Deluxe Electronic Payment Systems, a Phoenix-based unit of Deluxe Corp., has begun offering an outsourcing service for automated clearing house processing.

Banc One Corp. and First American National Bank, Nashville, have been testing the service for several months, and Deluxe is now prepared to sell it nationwide.

The climate for such a service is good. Automated clearing house transactions are on the rise, and banks of all sizes are growing increasingly receptive to farming out operations to specialists.

Leonard J. Heckwolf, vice president at Banc One, called the software in Deluxe's service "a potential breakthrough" in ACH technology.

The outsourcing service is part of an effort by Deluxe Corp. to diversify beyond check printing into businesses that have more growth potential. (Deluxe is the nation's leading check printer, and its electronic payments unit supports one of the few private-sector ACH operators.)

There are several factors working in favor of the new service. For starters, many banks feel the need to offer ACH services, and outsourcing can help smaller players to benefit from the economies of scale delivered by pooled transaction volumes.

But Deluxe's ACH service will not be without competition. Checkfree Corp. and Intranet Inc. sell ACH processing services, and several players, including Chase Manhattan Corp. and Norwest Corp., sell software that helps banks run their own processing.

The in-house option is sometimes attractive. For example, NationsBank Corp., which originated a consolidated 131 million ACH transactions last year (excluding transactions from the acquired Boatmen's Bancshares), recently licensed software from Applied Communications Inc., Omaha.

Deluxe opted not to develop software for commercial sale; its software is designed strictly to support the outsourcing business, said Jeanie Morrison, senior sales consultant at Deluxe.

The company also hired consultants whose research concluded the market would be receptive to the new service, Ms. Morrison said.

Banks, she said, are, "struggling with future issues," such as expanding their processing capacity and keeping up with new technology.

"Bankers didn't think their current solutions could keep pace with what they saw in the future," she said.

Ms. Morrison said development of the outsourcing service will pay for itself within year. Deluxe expects it to grow between 15% and 20% annually.

Part of that growth would come from selling its "business continuation" products and services, which give banks a place to shift processing should their in-house systems fail.

Deluxe also may bundle its services with those of the Arizona-based American Clearing House Association, one of the private-sector alternatives to the Federal Reserve's clearing and settlement operations.

Deluxe has provided American Clearing House with ACH switching software and hardware for more than 10 years.

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