By merging with the regional clearing operation Payments Resource One, the National Clearing House Association has picked up both a check clearing business and a regional automated clearing house association.
The merger, announced last week at the Nacha Payments 2007 conference in Chicago, runs counter to a trend of recent years in which other regional clearing outfits have sold off their check businesses but retained their ACH association functions, which typically include training local bankers about that electronic payment system.
One of the most prominent examples of that pattern was the Western Payment Alliances January 2004 sale of its check processing operations to The Clearing House Payments Co. LLC of New York.
Glenn Wheeler, the NCHAs president and chief executive, said those companies are following a different strategy that focuses on specific types of payments. I believe others did what they thought was the right thing to do at the time, he said in an interview Monday.
But the NCHA, of Dallas, is looking at a future in which it will have to handle multiple types of payments.
With all the things happening around payments convergence, we think this gives us some great opportunities to leverage the skills of the two staffs, Mr. Wheeler said. I believe what we are doing is the right thing in this case.
However, in the world of ACH training, where relationships are clubby and memories long, at least one rival is concerned about the combination of PRO and the NCHA. (The merged outfit took the NCHA name.)
PRO provides ACH association services in Arizona, Colorado, Wyoming, and northern New Mexico and operates a check exchange in Phoenix. The NCHA provides settlement services for paper checks on behalf of 19 local check exchanges and for check images on behalf of 4,000 banks across the country.
NCHA and PRO are going to try to solicit members from our folks and others, said Dennis Simmons, the CEO of the SouthWestern Automated Clearing House Association, a regional group in Dallas that serves Texas, New Mexico, and Louisiana. Were not going to shy away from the competition.
Peter Yeatrakas, WesPays president and chief executive, said the 19 regional ACH associations are mostly financed by the same handful of big national banks, so there is little point to the groups competing. He noted that the field is consolidating; there were once 32 regional groups.
Its important to have strong ACH associations, so you can do good training. The big guys are not going to do that, Mr. Yeatrakas said. If it helps them out with one problem or two problems or three problems, its worth it to them. Its not a lot of money.
Mr. Wheeler said the NCHA has no intention of poaching members from other associations.
Another thing that sets PRO apart from other regional associations is its history as an ACH operator.
As the Arizona Clearing House Association and later as the American Clearing House Association, it provided a network and settlement services, but it quit that business in April 2002, because with only 2.8% market share at the time it could not compete with larger ACH rivals.
Visa U.S.A. also got out of the ACH business later that year, leaving The Clearing House (the New York outfit) and the Federal Reserve banks as the only network operators.
Mr. Wheeler said the NCHA has no plans to restart any of those ACH services, in part because it would be too expensive.
