To promote interoperability among the various image exchange networks, the Endpoint Exchange Network has decided to use the rules drafted by the Electronic Check Clearing House Organization for settling payments with check images.
Mark Craig, the general manager of CheckClear LLC, the Marshall & Ilsley Corp. unit that operates Endpoint, said Wednesday that its member banks previously developed individual agreements with one another. There have been no complaints about that process, but "we understand that the risk of having multiple rule sets is much too high," he said.
The industry's other major image exchange organizations, notably The Clearing House LLC's SVPCo, have already agreed to use the rules established by Eccho, the Dallas clearing house that also helped develop the language used in the Check Clearing for the 21st Century Act.
David Walker, the president of Eccho, said the decision by Endpoint "eliminates one more potential issue between the networks" operated by Metavante and SVPCo. "It does address any legal issues that might be between them."
Endpoint, which went live in 2002, says it now has more than 4,000 participating banks, mostly community banks and credit unions.
SVPCo has commitments from some of the country's biggest banking companies to use the image exchange network it is testing. JPMorgan Chase & Co. and KeyCorp started exchanging files across the SVPCo network in August. Bank of America Corp., Wachovia Corp., Wells Fargo & Co., and Electronic Data Systems Corp. followed in December.
SVPCo has also signed agreements to connect its network to several other major check settlement networks, including those operated by the Federal Reserve Board, Viewpointe Archive Services LLC, and Fiserv Inc., which offers item processing outsourcing services to banks.
Mr. Craig said that as more banks begin using image exchange networks to settle payments, it will become more important for the networks to be able to work together. Imaging "is about to do that hockey-stick curve of growth," he said. "It's going to become very big, very fast, and we need a single rule set," in order to be able to work together.
Mr. Walker said the 300-page Eccho rules apply centuries of payments policies to the industry's imaging technology and cover the liability issues inherent in processing transactions electronically.
Alenka Grealish, who manages the banking group at the Boston market research firm Celent Communications LLC, called Endpoint's decision "a big deal."
For Endpoint, adopting Eccho's rules "is like switching religions," she said. "If this had been an easy thing to achieve, it would have been done six months ago or 12 months ago.
"These kinds of discussions are not easy, because they represent two very different constituencies," Ms. Grealish said. Eccho, which gets some funding from SVPCo, is "the big banks' voice," while Endpoint represents small banks.
Despite the differences in constituencies, "fundamentally, this had to happen," she said. "It basically is building a bridge" between Endpoint and the other image networks so that the banks that participate in one can settle transactions electronically with banks that participate in another.
