The Clearing House, SVPCo., And Related Companies Merge

Six New York-based payments businesses, including The Clearing House, a check-settlement processor, and Small Value Payments Co. (SVPCo.), an electronic transaction processor, will be merging over the next 12 months into a single company, The Clearing House announced today. The merger, which has been in the planning process for the past 18 months, is not expected to change operations or management at the affected companies and will not affect the banks that rely on the companies for payment services, the announcement says. Besides The Clearing House and SVPCo., the other four companies that will become part of The Clearing House Payments Co. are The Clearing House Interbank Payments System (CHIPS), Electronic Payments Network (EPN), Electronic Clearing Services (ECS), and National Check Exchange (NCE). Of these businesses, SVPCo is widely known among observers of the consumer-transaction processing business as the operator of an image-exchange network for digital check images that is going live this summer. EPN, likewise, is well-known as the only private-sector ACH operator in the country. The companies have historically worked in close collaboration and are under common ownership. “For the past several years, these organizations have been managed as separate businesses, while sharing technology, bank owners, and a point of view about the future of payments,” G. Kennedy Thompson, chairman and chief executive of Wachovia Corp. and chairman of The Clearing House, said in a statement. “With the migration of payments to electronic and the synergies between the organizations, it just makes sense to combine our strengths to address the challenges and opportunities collectively.” The new company will operate with a single governing board. Its owners include 15 major U.S. banks and four U.S. affiliates of foreign banks, including ABN AMRO Bank, Bank of America, Citibank, Deutsche Bank, KeyBank, Wachovia, and Wells Fargo Bank. Part of the motivation behind the combination into one company was the belief that a single, unified entity could wield more clout on behalf of banks as the payments business progresses from paper-based to fully electronic systems, the announcement says. “The Clearing House Payments Co. is uniquely positioned to influence the direction of the payments business in the U.S.,” Jeffrey Neubert, chief executive of The Clearing House, said in a statement. In a keynote address at a major trade show in May, Neubert took banks to task, accusing them of ceding too much ground to non-bank competitors in various sectors of the payments business (Digital Transactions News, May 21).