MPX, Payments Central Merge in Latest ACH Consolidation Move

The slow but steady pace of consolidation of regional automated clearing house associations continued this week when Kansas City, Mo.-based Mid-America Payment Exchange (MPX) merged with Columbus, Ohio-based Payments Central. The new entity, dubbed Epcor, serves more than 2,300 financial institutions in all or parts of 12 states stretching from Pennsylvania and West Virginia through Kansas, Nebraska, and Oklahoma. MPX and Payments Central started talking about a possible merger two years ago, says chief executive Ann-Marie Bartels, a 21-year veteran of MPX where she had been the top officer since 2000. Epcor's president is Jerry Woessner, who was Payments Central's president and chief executive. The two entities were familiar with each other because their service areas touched at the Indiana-Ohio line. The former MPX “actually shared Kentucky with Payments Central,” Bartels tells Digital Transactions News. “It became clear there were some common interests.” Combining the two organizations will enable them to better serve members by leveraging their staffs and resources, and also will bring MPX's non-ACH services to Payments Central's banks and credit unions, according to Bartels. Those services include education and support for payment cards and checks, particularly remote deposit capture, and also fraud and risk-management support. While Epcor's formal headquarters will be in Kansas City, the Columbus office will remain open to provide member service, training, and marketing support. Epcor has a total staff of 25?20 from MPX and five from Payments Central. No layoffs are planned, though some staffers could get different duties, Bartels says. By Bartels' count, the nation now has 18 remaining regional ACH associations. “When I got into the business, there were upwards of 30,” she says. The associations sprang up in the 1970s to set rules for the new ACH payment system and serve as clearing houses, often locating in cities with Federal Reserve processing centers. At first, there wasn't much “automated” in the ACH, Bartels says. She adds that differing rules in the various ACH regions could inhibit transaction flow between cities, sometimes even between cities in the same state such as St. Louis and Kansas City. The need for a national set of rules led to the creation of the National Automated Clearing House Association, now known as NACHA. Today, the regional ACH associations concentrate on member education and training about ACH rules and issues and increasingly, as Bartels noted, the broader payments world. “They also are advocates for their members on NACHA,” says Nancy Atkinson, senior analyst at Boston-based Aite Group LLC. As advocates, the regionals provide to small and mid-sized financial institutions a counterbalance to the big banks that dominate ACH transaction flows, she says. An Epcor news release says the new entity serves 14% of all U.S. financial institutions and more than 21% of financial institutions affiliated with NACHA through a regional payment association. Another analyst, Andy Schmidt, research director of wholesale banking at Needham, Mass.-based TowerGroup Inc., says the merger of the two regional associations “doesn't surprise me at all because you're seeing those organizations trying to achieve synergies.” In a parallel move, he notes that two of the top originators and receivers of ACH transactions, Bank of America Corp. and Wells Fargo & Co., have established a joint venture called Pariter Solutions LLC to process their volumes (Digital Transactions News, May 27, 2008). “People are trying to get scale, reduce costs,” says Schmidt. The name “Epcor,” which the new not-for-profit association spells in all capital letters, means “electronic payments core of knowledge and support,” according to the firm's Web site. Epcor has a 22-member board of directors whose chairman is Russ Oatman, a senior vice president at First National Bank of Omaha.