NEW ORLEANS - The New York Clearing House Association has developed PC-based software to help small and midsize banks embrace electronic data interchange.

The software, unveiled this week at the annual National Automated Clearing House Association conference here, is meant to provide an affordable way to handle the remittance data that accompany business-to- business electronic payments. Banks process such data as a cash management service for corporate customers.

In financial EDI, the receiving bank gets remittance information that tells it the purpose of a payment, which can then be reconciled with the appropriate invoice and applied to the appropriate account.

The software, called ACHRedi, will give financial electronic data interchange a much-needed boost, according to officials at the clearing house. Only a fraction of the nearly 11,000 commercial banks in the country have committed the necessary resources to offer financial EDI services.

"Most financial institutions just cannot handle the financial information that flows along with the payment," said George Thomas, a senior vice president at the New York Automated Clearing House.

Mr. Thomas said the clearing house group soon will test the service with a handful of customers before starting to market the product. Suffolk County National Bank of Riverhead, N.Y., should install the necessary software within a month, Mr. Thomas said.

Once installed, the software will allow receiving depository institutions to translate remittance data written in long streams of digits into human-readable reports and computer-readable files, said Teresa A. Corrigan, the manager of personal computer support for the New York association.

Banks take that translated information - including data about the purpose of payment, adjustments, and discounts - and fax or electronically send it to their corporate customer.

Fellow clearing house organizations and service providers noted a need in the market for such a product.

Card Establishment Services Inc., a card processing company recently acquired by First Data Corp., introduced a similar system, called Translink, earlier this year.

In addition, the national association itself enlisted MCI Communications Corp. in December to develop a similar low-cost remittance-handling service for smaller institutions. MCI, in turn, forged an alliance with Maxxus Inc., a cash-management software maker, to develop this service, which company officials said they hope to pilot by the second quarter of this year and roll out generally by the following quarter.

The telecommunications company was selected from a field of 14 that bid for the multimillion-dollar contract after the national association announced in April 1994 that it was looking for a vendor to develop such a service to foster growth on the automated clearing house network.

Mr. Thomas said that the New York association was not among the companies to submit a proposal.

But he said that MCI's service may not be the best option for all smaller institutions. And the widening array of services offered by these companies should encourage more banks to embrace the use of electronic data interchange.

The MCI-Maxxus service is expected to cost a bank $60 a month with a cap of 10 companies, Mr. Thomas said.

The service being promoted by Mr. Thomas' clearing house group would be priced at $30 a month, and would not limit the number of participating companies, he said.

Although the New York Clearing House Association product would lack certain capabilities available on the MCI product - such as the electronic mail service that can be used to receive the remittance information - Mr. Thomas said that ACHRedi should appeal to many institutions both on the lower and higher end of the desired target market.

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