Midwest Payment Systems Inc., a rare breed as a bank-owned transaction processing company, is asserting itself as never before.

The unit of Fifth Third Bancorp in Cincinnati is coming out with new products for merchant customers and gaining market share in electronic funds transfer systems.

"We are the largest EFT processor in terms of volume and we're the sixth-largest merchant-acquirer," said Barry L. Boerstler, senior vice president of Midwest Payment Systems. "We're unique in that we're right up there in both lines," debit and credit.

That puts the operation known as MPS up against two different sets of competitors. On the EFT side-where the company moved up from third place last year, according to Faulkner & Gray's Card Industry Directory -the biggest rivals are Banc One Payment Services and Deluxe Electronic Payment Systems.

In credit card merchant processing, the largest acquirers are Chase Merchant Services, which is a joint venture of Chase Manhattan Corp. and First Data Corp., and National City Corp., parent of National Processing Co.

Another major bank-owned processor is BA Merchant Services, a unit of BankAmerica Corp. Paymentech Inc. is affiliated with Banc One Corp., a result of its merger last year with First USA Inc.

Midwest Payment Systems' "symbiotic relationship" with Fifth Third helps it to straddle these business lines, Mr. Boerstler said. Fifth Third Bank and MPS share computers and "share the costs," Mr. Boerstler said. "We think that gives us a competitive edge."

Another advantage is the ability to cross-sell. Fifth Third's branches refer business to the processing company, and vice versa. "There's a synergy that we take to our clients," Mr. Boerstler said.

"MPS can offer services an independent sales organization could not because they have the bank behind them," said Paul Martaus, president of Martaus & Associates, a consulting firm in Clearwater, Fla.

Independent sales organizations are agents of retailers in the middle of bank-processor relationships.

Mr. Boerstler has worked his way up the Midwest Payment ranks for 21 years. He took the top job in January 1997 and has presided over a plunge into electronic commerce.

Several new Internet-based products have been introduced in what Mr. Boerstler called an "emerging" business line. For consumers, MPS offers BillPayer 2000.

"It's designed for the common consumer, not just the Internet whiz," Mr. Boerstler said. "Our primary focus is on the common guy who doesn't deal with the Internet but still would like to have bills paid in an automated fashion. We don't want to force people to use a personal computer."

Under the service, which MPS has patented, the processor makes arrangements with utility, cable, telephone, and other companies that send regular bills. People provide their checking account numbers to arrange for direct debits each month.

"You can be out of town, and you don't have to worry about your gas and electric being paid," Mr. Boerstler said. "Other people's customers have to take positive payment action."

More than 150,000 people have signed up for BillPayer 2000 since it began last year. Soon they will be able to pay by MasterCard and Visa.

The system is available in Ohio, Kentucky, and Indiana, and the company plans to introduce it "on a more national basis over the next few years," Mr. Boerstler said.

"We didn't want to put a great deal of money into it if our competitors could mimic what we were doing," he said. Since the patent came through last year, "we are the only ones who can deal with multiple merchants, variable payments, and a default payment mechanism."

Another on-line product is MVision, a back-office administrative tool for merchant customers. Introduced in 1997, it gives retailers, supermarkets, and petroleum companies Internet access for transaction, deposit, and chargeback data.

"They can go back and look at an individual transaction, or take information and tie it into a general ledger," Mr. Boerstler said.

Federated Department Stores of Cincinnati is the largest MVision customer so far. "They have essentially automated their back office from a manual environment," Mr. Boerstler said.

Other users include Office Depot and CompUSA.

Midwest Payment Systems is "not alone" in its ability to offer retailers Internet access to account records, but that type of service is still "in its infancy," Mr. Martaus said.

The consultant said that of major merchant acquirers he recently surveyed, 80% provided some level of Internet-based support.

"The theory is this will evolve into a set of services allowing us to buy and sell important kinds of information, as well as to arrange the sale and transfer of goods and services between and among retailers," Mr. Martaus said. "That will be the next iteration."

MPS' core business remains electronic funds transfer. In 1977, four years after the company was started, it entered the shared EFT arena with the introduction of the Jeanie network.

"We have invested hundreds of millions of dollars in the EFT platform," Mr. Boerstler said. The International Business Machines Corp. mainframe system that the company relied on in the 1970s is still in use today and "operates very effectively in a software environment."

For merchants, Midwest Payment Systems offers credit and debit card acceptance and electronic benefits transfer capabilities.

Debit is "something we have going for us that many of our competitors don't have," Mr. Boerstler said. "We have the EFT platform and all the connections to the regional and national networks."

Supermarkets, gasoline retailers, drug stores, and other merchants are enthusiastic about debit cards, Mr. Boerstler said.

"Ten years ago, merchants had never heard of debit, but now it's a significant portion of their business," he said. "They need debit as well as credit, they need EBT, and we can offer all the systems."

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