Calif. Firm Gets Controlling Interest in ATM Company

Cardservice International has purchased a controlling interest in Nationwide Money Services Inc., a Nevada-based deployer of automated teller machines.

The two companies said they have been operating under the current arrangement since July 1, but completed the deal last week. Terms were not disclosed.

California-based Cardservice, an independent service organization, said it made the move to complement its credit and debit processing business.

"We've been looking to get into the cash business for some time, and NMS gives us a jump start," said Chuck Bertzloff, chairman and chief executive of Cardservice, in a statement.

Don Headlund, Cardservice's chief financial officer, described Cardservice as having "closed the loop" in adding cash services.

He said that his goal was to build Nationwide "into the largest privately held nonbank ATM deployer in the United States."

Robert Peisner, the company's chief operating officer, said that the alliance "gives us the financial resources to acquire all the hardware we need. Prior to this, we had to slow the wheel and get financing."

Founded in 1993, Nationwide expects to deploy between 1,500 and 2,500 ATMs and cash dispensers by the end of 1996, and as many as 7,000 units by the year 2000. The top nonbank ATM deployer is Electronic Data Systems Corp. of Dallas, with about 6,000 available.

"That's a good number," said Jim Shanahan, a partner with Business Dynamics in Nyack, N.Y., of Nationwide's projected growth. "You can do a lot with that. That's a real market presence,".

Through the arrangement, Cardservice can purchase or lease ATMs from Nationwide, or go in with the company and its partners to buy machines, or allow Nationwide to deploy the ATMs to Cardservice customers at no cost to merchants.

Decisions like these will be made on a case-by-case basis, Mr. Headlund said.

Cardservice serves more than 80,000 U.S. merchants and processes more than 48 million credit and debit transactions annually, recording more than $3 billion in processing volume. The company is considered one of the fastest-growing independent service organizations.

"They have made it their business to be the provider of choice for high- risk merchants," said Paul Martaus, president of Martaus & Associates in Clearwater, Fla. "They buy the rejects from the banks."

He said high-risk merchants include those that might not process enough transactions or have not been in one location long enough.

For example, he said, "If First Union has a merchant that doesn't fit their criteria, it will sell that referral to Cardservice. "So they're really getting all the referrals for high-risk merchants."

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