Magazine article American Banker

SVPCo's Exchange May Rival the Fed

Magazine article American Banker

SVPCo's Exchange May Rival the Fed

Article excerpt

By revamping its check processing operations, Clearing House Payments Co. LLC hopes to hold down costs and increase scale, and one executive said its forthcoming exchange system could challenge the Federal Reserve.

Today the New York company's SVPCo-Check Services unit is to unveil National Check Exchange, a private-sector system that will allow banks to use any of Clearing House's five regional clearing houses. It is slated to start running April 4.

Jerry Milano, SVPCo-Check Services' senior vice president, said paper checks are being used less and less but will not disappear anytime soon. By consolidating its operations, SVPCo-Check Services could increase its volume, he said.

"That's the way to maintain efficiencies in a declining market," Mr. Milano said. "We're going to wring every drop of blood out of this stone that we can."

The National Check Exchange will consist of Clearing House Payments' New York, Chicago, Los Angeles, San Francisco, and Philadelphia facilities.

Mr. Milano said the five clearing houses now handle checks valued at $3.6 trillion a year for more than 400 banks. Consolidating them will streamline the process and reduce costs, he said.

Banks using the system will find it easier to settle checks with trading partners in other regions, Mr. Milano said.

For example, a bank on the West Coast could convert a check into a digital image and transmit it to New York. The item could then be printed out as an image replacement document and delivered to the exchange's clearing site to be handled just like a standard paper check that had been delivered by airplane. …

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