Payments Consortium Reorganizes To Improve Information-Sharing Among Member Banks
With so many changes under way in electronic payments, banks need a way to come together to discuss ways to proactively play a role in development.
A major bank-owned payments consortium, The Clearing House, disclosed last week a reorganization intended to slash administrative costs and foster greater information sharing among members. Under the reorganization, the divisions of The Clearing House, each of which had been legally operating as individual units, will be combined under a new banner, The Clearing House Payments Network.
The divisions, which handle a combined $1.5 trillion in payments volume, include the Small Value Payments Co., which is spearheading the drive to exchange check images under the Check 21 law, which goes into effect in October (see FDIC Tells Banks to Get Ready for Check 21). It also includes The Clearing House Interbank Payments System, which processes large-value payments between banks such as foreign-exchange and securities settlements; and the Electronic Payments Network, which handles recurring, low-value transactions such as automatic payroll deposits and Social Security payments.
In addition to reducing overhead, the reorganization will encourage greater information sharing among members about transformations under way in payments; the network has created a strategic payments forum for this purpose. The forum "allows banks to come together to discuss how they can proactively play a role in the evolution of payments," says Jeff Neubert, CEO of The Clearing House Payments Network.
The Clearing House Interbank Payments System is implementing two new networks, one an updated version of its proprietary network and the other SwiftNet, a high-bandwidth, highly secure network for transmitting payments and electronic documents, that banks around the world are planning to start using later this year. Neubert says banks can choose to use either or both networks.
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