SAN DIMAS, Calif. – Yes the number of checks being written continues to decline, but not WesCorp's item processing volume. The corporate has been able to increase volume by picking up business in new markets such as Utah and acquiring a few smaller item processing shops in California. WesCorp SVP of Payment Systems Tony Kitt says WesCorp is also hoping to pull some new business from the 11 large CUs in the Western part of the country that do their own processing in-house. "In terms of WesCorp, our business model is built around the check. We're not in bill pay. If we are going to stay in the business, we are going to have to add value to credit unions offering checks," he said. WesCorp currently has members in 41 states and Kitt envisions a day when image exchange is up and running that WesCorp could serve CUs in any of those states with item processing services. Today it can't, because it needs to have physical item processing centers near the credit unions. It partnered with BluePoint Solutions earlier in this year to develop WesCorp's IMAGEin product. IMAGEin incorporates all aspects of image exchange, from scanning and truncating the paper check, saving it as a digitized image, sending and archiving the data and images, and collecting the funds and settlement. This is the solution that will drive WesCorp's ability to serve CUs anywhere. Kitt said the only way for it to really make sense to be one of the last standing in item processing is to either become super efficient or increase volumes – or both. WesCorp recently revamped its payment processing operation. Instead of keeping a separate staff of MSRs for electronic transactions (ACH, wires, etc.) and a separate staff of MSRs for item processing, it has cross-trained the 17 staffers so they can work both ends. Kitt said this will be advantageous as electronic transactions start to take over. It's also combining the product development and product management for these two disciplines to better prepare it for electronic transactions. All these factors point to a corporate committed to staying in item processing, said Kitt. He expects there to be consolidation among CU item processors over the next few years as image exchange takes hold. He said image exchange is a somewhat emotional issue for item processing gurus such as himself, because it means retooling the infrastructure WesCorp spent years building. Right now image exchange can be more inefficient than the traditional moving paper method. For example WesCorp had to purchase three high-end printers to print substitute checks for those items that do come in electronically. Ideally substitute checks will go away as item processing takes hold. Kitt said WesCorp will probably have to get rid of a printer or two, but it was a necessary investment. The big question with image exchange is guesstimating when it will take hold. WesCorp is in the footprint of two mammoth banks, Bank of America and Wells Fargo. He said WesCorp expects to be doing full-fledged image exchange with these two banks by second quarter of 2006. Kitt says WesCorp wants to be ready for the increase in electronic transactions, such as ACH. "There's the Wal-Mart example, they take a check, scan it through and send it on through ACH. They give you your check back," said Kitt. More consumers also have direct relationships with creditors like their mortgage company or power company where their payments are made automatically through ACH each month. And of course there are member-to-member transactions as individuals move money with each other electronically. "It (ACH) is a very inexpensive way to move money since it's all batch processed. It's a lot more efficient," than even wires said Kitt. Another major question facing the CU industry in terms of image exchange is whether larger CU item processors will join forces. Many agree smaller ones will be gobbled up, but the larger processors present a question mark. Kitt thinks it's going to make sense for the industry to bring the larger players together, what form that will take, time will tell. [email protected]