/Ts) opened by paying banks for image clearing grew to 6,046, up slightly from 5,978 in October. The organization estimates this represents some 5,548 financial institutions (some banks control more than one R/T), which means some 34% of U.S. institutions are now receiving image files. ECCHO compiles its numbers from the national image-exchange networks and settlement services, including the Federal Reserve, The Clearing House Payments Co. LLC's SVPCO service, and the National Clearing House Association, which settles for a number of networks, including Endpoint Exchange and Viewpointe Archive Services LLC. Meanwhile, New York-based SVPCO announced Wednesday its January traffic had reached 141.2 million items, up 15.7% over December. SVPCO operates the largest image exchange in the U.S.