When Holly Merrill took the helm of the Arizona Clearing House Association in May, her predecessor, Paul W. Finch, left her with some words of wisdom.

Don't forget your home life, he said, and be persistent. "If you know you have a good program in mind, you must continue to push, and things will happen."

Ms. Merrill's job - in addition to caring for two young sons - is guiding a 99-year-old organization made up of more than 100 bank holding company members.

The clearing house was formed as a place for banks to exchange checks. It now handles over 25 million local checks monthly, valued at around $8 billion.

But it has since expanded its transaction processing services to become one of the more influential ACH organizations in the country, processing over 50 million payments last year.

"We offer state-of-the art ACH servicing, which involves switching, settlement, plus all the auxiliary services," Ms. Merrill said.

"What I bring to the clearing house is a nice blend of technical expertise as well as an understanding of the marketing side of the business."

Mr. Finch, who has retired to travel the country in a motor home, hired Ms. Merrill in 1986 from United Bank of Arizona to head systems and data security development for the Cactus point of sale network.

Cactus, one of the first successful debit card programs, served as a blueprint for many of today's programs. The network handled 1.7 million transactions per month at its peak. Two years ago, it was sold and merged into to a larger regional debit card network, Explore, which is run by Star System Inc., San Diego.

During her tenure with the clearing house, Ms. Merrill also helped develop comprehensive educational and training programs, and taught at several seminars.

As president and chief executive, Ms. Merrill will draw on that experience as she strives to enhance the clearing house's services. Among her top concerns: the value her organization delivers to members and pricing.

She intends to push the clearing house to search for the perfect blend of service offerings while simultaneously looking for possible merger candidates.

"We are looking at expanding that outside our membership as a general servicer, and also adding ACH services that can be used by the banking community and their corporate customers," said Ms. Merrill.

The services and programs include regional check clearing, direct deposit payroll programs, and automated clearing house processing for member banks. It is one of the three private-sector ACH operators.

The Arizona association, together with the other private networks - the New York Automated Clearing House and Visanet ACH - formed the Private Sector Automated Clearing House Exchange, or Pax, last year.

Pax is an alternative to the 12 Federal Reserve banks, which process some 80% of the nation's ACH transactions. With ACH transaction volumes surpassing 2.5 billion annually, banks are increasingly looking to the private sector for pricing that competes with the Fed.

No Arizona members are yet live on Pax, though Norwest, the nation's second-largest originator of ACH transactions, is gearing up for a September launch.

Converting Cactus members to Explore's systems has kept the Arizona clearing house from putting all its energies into promoting Pax.

But, Ms. Merrill said, "the clearing house is fully intending on maximizing the Pax participation, because it would benefit our members so greatly."

Another initiative involves check truncation at the point of sale. Within two weeks, officials said the clearing house will preside over the first of two scheduled pilots between Allstate Insurance Co., Northbrook, Ill., and First Interstate Bancorp, Los Angeles.

The pilot, which was announced by Mr. Finch last year, endured several delays on Allstate's part, but is now back on track, officials said.

Scott Wisdom, First Interstate's lead ACH product manager, said in the pilot announcement last year that Allstate would truncate the checks of walk-in customers by converting the items to ACH transactions.

First Interstate, through some slight bending of the 10-day prenotification rules, would initiate straight debits to payer banks if Allstate would keep the check, and the payer banks would never have to process those checks.

Another pilot, which was to involve truncation at lockbox collection sites, is on hold because of several unresolved issues. Officials said they could not get around the regulatory rules for written authorization.

In a program with the Arizona State Banking Association, the clearing house is working to further the state's efforts to reduce check fraud.

The program aims to stem check fraud - which hit record levels in 1994 - by using inkless fingerprint identification for check cashers.

The clearing house works "very closely with the ABA and all our members" on this effort, said Muriel Blodgett, a vice president with the clearing house.

With these and other efforts, the clearing house that Ms. Merrill inherits from Mr. Finch is considered by experts to be one of the more progressive organizations in its line of work.

Ms. Merrill has taken up Mr. Finch's battle cry of improving the payment system through technology.

And she plans to continue to heed his personal advice, as well.

"I think the thing that sticks in my mind the most is that he taught me to enjoy what I do," Ms. Merrill said.

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