All-Electronic Check Clearing Keeps Rising As Image Exchange Grows

Checks cleared as electronic images continue to account for an increasing share of all image-based check traffic, even as an industry group works to hammer out a new system to accelerate the conversion to all-electronic check processing. Indeed, The Image Payments Network, an image-exchange network operated by The Clearing House Payments Co. LLC, New York, reported on Wednesday it processed 99 million images in October, up 23.4% over the previous month. The network, the largest such system in the country, had not expected to reach 100 million monthly items until the end of the year. The volume of items cleared at paying banks as images, rather than as substitute checks, reached 74% on the network, officials say, up from 53% in April. At the same time, all-electronic processing continues to rise at all networks. Total image-exchange volume hit 309.4 million items in September, with just under half?49.2%–clearing as images, according to the latest figures from the Electronic Check Clearing House Organization, Dallas. By contrast, networks handled some 32.2 million items in September 2005, of which just 16% settled as images. Also, about 4,692 paying banks, or about 28% of all U.S. financial institutions, had opened 5,190 routing-and-transit numbers (R/Ts) to receive check images for settlement as of September, up from 2,221 R/Ts a year earlier. A rule-setting body for image exchange, ECCHO gathers numbers from the Federal Reserve, The Clearing House's SVPCO unit, and the National Clearing House, which provides settlement for several image exchanges. Helping to drive results at SVPCO in October was the addition of Sterling National Bank to the network, which has begun trading images with Bank of America Corp. The system now has 16 participants as well as a link to the Fed, whose volume through the network grew 40.4% last month. The steady rise in all-electronic check clearing via image exchange comes as a group comprising banks and banking organizations has been working on a proposal to accelerate the process by merging image exchange with the automated clearing house network (Digital Transactions News, May 26). The Check-ACH Coalition, which now claims 65 participating banks and groups, last week released a survey to gather information on whether and how institutions are participating in image exchange as paying banks (Digital Transactions News, Oct 30). One of the group's concerns is the cost collecting banks confront in printing substitute checks, or image-replacement documents (IRDs), for paying banks that are not prepared to clear images. These paper printouts of images are authorized under the 2-year-old Check Clearing Act for the 21st Century (Check 21). According to ECCHO's numbers, some 157 million items cleared as IRDs in September, compared to a volume of 27 million a year earlier.