Three large regional electronic banking networks have expressed interest in equity ownership of Primary Payment Systems Inc., a company that plans to build and market a nationwide data base of check information.
The owners of the Honor, Most, and Cash Station networks have signed letters of intent to explore ownership of the two-month-old company, formed in July by Star System Inc., the San Diego-based regional network.
Other regional networks are also expected to be interested in equity shares in the new company, since it will offer a new way for members to collect fee income, the lifeblood of the automated teller machine switches.
Taking an equity stake would require the approval of each regional network's board.
Although none will say exactly how much equity they will take, each network is allowed to own up to 10% of the nascent company, which aims to reduce fraud. Star System said it is willing to dilute its ownership to 35%, and the Primary Payment Systems bylaws allow for an amendment reducing the stake to as low as 20% after three years.
Honor, Most, and Cash Station said they will solicit participation in the services within their market areas.
"The traffic patterns of check presentment between the various areas of the country make this national organization a perfect fit for any organization accepting checks," said Thomas O. Bennion, chief executive officer of Southeast Switch, the Maitland, Fla.-based firm that runs the Honor network.
Banks that are not equity owners will also be allowed to sign up for the services. Cost has not yet been determined, but will depend on the number of accounts an institution has, the number of items that are checked against the data base, and the number of services the institution uses.
If a bank wants to participate, it will be required to link its demand deposit account system to the Primary Payment Systems data base.