Bank of America, Wells Fargo Form Payment Processing Joint Venture
Wells Fargo & Company (NYSE: WFC) and Bank of America (NYSE: BAC) today announced the formation of a joint venture to operate a single, combined automated clearinghouse (ACH) platform for both companies and their clients. The new entity, called Pariter Solutions LLC, will be the country’s largest processor of ACH payments. Financial terms were not disclosed.
Through joint venture, the two companies will combine their strengths in advanced processing technology and high payment volumes to create a single, more efficient platform. It will also facilitate greater investment in innovation to deliver added value to clients through increased speed, broader product capability and capacity for higher volumes of cross-border payments.
An ACH payment is a mechanism for electronic funds transfers such as direct deposit, direct payment, business-to-business payments, e-checks, e-commerce payments and tax payments. Annual electronic payment volume doubles every five years, according to NACHA, the Electronic Payments Association. In 2007, nearly 14 billion ACH payments were made.
Ownership of Pariter Solutions will initially reside with the founding partners, Wells Fargo and Bank of America. Stephanie Sturgis-Griffin, a senior vice president at Wells Fargo, will be CEO of Pariter Solutions. Walter Taylor, senior vice president at Bank of America, will be chief operating officer. The company’s board will consist of the CEO and one executive representative from Wells Fargo and one from Bank of America. Payment processing operations are expected to begin in late 2009.
“Pariter Solutions is committed to finding innovative ways to deliver core business services,” said Sturgis-Griffin. “This new shared services provider will deliver high quality and enhanced payment processing capabilities that reflect significant efficiencies of scale. It is an important step toward payment convergence and efficiency in the industry.”
Bank of America and Wells Fargo top the ACH payments rankings, according to NACHA. Bank of America is first for receiving payments, and Wells Fargo is second. They rank second and third, respectively, for originations.
“Pariter Solutions breaks down traditional, proprietary processing models,” Sturgis-Griffin said. “Collaborating on market-leading payment capabilities and product solutions is the right thing to do for our shareholders and customers.”
Pariter (Latin: “together”) will combine the payment processing capabilities and infrastructure of Wells Fargo and Bank of America. The company will have offices in San Francisco and Charlotte, North Carolina.
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