The Clearing House Payments Co. LLC, which already operates some of the nation's largest private payment networks, wants to take a more central role in the industry's efforts to address the issues facing those networks.
The New York payments organization and BITS, the technology arm of the Financial Services Roundtable, announced last week that The Clearing House would take over the work handled by the BITS Payments Strategy Steering Committee, and that members of the BITS group would join The Clearing House's Strategic Payments Forum.
BITS said it plans to shift its focus to other technology issues, especially privacy, security, and risk.
R.C. "Rick" Leander, an executive vice president of The Clearing House and the head of its forum, said that numerous issues need to be addressed in the rapidly changing industry, and that the consolidation will make it easier for financial companies to collaborate.
"We have been doing this in a number of venues sometimes the same players, sometimes not," Mr. Leander said. "What we didn't have was one place where the industry could take a step back and think strategically about the market."
To accommodate the shift, The Clearing House, which is owned by 21 large U.S. banking companies, agreed to expand the forum's membership by five, to 17. Representatives of Compass Bancshares Inc. of Birmingham, Ala., SunTrust Banks Inc. of Atlanta, Synovus Financial Corp. of Columbus, Ga., Whitney Holding Corp. of New Orleans, and the Independent Community Bankers of America will join the forum.
Viveca Y. Ware, the ICBA's director of payments policy, said the forum would need a new charter to accommodate the new members and sort out their financial contributions.
"There are lots of i's to dot and t's to cross before it is fully functioning, but strategically it does make sense," Ms. Ware said.
The ICBA had been working with a number of forum members who were involved in BITS and the Check ACH Coalition, which was formed last year to study the idea of clearings checks over the automated clearing house network. Members ultimately found that approach unworkable, she said.
Mr. Leander said mobile payments will be one early area of emphasis for the forum.
The Clearing House and the Financial Services Technology Consortium announced plans in March to study the question of whether standards are needed to promote consumer adoption of payment systems that work through cell phones and other mobile devices.
The preliminary results of that study are in the hands of the sponsoring banks, he said, and he expects to have their recommendations on the next steps within four weeks.
A number of trials are under way involving mobile devices, including downloadable applications, Web browsers, text messages, and contactless chips embedded in cell phone cases.
Daniel Schutzer, the FSTC's executive director, noted that Citigroup Inc. and Wachovia Corp. are pursuing different strategies in the area. "If a Citi customer wants to pay a Wachovia customer, let's make sure the system works. To me, that's going to be vitally important."
The executives of the various organizations noted that BITS historically has drawn its members from the executive ranks of its member organizations to look at big-picture issues in banking and finance, while the FSTC more often relies on operational staff members of its projects' backers to study nitty-gritty aspects of technology.
The Clearing House will continue to work with BITS where their areas of focus overlap, such as cross-channel payment risk and fraud, Mr. Leander said.
Cathy Allen, who had been the chief executive of BITS since its founding in 1996, stepped down May 1 to focus on her private consulting practice, Sante Fe Group. She said the forum will be more bank-centric than the Payments Strategy Steering Committee, since the Financial Services Roundtable draws 20% of its membership from the insurance industry and 20% from securities firms.
The focus of BITS has changed, as well, she said. Conceived in the early days of the Internet as a forum for e-commerce issues, it has concentrated increasingly in recent years, especially since the Sept. 11 attacks, on matters such as data security and protection, along with privacy and regulation.
BITS announced last week that Leigh Williams, a former Fidelity Investments executive, has been appointed to succeed Ms. Allen.
Mr. Williams worked at Fidelity as its chief risk officer, chief privacy officer, and senior vice president public policy. Most recently he has been a senior fellow in the Mossavar-Rahmani Center for Business and Government at Harvard University's Kennedy School of Government. His research focused on public- and private-sector collaboration in privacy and security.
