Liberty National Bank and Trust Co. has formed a new company to provide payment system services using a unit of United Parcel Service.
The new company, called Liberty Payment Services Inc., is scheduled to open in January and offer check clearing services to financial institutions nationwide.
"We see this as an opportunity to leverage the bank's longstanding reputation in check clearing services on a regional level and expand it nationally," said Malcolm Chancey Jr., chairman of Liberty National and its holding company, Banc One Kentucky Corp.
"This new organization will allow us to utilize new technologies and the transportation capabilities of UPS to offer better service to our existing customers while providing the foundation to attract new ones."
The UPS unit, UPS Worldwide Logistics, will manage the transportation of the checks from Liberty Payment's customers to a central processing site in Louisville, Ky.
The Liberty Payment site, situated next to UPS' air operations facility at the Louisville airport, has been designed to take advantage of new technologies, such as electronic check presentment and future payment systems.
"Two years ago, we initiated a study to see how we could utilize UPS to transport physical items in order to provide same-day settlement," said W. LeGrande Rives, executive vice president of Liberty National Bank.
"What we came up with is a seamless system that moves items from the receiving bank to the paying bank through Liberty while meeting regulation guidelines. We provide the processing while UPS provides the transportation."
UPS Worldwide will arrange pickup of the checks from banks throughout the U.S. as late as 10 p.m. and transport the items to Louisville for sorting and processing.
"Basically, we have gone outside of the UPS' standard delivery services in order to meet the bank's requirements," Bob Prugar, vice president of Louisville operations for UPS Worldwide.
"To insure the packages get to the right place at the right time, we will manage a network of couriers outside of UPS to make the deliveries."
Mr. Rives said Liberty Payment plans to offer a product line called "Liberty Clear" to give customers different service options to meet clearing needs.
"Liberty Clear offers customers the ability to chose which product best fits their needs and take advantage of the service while reducing costs," he said.
The main product in Liberty Clear is a service called "Same Day Clear," which offers customers the ability to clear more than 160 endpoints with same-day settlement while adhering to the guidelines created by the Federal Reserve Board.
Although officials at Liberty would not be specific on costs associated with the company's formation, Mr. Chancey said he expected a return of 30% or better on an investment he placed at "millions of dollars."
Liberty National Bank and Trust Co. is the lead bank for Banc One Kentucky Corp. with assets of $3.8 billion as of June 30.