Electronic Check-Clearing To Become More WidespreadElectronic Check-Clearing To Become More Widespread

Like early automatic-teller machine networks that were incompatible with one another, banks offering electronic check clearing today face similar challenges of interconnecting with other banks. Viewpointe Archive Services LLC, a bank-owned venture that archives more than 60% of all checks written in the U.S. each year, recently established a connection with two other aggregators that will allow thousands of banks to exchange check data and images electronically.

Fiserv Inc. signed an agreement to start using Viewpointe's Pointe2Pointe service, which lets any bank send and receive electronic check images from another bank. Under the agreement, Viewpointe's and Fiserv's banking customers will be able to exchange checks electronically without having to create individual contracts. "Interconnectivity is critical in terms of this check-processing transformation from paper to electronic. So, we want to connect to as many end points out there as we possibly can," says Lou Buglioli, CEO of Viewpointe.

Banks already have legal authority to use images of checks instead of paper under the Check Clearing for the 21st Century Act, known as Check 21. But unlike exchanging a paper check, a check image requires a legal agreement between banks, which can take a long time due to exceptions and how to get the proper credit back to the customers.

In the past, Bank of America could exchange check images only with large banks that were connected to Viewpointe's network, but striking bilateral agreements with smaller banks was unrealistic since they were part of separate networks, operated by Fiserv and Endpoint Exchange, says John Feldman, senior VP of image transaction and payments at Bank of America.

Now Bank of America will be able to send and receive electronic images from smaller banks. "We can exchange all our transaction electronically not just a portion of our transactions," Feldman says.

J.P. Morgan Chase and SunTrust Banks are among other large banks that use the Viewpointe's check-imaging service. The most recent addition is Wells Fargo and Co., which plans to move its internal check image archive over to the Viewpointe platform by the middle of 2006. The companies are involved in an ongoing effort to change how the nation's banks process checks.

Viewpointe's agreement with Fiserv comes on the heels of another recent partnership with Endpoint Exchange LLC, a competing provider of image-based check processing. The Metavante Corp. subsidiary provides services to over 4,000 financial institutions in the U.S. through its Endpoint Exchange Network. Connectivity between Viewpointe's network and the Endpoint Exchange Network will create a gateway for large volume exchange of check images, the companies say.

Bank of America already has started exchanging check images with several smaller banks, including Sterling Savings Bank of Spokane, Wash., which is an Endpoint Exchange customer. "We were not exchanging with smaller banks before," says Feldman, "so this is a pretty big achievement that will drive momentum of electronic check clearing."