Two more banking companies have begun exchanging check images across the network developed by Clearing House Payments Co.'s SVPCO, but they are skipping a step that others have used to validate the system.
National City Corp. and Union Bank of California transmitted their first images across the SVPCO Check Image Exchange Network last week.
The five other banks that use the network have limited their exchanges to checks from fixed lists of customer accounts. In contrast, National City and Union Bank are using routing and transit numbers, which can define bank units down to an individual branch, to determine which checks will be transmitted. Once the two companies approve a routing and transit number, every check from every account within that number will be sent across the network.
Connie Rose, a senior vice president at National City, said its nightly volume on the network is quite low (about 200), because the two companies have no overlapping markets, and because National City is sending only images from its Michigan banking operation.
The Michigan operation has 20 distinct routing numbers, and "we actually opened up an entire bank," but it is one of the smallest of the Cleveland company's five banks, Ms. Rose said.
National City will begin sending images from its other banks to Union Bank over the next 90 days.
National City is processing the incoming images electronically.
Bill Christensen, an executive vice president at Union Bank of California, said it is transmitting images from its California operation, its largest, but not from its Northwest operation.
However, Union Bank is printing out the images from National City as image replacement documents for settlement, according to Mr. Christensen, who said he was cautious about switching from settling with paper IRDs to electronic files.
"We're just tiptoeing into the water. There's a lot more to go."
The small incoming volume from National City made Union Bank more comfortable in connecting to the SVPCO network, Mr. Christensen said. "We knew that when we turned on the spigot, we weren't turning on a fire hose."
Union Bank's parent, UnionBanCal Corp. of San Francisco, is majority owned by Mitsubishi Tokyo Financial Group Inc.
Susan Long, the senior vice president of SVPCO's electronic clearing services, said its network has three other pairs of trading partners: KeyCorp and JPMorgan Chase & Co.'s Bank One are exchanging images; Bank of America Corp. is sending images to Wachovia Corp.; and Wells Fargo & Co. sends images to Electronic Data Systems Corp., which prints them out as IRDs for delivery to receiving banks.
The Federal Reserve banks are also connected to the network.
However, the nightly volume remains small, Ms. Long said; it topped 100,000 check images only last week. On Monday night the network handled 138,851 items.
She praised Union Bank and National City for opening up entire routing numbers to exchange. "They didn't even bother with fixed account tables. That opens the floodgates" to a much faster increase of images. "For us, it's significant, because it means more volume."
Ms. Rose said National City is eager to expand its exchange capabilities. It is in talks with several other banking companies and expects to begin sending images to the Fed in a few months, she said.
"We are in a position to be a little more aggressive," Ms. Rose said. "Our only struggle is finding other banks that are in the same position."
