Image volume on Fiserv Inc.'s clearing network is already showing strong growth, the company said, and should pick up even more due to its agreement to exchange images with Bank of America Corp.
Fiserv, a Brookfield, Wis., banking technology provider, is expected to announce today that it has signed up more than 600 clients for its Fiserv Clearing Network and is processing more than 30 million electronic transactions monthly using its Virtual Item Exchange software. It does this either through in-house installations for banks that process their own checks or in its own national network of 50 item-processing centers for outsourcing clients.
The company said last week that it is settling checks with Bank of America through the image archive operated by Viewpointe Archive Services LLC in Charlotte. This connects B of A to the small banks that use the Fiserv Clearing Network, while letting other Fiserv customers exchange images directly with B of A, and it creates, in effect, a direct link between the nation's largest retail bank and its largest third-party check processor.
Stephen J. Ward, the division president of market development and product delivery in Fiserv's item-processing group, said that the vendor went live with B of A in February and that Fiserv could use this process to connect to other Viewpointe banks.
"We have developed what we believe is a template for other Viewpointe banks that we can expand," Mr. Ward said, though he would not elaborate on any plan to do so. Eleven major banking companies store check images in the Viewpointe archive, and the Charlotte company that operates it claims that it stores half of the nation's checks.
Fiserv worked with Viewpointe to integrate the latter's "Pointe2Pointe" service with the Fiserv Clearing Network. Pointe2Pointe enables nonarchive banks to exchange check images with Viewpointe banks; Fiserv's network is a low-cost clearing system for the 7,000 institutions that use its technology for core processing or item processing.
Volume for Virtual Item Exchange is growing by about 2.5 million transactions per month, Fiserv said, and is expected to exceed 50 million transactions per month by December.
John G. Feldman Jr., a senior vice president at B of A, said the agreement with Fiserv is an example of "the next stage" of image exchange.
"Where bigger banks had been doing image exchange with one another, and smaller banks had been doing image exchange with one another, now we're seeing the banks and the aggregators coming together and taking image exchange to the next level," he said.
Fiserv said that financial companies can reduce their clearing costs 15% to 20% by using its network.
Fiserv also has image-clearing connections with the Federal Reserve banks and the Endpoint Exchange Network operated by Metavante Corp. "We want to have connectivity through all those various options. We choose the ones to use based on cost and funds availability," Mr. Ward said.
(Fiserv said in 2003 that it would use the SVPCO Image Payments Network operated by the Clearing House Payments Co. LLC, but this connection is not yet live.)
A growing share of checks is clearing as images, without being converted back into paper documents. The Electronic Check Clearing House Organization reports that 61.8% of image-exchange volume cleared by image in January, an estimated 18% of total check volume.
Aaron McPherson, the research manager of payments at Financial Insights Inc., said Fiserv's link with B of A and the growth of its network reflects the growth of image clearing.
"I expect this is putting a lot of pressure on banks that don't accept images to get on board since that's clearly where the industry is going," he said in an e-mail.
