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In preparation for the Check Clearing for the 21st Century Act, commonly called Check 21, two Wisconsin firms have acquired companies that specialize in electronic check imaging.
Check 21, which will come into effect on October 28, is designed to improve the efficiency of the payments system by legalizing the use of digital copies of checks in place of the physical documents. Using the substitute check, banks are permitted to take the original check, process its information electronically, and create a completely valid substitute check to deal with other banks.
Banks are not required to start using substitute checks, but the prospect of speedier check clearing has raised concerns over reduced float and the chance of overdraw fees.
Metavante acquires Texas banking firm
Milwaukee-based financial technology firm Metavante
has announced a deal to buy all the outstanding stock of VectorSGI, a banking transaction firm headquartered in Addison, Texas, for $100 million. VectorSGI will become a fully-owned subsidiary of Metavante, with the transaction expected to close in November.
VectorSGI is the developer of Distributed Traffic Agent, a clearinghouse owned by 19 of the nations largest banks to facilitate national image exchange. With DTA, banks exchange image files directly, while summary information moves through an intermediary, allowing for settlement and reporting.
This deal follows Metavantes purchase in May of Advanced Financial Solutions, a check imaging technology provider based in Oklahoma. Metavante executives said that by blending operations from the two, they will be prepared to support the electronic transition that will take place when Check 21 begins.
With this combination, we will have in place the industrys most comprehensive suite of applications to address Check 21 needs and beyond, said Metavante CEO Frank Martire.
Fiserv makes a deal with Virginia check presenters
The Brookfield-based information management firm Fiserv
announced on Monday it has purchased CheckAgain, a provider of electronic check services. While the price of the transaction was not disclosed, the deal is expected to raise Fiservs annual revenues by an estimated $15 million.
CheckAgain uses automated clearinghouse transactions to electronically re-present returned checks, primarily for major retailers. The company has developed a proprietary system for electronically recovering checks that were returned because of insufficient funds, allowing businesses to lower the costs of check collection.
Leslie Muma, president of Fiserv, said the addition of CheckAgain to the Fiserv portfolio will be a major asset in the field of electronic check conversion.
We are at the crossroads of a major change in the way that checks are processed, Muma said. After decades of moving paper all across this country, we are driving very quickly toward converting the paper to electronic transactions.