Eye on Image Exchange: Volume Quintuples, SVPCO Gains in April

Total image-exchange volume quintupled in the 12 months through March, while the percentage of items clearing at paying banks as images rather than as paper substitute checks grew to 64% from 36%, according to the most recent statistics compiled by the Electronic Check Clearing House Organization. In a further sign of the progress of image exchange, in which banks trade electronic images of checks rather than the paper originals, checks flowing through image-exchange networks now account for about one-fifth of all checks cleared, according to Dallas-based ECCHO. The proportion of volume cleared as images rather than the paper substitutes authorized by the Check Clearing Act for the 21st Century (Check 21) is a closely watched number as banks incur lower costs to process images. Image-replacement documents, as the substitute checks are known, cost banks of first deposit 5.9 cents each to process, on average, compared with 2.7 cents for an item that can be cleared by the paying bank as an image, according to estimates from Atlanta-based Global Concepts. Although the volume of IRDs stood at 221.9 million items in March, an all-time high, image clearing has been growing faster. Some 8,508 routing and transit numbers (R/Ts) now receive images for clearing, up from 2,896 a year ago. That number represents about 41% of all U.S. financial institutions, ECCHO estimates. Under Check 21, banks must accept substitute checks, which are printouts of check images, as if they were the original checks. Banks that have not yet installed the technology to handle images request the paper alternatives. Separately, the country's largest image-exchange network reported on Monday that its monthly volume jumped 450% in April compared to April 2006. The Clearing House Payments Co. LLC's SVPCO Image Payments Network handled 193.9 million items worth $383.6 billion, the New York-based network said. In April, Metavante Corp.'s Endpoint Exchange network began to swap images with SVPCO in a landmark deal that Susan Long, senior vice president at The Clearing House, characterizes as “a game changer for image exchange.” Like SVPCO, Oklahoma City, Okla.-based Endpoint Exchange is a national image-exchange system. It serves more than 4,000 R/Ts, mostly belonging to small and mid-tier institutions. SVPCO's clients include many of the nation's largest banks. The Endpoint link “changes the landscape,” says Long. “The number of endpoints [for us] is extended even further, which is more cost-effective.” SVPCO has a similar link in place with The Federal Reserve's image-exchange system, which accounted for 32.2 million images on the network in April. SVPCO also announced Bank of New York has agreed to join the network, bringing to 19 the number of institutions on the system. In compiling its monthly statistics, ECCHO gathers numbers from SVPCO as well as the Fed and the National Clearing House Association, Dallas, which performs settlement for The Endpoint Exchange and other image-exchange networks.