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ALBANY, N.Y. – Though Check 21 isn’t a done deal just yet and its effects won’t fully be realized for a few years, the $4.7 billion Empire Corporate isn’t wasting any time laying the groundwork to take advantage of it. In a major deal, Empire has formed an agreement with Small Value Payments Company, LLC (SVPCo) to cooperate on system connectivity for electronic exchange of check data and images between their Empire’s CUs and SVPCo’s financial institution clients. The deal is key because of the major players SVPCo will be able to connect Empire with for image exchange. Formed in 1998, SVPCo is owned by 22 of the largest U.S. clearing and issuing banks. SVPCo owners hold over $2.448 trillion in deposits and represent 59% of commercial bank deposits. “The reason we chose SVPCo is the exchanges we’ll be able to do with the largest institutions in the country. They will bring the highest volume of items. It gives us a piece of that game,” said Nancy Virkler, SVP, Operations for Empire. Virkler said the key with Check 21 and the SVPCo deal is going to be limiting the actual physical movement of checks and also limiting the number of times an image is captured. “You write me a check drawn on Bank of America. I get the check and process it on behalf of our members. I would be able to send the image of the check to SVPCo for clearing rather than forwarding it on to Bank of America. If I didn’t have the agreement we’d have to go directly to Bank of America,” said Virkler. In forward presentment, Empire can just send the images to SVPCo, allowing it to leave the paper checks in its shop and eliminate any shipping costs. “We’re not flying them anywhere, instead the images are sent out according to the arrangement.” Then if another financial wants access to those images, they go to SVPCo for the images. “Given that Empire Corporate and SVPCo clients have a large number of checks drawn on each other, it is critical that we work together to design our image exchange efforts,” said Hank Farrar, President of SVPCo. Not only does SVPCo have 22 of the largest banks, Virkler said they are setting up arrangements with other entities that will give Empire even more connections to exchange images. She said Empire could form more deals like the SVPCo one, but “every agreement you get means another telephone line.” Empire provides item processing for 550 of its member CUs through a network of image-enabled check processing centers. Last year it processed over 167 million in-clearing items on behalf of members. An SVPCo study recently found that electronic check image exchange will reduce industry wide operating costs for check exchange by $2.1 billion annually for financial institutions. Although Check 21 will have much more impact on banks than CUs because CUs have been truncating for years, Virkler said the imaging technology Empire has invested in will get greater use. “We still see great opportunities to speed up the process,” she said. As for hardware requirements of the SVPCo deal, Virkler said it will require some additional hardware on Empire’s end, though she’s not sure on the specifics as of yet. [email protected]

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