Two California clearing houses, one electronic and one that processes checks, are jumping on the consolidation bandwagon.

Western Payments Alliance, the regional automated clearing house, is merging with the Bankers Clearing House.

Citing a convergence of paper and electronic payments, the two associations have formed a new entity to be called Western Payments Services Co., or Servco.

The two organizations will remain separate this year as the merger plan is phased in. The educational, marketing, and rule-making functions of the automated clearing house, known as Wespay, will be integrated with the regional check clearing functions.

The aim is "to try and remove some of the silos that we have between checks, the ACH, and other areas," said Peter Yeatrakas, president and chief executive officer of Wespay and now also secretary and treasurer of Servco.

He said the merger is overdue, noting that several other associations, notably the New York and Chicago bank clearing houses, long ago combined check and ACH operations. The California entities had been sharing office space in San Francisco.

The Wespay ACH serves an unusually large geographical area-much of the 12th Federal Reserve District, including Hawaii and the territory of Guam.

"There is a gray area between checks, the automated clearing house, and other payments systems, so we thought it would be good to consolidate both associations," Mr. Yeatrakas said.

The benefits to more than 1,000 financial institution members would include lower costs, more targeted use of dues, and a stronger national voice on payments issues, Mr. Yeatrakas said. Savings would also come from combining legal, accounting, and human resources functions.

Gerard F. Milano, executive director of Bankers Clearing House, is president of the new company. Bankers Clearing House, formed in 1876, clears 5.5 million items worth $4 billion a day for 100 California banks.

Growth in electronic transactions "makes the time right to consider how we can best serve our members," Mr. Milano said. "We need closer cooperation on strategic issues, member communications, and proactive public advocacy for electronic payments."

Given the trend toward "electronification" of checks, the merger "makes a lot of sense," said David Kvederis, a past president of Wespay and founder of Bankserv, a San Francisco-based company that converts checks into ACH debits at the point of sale.

"We've been talking about this for 15 years," said Mr. Kvederis, who was active in Wespay before retiring from Wells Fargo & Co.

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