Cash Station Inc., the dominant electronic banking network in Illinois, is contemplating a change to a new transaction processor.

The network currently relies on Midwest Payment Systems Inc., a unit of Cincinnati's Fifth Third Bancorp, for the technology services that allow the network to switch automated teller machine and debit point of sale transactions between its member financial institutions..

"We are reevaluating our technical options," said Stephen S. Cole, president of Chicago-based Cash Station. "We haven't really come to any conclusions, but our processing is clearly under review."

Cash Station's contract with Midwest Payment expires in October, but the network has an option for a one-year renewal built into its current deal.

Mr. Cole said Cash Station is not dissatisfied with either the quality or the cost of services provided by Midwest Payment.

The request for proposals put out to other providers of switch services is part of the network's responsibility to look for ways to lower processing costs whenever possible, Mr. Cole said.

Deluxe Data Floats Bid

Though Cash Station executives declined to name the service providers who have responded to a request for proposal, Deluxe Data Systems Inc., Glendale, Wis., said it had entered a bid.

Mr. Cole emphasized that Cash Station has not ruled out remaining with Midwest Payment.

The decision to test the processing waters was precipitated by the termination of merger talks between Cash Station and Magic Line Inc., the dominant regional ATM network in Michigan.

The two networks, the 14th and ninth largest of their kind respectively, had agreed to merge in December but canceled the deal earlier this month after reportedly disagreeing over the way equity in a merged network would be distributed.

Midwest Payment Unfazed

Under that failed deal, NBD Bancorp of Detroit, a partial owner of Magic Line, would have taken over Cash Station's processing from Midwest Payment. As such, the news that Cash Station is entertaining proposals does not rattle Midwest Payment, which, according to Bank Network News, is the nation's third largest electronic funds transfer processor.

"The switch is a nice piece of business for us, but in the scheme of things, it's small by comparison with the value of all our relationships with individual institutions," said Timothy D. Ballinger, a senior vice president at Midwest Payment.

Mr. Ballinger said that most of the financial institutions that participate in Cash Station use Midwest Payment to drive their ATMs. This business would be unaffected by any changes Cash Station would make in its transaction switching arrangement.

Cash Station has set no deadline for the decision on its Midwest Payment relationship. Mr. Cole said the network has put out a second wave of requests for proposals.

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