Add Chase Manhattan Bank to the membership rolls of the start-up payment system known as the EDI Bank Alliance Network Exchange, or Edibanx.
Chase joins 13 other leading cash management banks in Edibanx, a system operated by the Chicago Clearing House Association that is designed exclusively for financial electronic data interchange.
Financial EDI is the paperless exchange of corporate payments and related information through standard computer formats.
About 50 financial institutions offer financial EDI to their cash management customers, and many believe the services - which in the past have been money losers - are on the cusp of becoming profitable. As such, experts expect more institutions to begin offering financial EDI services in the coming year.
Peter James, electronic payments product manager at Chase, said the bank joined the network because it saw competitive advantages in being able to offer its capabilities.
Chase is fully capable of sending EDI transactions in corporate trade formats over the automated clearing house network, but it wants to ensure that it can offer its customers any service they demand.
"We want to be able to offer them a full spread of alternatives," Mr. James said.
He noted that within the last six months many of the businesses feeling the most pressure to cut operating costs have farmed out labor-intensive operations to their cash managers.
This situation opens the door for EDI services, which cut back on the amount of paper exchanged in the billing and invoice processes.
"We've been getting an awful amount of demand from our corporate customers recently to outsource their payments business," Mr. James said. "They want us to take over the process of printing and distributing checks by sending us a file with all of their Fed Wire, ACH, and check payments."
Chase is the No. 1 originator of automated clearing house transactions, accounting for 187 million items in 1994. It has been in the financial EDI business for nearly a decade.
Despite its membership in Edibanx - which competes with the EDI services offered by the automated clearing house network - Mr. James said Chase will continue to support the corporate trade exchange format used by the automated clearing house.
"Chase is the biggest ACH processor in the country; we intend to stay the biggest," Mr. James said. "We are in no sense backing off from any commitment to the ACH."
Any boost in EDI volume that Edibanx receives from Chase's membership will be welcome; the network processes only about two dozen transactions daily.
Chase's stable of large corporate customers will eventually be added to the Edibanx trading partner directory, an on-line electronic service that plays matchmaker for corporate trading partners.
"I think it's definitely a plus," said Frank Cesario, chairman of the Edibanx management committee and a vice president of product development with Northern Trust Co., Chicago.
"With players like Chase, it broadens the distribution channel in terms of the number of corporations that we are able to reach," he said.
To join the network, the bank obtained a system interface from Dallas- based Sterling Software. Mr. James said the system is being installed and will begin operating in the second quarter.
