N.Y. Clearing House Spinoff Buying Electronic Check Presentment Rival

By Marjanovic, Steven | American Banker, August 4, 1999 | Go to article overview

N.Y. Clearing House Spinoff Buying Electronic Check Presentment Rival


Marjanovic, Steven, American Banker


The New York Clearing House Association has taken a small but symbolically important step toward consolidation of payment systems.

Small Value Payments Co., a spinoff of the association, has agreed to acquire a Dallas-based company that has been instrumental in the movement toward automated check clearing.

Both Small Value Payments and the company it is to buy, Payment Solutions Network Inc., have developed electronic check presentment and return-item services aimed at lowering the costs of processing the 65 billion checks written per year in the United States.

A combination of the operations would eliminate a type of redundancy among trade associations and other joint ventures that has become an increasing concern among top bankers.

There are also high hopes that a single entity would eliminate fragmentation and be more effective in pursuit of the elusive goal of electronic check presentment.

"The bottom line is that no one wants to send the same people to two different meetings at two different companies and talk about the same thing," said Henry C. Farrar, senior vice president at the New York Clearing House Association and president and chief operating officer of Small Value Payments Co., known as SVPCo. He noted that electronic cash presentment has been promoted nationally for a decade but accounts for only 3% of volume.

The acquisition is expected to close in September. Financial terms were not disclosed.

SVPCo, which was spun off from the New York Clearing House as a forprofit entity last year, provides a multilateral netting service through which collecting banks electronically transmit check information to paying banks. Paper items follow via lower-cost delivery methods.

Since its spinoff, SVPCo has added 10 institutions, bringing the number of member-owners to 22. …

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