Cartel Network said it has signed the first two financial institutions for its point of sale program and is embarking on a second major venture serving automobile dealers.

Cartel said Lockport Savings Bank and Savings Bank of the Finger Lakes in Geneva, N.Y., will participate in the in-store terminal networks of Tops and Wegmans, two of the upstate New York supermarket chains that endorsed Cartel last year.

Joseph E. Wolfson hailed the signings as a milestone for the upstart transaction processing company that he formed in late 1994 to offer retailers an alternative to bank-owed electronic funds transfer networks.

Though "our primary business is serving retailers," he said, the Cartel concept also has appeal to financial institutions.

He is pursuing endorsements and alliance agreements with trade associations in both the retailing and financial communities, and he said he expects significant "strategic partnerships" beyond the one already announced with Affiliated Computer Services Inc. of Dallas.

"Our business is transaction processing, and we believe we can be an effective niche player," he said. That's true, he said, of debit or credit cards, check cashing, electronic benefits transfer, or, as in the new venture, a specialized network called Cartel Auto for loan-related data, card authorizations, insurance and licensing information, and other aspects of auto dealer transactions.

Mr. Wolfson, chairman of Cartel's Buffalo-based operating company, Integrated Delivery Technologies Corp., said that between the bank- supermarket signings and the reciprocity agreement with Affiliated Computer Services, Cartel is "assured of covering operating expenses for 1996."

"That doesn't mean we're making a lot of money," he said last week, "but it's better than not covering expenses, and it means we can grow from there."

Affiliated Computer Services agreed last year to process Cartel transactions as part of an alliance that includes an equity interest in Mr. Wolfson's company, accepting Cartel cards at more than 4,000 ACS-operated automated teller machine and terminal sites, and offering Cartel access to customers of 350 financial institutions served by ACS.

Mr. Wolfson said he has been working feverishly, with a staff still at only six people, including his partner and company president Craig S. McIntyre, toward what he calls "our D-Day," March 26, when ACS throws the switch for live transactions.

"Until then, we still aren't making money from our core business," Mr. Wolfson pointed out.

But that has not prevented him from launching Cartel Auto, which he envisions as an electronic medium for credit applications and related data that dealers customarily transmit by phone and fax. Because it is a "value- added service," Mr. Wolfson said, it conceivably could generate far more than the pennies per transaction that he will make on retail point of sale volume.

Mr. Wolfson had referred only tentatively to Cartel Auto in early publicity about his company. He is taking it to the next level because a Buffalo-area dealership association wants to test the program.

Richard K. Welte, president of the Niagara Frontier Automobile Dealers Association, said it views the concept as "extraordinary.... To my knowledge, this is a first in the United States for the new-car franchised dealer."

As in his supermarket venture, Mr. Wolfson said he expects banks and other car lenders to want access to his transaction utility.

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