ELECTRONIC CHECK EXCHANGE, CLEARING AND SETTLEMENT SYSTEM

An electronic financial transaction clearing and settlement system handles and processes electronic financial transactions on behalf of a set of regional banks and correspondent banks. In particular, each bank participating in the system has a financial transaction server. The financial transaction server of each regional bank performs settlement and transaction forwarding services on behalf of the correspondent banks serviced by that regional bank. The financial transaction server for each correspondent bank transmits and receives electronic financial transactions to and from the financial transaction server for its regional bank. The financial transaction server for a regional bank includes a first interface for receiving electronic financial transactions from clients, a second interface for transferring electronic financial transactions to and from the electronic financial transaction servers of other regional banks, and a third interface to transferring electronic financial transactions to the regional bank associated with the electronic financial transaction server. Each electronic financial transaction has associated therewith a payor, a payor's financial institution, a payee and a payee's financial institution. The financial transaction server for a regional bank also includes transaction logic for determining, for each financial transaction received from a client, whether the received financial transaction satisfies predefined integrity criteria, and settlement logic for processing each received financial transaction by updating at least one account balance associated with at least one of the payor or payee's financial institution, and forwarding the received financial transaction to at least one of the payor or payee's financial institution via the second or third interface.