Two payment system organizations with maverick reputations are set to make waves in the increasingly treacherous waters of transaction processing.

Affiliated Computer Services Inc., one of the largest operators of automated teller machines, has formed an alliance with Integrated Delivery Technologies Inc., which is developing payment programs for supermarkets under the "Cartel" brand name that could end up competing with bank-owned networks.

Dallas-based ACS said it will take a minority equity stake in Buffalo- based IDT, making the latter more than just another customer for data processing services.

And in a related move, ACS formed a subsidiary, ACS Merchant Services Inc., to become more active in the merchant servicing end of the payments business. IDT's Cartel products will be arrows in ACS Merchant's quiver as it aims point of sale services at independent retailers, chain stores, the travel and entertainment market, and agent banks.

The alliance brings to fruition a plan that IDT chairman and chief executive officer Joseph E. Wolfson announced late last year to provide payment services to supermarkets. He said he expects Cartel transactions to be flowing within two months.

ATM-network leaders like Richard Yanak, CEO of the New Jersey-based NYCE system, scoffed at Mr. Wolfson, who claimed Cartel would operate explicitly in the supermarkets' interests, and at least would improve the grocers' bargaining power with the bank-dominated debit and credit card organizations.

Mr. Wolfson seems to have struck a responsive chord.

IDT and Cartel mark a return to the funds transfer arena for Mr. Wolfson and his president and chief operating officer, Craig S. McIntyre. They developed one of the early shared banking networks, Metroteller, in the 1970s. Though away from the field for five years, they drew on old supermarket contacts to sign the first Cartel stores - the upstate New York chains Price Chopper, Tops, and Wegmans.

Mr. Wolfson also had a long-standing acquaintance with ACS chairman and CEO Darwin Deason. He headed the data processing arm of MCorp, the failed Dallas-based holding company, which originated another pioneering ATM network, Mpact.

Extending into bank data processing and outsourcing, his strategies were validated when an initial stock offering last November raised $32 million.

Mr. Wolfson said he and Mr. McIntyre had 11 potential partners on their list before whittling it down.

ACS was "the first one we talked to," Mr. Wolfson said this week. "It was important that we pick the absolute best strategic partner, and ACS turned out to be the one we felt most comfortable with."

The companies have "good synergy," said Liam Carmody, president of Carmody & Bloom, a Ridgewood, N.J.-based consulting firm. He and others said ACS's scale and infrastructure are what Mr. Wolfson needs to be a national force.

Mr. Wolfson wants to put the Cartel name on a national network of supermarket ATMs. ACS will jump-start the effort by adding the logo to its MoneyMaker network of 3,400 machines, many of them in food and convenience stores.

He also wants to issue "national retail cards" that could be cobranded with supermarkets, allowing for payments, check authorizations, tracking of frequent-shopper points, and perhaps even electronic benefits transfer services, at participating stores.

ACS is part of a joint bid with Chemical Banking Corp. for the potentially lucrative EBT contract of the Northeast Coalition of States. The bank and processor for the seven-state program are due to be announced in November.

ACS believes Cartel will boost its chances. Cartel's supermarket allegiances extend to a national advisory board that includes Kroger and other industry leaders outside the Northeast.

"The retailers have been a stepchild" in electronic benefits, said Thomas M. Rouse, executive vice president of ACS. Despite their key role in accepting food stamps and other entitlements, "they are never brought in at the beginning," Mr. Rouse said. "That's where IDT makes a difference. The retailers are their partners."

With the alliance sealed, IDT is turning its attention to product development and merchant signings.

"It was difficult to move forward without a processor or definite pricing," said Mr. McIntyre. "We sent out eight or 10 proposals just last week."

IDT is seeking endorsements from trade associations like the Food Marketing Institute, National Retail Federation, and bankers groups, which could mean faster progress than through single-store sales.

Meanwhile, the Cartel sales force will call on supermarkets and convenience stores currently served by ACS.

"That's why the deal was so attractive," said Mr. Rouse. "We share the same vision, and our convenience stores could become part of Joe's organization."

ACS has a marketing agreement for its ATM services with the Fleming Cos., one of the nation's biggest food distributors, and a noncontractual marketing arrangement with McLane Co., a Temple, Tex.-based distributor to convenience stores.

"Now we can introduce them to IDT and that whole new menu of services," Mr. Rouse said.

On top of the MoneyMaker-Cartel ATM branding, "what Joe has to offer adds value to the core merchant processing services we will be offering," said Mr. Rouse.

The Dallas company's new merchant services unit will be a full-service provider of credit and debit processing, including terminal software for various types of retailers, fully customized services where desired, and an on-call help desk.

ACS recruited Terry Hannum, 58, formerly president of Bank of Boulder's merchant processing division, to head merchant services. Another veteran of the Colorado bank, Rusty Shaffer, 45, joined ACS as senior vice president for sales and marketing.

"Merchant processing was a missing link" for ACS, said Mr. Hannum. "Community banks, which are already customers of other services like ATM, may not have the expertise in the intricacies of the card and merchant processing businesses. We want to be able to offer them one-stop shopping."

Mr. Hannum said the time is right for the merchant focus, because the pending merger of two industry giants, First Data Corp. and First Financial Management Corp., may leave an opening for a leaner player specializing in smaller and midsize merchants.

"Big is not always better," he said. "Our goal is outstanding service to the merchants."

Six banks have committed to acquiring at least some of the merchant processing services: Community National Bank, Hondo, Tex.; Seguin (Tex.) State Bank; First National Bank, Uvalde, Tex.; Little Horn State Bank, Hardin, Mont.; First American State Bank, Denver; and State Bank of Fenton, Mich.

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