SVPCO Hits 1 Million Mark in Average Daily Items for Image Exchange

In an indication of the rapid growth of image exchange, the nation's largest network reports its average daily volume soared 47.3% in February, to just over 1 million items, over the average in January. This represents the first time The Clearing House Payments Co. LLC's SVPCO unit has reached the 1 million mark in daily volume on its Image Payments Network, the image exchange it built and switched on just over a year ago. Total volume for the month hit 19.4 million items, up 40% over January traffic. Interestingly, dollar volume in February declined on both a daily average basis and for the month, indicating the network is handling lower-value checks and perhaps reflecting a greater volume of consumer checks. The initial flow through the network was dominated by commercial checks as banks sought faster clearing for these higher-value items. Dollar volume for the month dropped 9.6%, to $74.4 billion, which works out to an average check value of $3,835, compared to $5,919 in January. “We are extremely pleased with the progress our customers are making and expect this very positive growth trend to continue,” said George Thomas, executive vice president at The Clearing House, New York, in a statement. “At the current growth rate, the number of daily items in the first quarter of 2006 will exceed the total number for 2005.” Helping to drive the growth is the Federal Reserve's decision to start sending check images on SVPCO's network last month, beginning with National City Bank (Digital Transactions News, Feb. 9). The Fed is one of 14 endpoints, including a dozen banks and Electronic Data Systems Corp., linked by the network. Because of this move by the Fed, which previously had been receiving images on behalf of the regional and mid-tier institutions it serves for check processing, “this phenomenal growth rate is likely to continue,” said Susan Long, senior vice president at The Clearing House, in a statement. 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 last month that the volume of images flowing through its network with IRD instructions had fallen to 20% of total traffic.