Star System Inc., the California-based electronic banking network with a reputation for innovation, is taking one successful experiment national.

The San Diego-based company, by some measures the largest regional automated teller machine network in the nation, formed a for-profit company to market a nationwide data base of check information with the goal of reducing fraud against participating institutions.

The new company, called Primary Payment Systems Inc., is at its core an expansion of what was previously known as Star Chek.

"There is such extensive interest being expressed by various organizations throughout the country to license the Star Chek technology, including demand from the financial community, that the formation of a national company to offer these services was the most viable business solution," said Ron Congemi, president of Star.

"This will allow financial institutions, other electronic funds transfer networks, and clearing houses to participate as owners of the new company," he added, "as well as providing these services to their constituents across the nation."

In the Star Chek program, the Star network maintains a file of all demand deposit accounts of participating institutions, including the status of the accounts and their ability to accept debits.

Each night, banks' daily check activity is compared with the file. Then Star sends reports to the banks, showing which checks have been written against closed accounts, accounts that have insufficient funds, or new accounts.

The banks can then decide whether to put a hold on the account a day earlier than they would if the item were routed normally.

"I agree that there's a lot of interest in this service," said Liam Carmody, president of Carmody & Bloom, a Ridgewood, N.J.-based consulting firm. "Star is saying, I'm better than the other check verification services because I'm on-line."

The 12 existing participants in Star Chek, comprising some 20 million accounts, will now be transferred to the Primary Payment Systems program, called Deposit Chek.

With the expansion of the data base beyond the financial community in the western states, this name more accurately describes the service, a Star System spokeswoman said.

Some services that were not a part of the Star Chek program will be introduced by Primary Payment Systems.

For example, the company will offer personal computer and phone inquiry services, enabling financial institutions direct access to the data base from retail branch locations.

Primary Payment Systems also expects to roll out an on-line inquiry service, which will allow checks to be read electronically at a teller or platform location. Requests for check status information will be answered immediately, thereby expediting decisions regarding check holds.

Eventually, Primary Payment Systems will add automated clearing house functionality, so that direct deposits and other ACH transactions can be examined just like checks.

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