(May 20, 2008) Pariter Solutions LLC, the new company formed by Bank of America Corp. and Wells Fargo & Co. to process automated clearing house transactions for the two banks, has no current plans to add other financial institutions as clients, the new venture’s chief executive tells Digital Transactions News. “Our first goal, one we can’t lose sight of, is that we have to make this work for Wells and BofA first,” says Stephanie Sturgis-Griffin, who comes to Pariter from her post as a senior vice president at Wells. “Then and only then can we turn our attention to adding other financial institutions. It’s easy to get distracted if we don’t make that first milestone.”

Pariter, announced late last week, will begin testing transactions next year. Charlotte, N.C.-based BofA will migrate to the new platform in the fist half of 2010; San Francisco-based Wells in the second half, according to Sturgis-Griffin and Walter Taylor, a senior vice president at BofA who comes to Pariter to serve as chief operating officer. When it goes live, the company will be the nation’s largest processor of ACH payments. According to statistics released on Monday by NACHA, the governing body for the ACH, BofA was the No. 2 originator of ACH transactions in the country in 2007, with 1.42 billion items. Wells ranked third with 1.12 billion. Among receiving institutions, BofA ranked first, with 1.41 billion transactions, while Wells came in second at 687 million.

Each bank owns a half interest in the venture. Pariter, which in Latin means “together,” will rely on an existing Wells platform, enhancing it for use by both banks, says Sturgis-Griffin. The company will draw on resources from both of its owners, including personnel. “There will be a lot structure around how we get services from each unit and how they’re managed,” says Taylor.

Sturgis-Griffin says the venture will bring economies of scale to the two parent banks and better position them to develop future products with a single investment in the underlying processing engine instead of duplicative investments. Such products potentially run a wide gamut, Sturgis-Griffin says. “You see more and more card-based products going through the ACH,” she says. “You hear a lot of talk of globalization of payments. You look at mobile. Both institutions think mobile is going to be important.” She won’t specify the expected savings in processing costs, except to say “the numbers are meaningful for both institutions.”

Pariter may well spend the next several years serving only its two owners, but even if the company adds no other clients, it could have an impact on the Federal Reserve and on the Electronic Payments Network (EPN), the two so-called ACH operators. These two entities (EPN, the only private-sector operator, is a unit of New York City-based The Clearing House Payments Co. LLC), handle inter-bank, or non-on-us, transactions. By handling these transactions for both Wells and BofA, Pariter would remove a significant chunk of volume for the operators. “It would mean there would be a reduction in volume to EPN and the Fed,” says Sturgis-Griffin. “BofA and Wells are in a unique situation in that there’s enough volume for it to be significant.”

There could also be an impact on NACHA, which last year began collecting a network fee on inter-bank payments (Digital Transactions News, Feb. 5, 2007). The likely extent of that effect, however, is not yet known. “We haven’t tackled that subject,” says Sturgis-Griffin. “That’s TBD [to be determined]. The network fee is recent. I personally feel [the impact] will be nominal.”