Citibank in New York, with almost no fanfare, has begun participating in the NYCE network, the regional automated teller machine system originally designed as a counterweight to Citi's ATM leadership.

In a relatively quiet way -- through a customer newsletter -- the Citicorp unit has begun promoting use of its cards in NYCE ATMs, which are concentrated in New York and the Northeast.

Officials of the two companies said Citicorp soon will join major regional rivals like Chase Manhattan Corp. and Chemical Banking Corp. in taking an equity position in NYCE.

Citibank's ATMs Connected

The joint venture that operates the network, New York Switch Corp. in Hackensack, N.J., last week completed the process of connecting Citibank's 1,764 ATMs, allowing them to be used by customers of NYCE member banks.

Conversely, Citi's nearly four million debit card holders now are able to use NYCE's 15,000 shared ATMs, as well as more than 60,000 point-of-sale terminals at 17,000 merchants.

The arrangement ends nearly a decade of on-again, off-again talks between the NYCE organization and the nation's largest financial institution.

Citicorp had for many years held to a go-it-alone strategy, seeing its early, blanket deployment of ATMs as a competitive advantage.

Citibank was the last major holdout from a locally based shared ATM system. Several years ago, it broke tradition by giving its New York debit card holders access to MasterCard International's Cirrus network.

It struck some observers as curious that Citibank made little note of the end of an era.

A Power in POS

The agreement "is not bringing all that much to the bank in the near term," said Susan Weeks, a spokeswoman for Citicorp.

She explained that the bank's decision to join NYCE was driven by a desire to take advantage of the network's growing presence in the debit point-of-sale area, rather than by a need to expand ATM access in the New York area.

"We've always felt our [ATM] distribution was very good in New York," even without NYCE, Ms. Weeks said.

"The POS aspect in the future is what is of interest to us."

Observers said the move has been a long time coming, and Citi's reasons for joining NYCE came as little surprise.

"I think Citibank would have to feel that they would be competitively disadvantaged without [NYCE's] POS," said Liam Carmody, president of Carmody & Bloom, a consulting firm based in Woodcliff Lake, N.J.

Mr. Carmody and others said NYCE is likely to be the dominant POS brand-name in New York and New England for some years to come, making it possible for retailers to accept all cards by posting one decal.

Reinforcing this expectation is the pending merger between NYCE and the Connecticut-based, New England network known as Yankee 24.

The combined organization, which will operate under the name Infinet Payment Services Inc., will focus much of its efforts on becoming dominant in debit cards in the nation's Northeast quadrant.

"I would go so far as to say that probably if NYCE and Yankee 24 weren't getting together to form this new entity that is very focused on POS, we probably wouldn't be doing this," Ms. Weeks of Citicorp said.

When the Infinet deal is completed in the coming weeks, Citicorp will purchase an as-yet-unspecified equity interest.

Also under wraps is the list of other equity owners in Infinet. Observers assume that NYCE's owners will all get a share, but Yankee 24 operates under an association charter with numerous equal members.

The NYCE owners are Bank of New York Co., BayBanks, Inc., Chase Manhattan Corp., Chemical Banking Corp., Fleet Financial Group, Marine Midland Banks Inc., and National Westminster Bancorp.

Other prospective equity partners include First Fidelity Bancorp. and UJB Financial Corp. in New Jersey and Bank of Boston Corp. and Shawmut National Corp. in Massachusetts and Connecticut.

Observers said that just as Citi's participation in NYCE marks the closing of one era in electronic banking, so does the emergence of more diversified companies like Infinet open another.

"We're seeing the evolution of networks from what they have been in the past - ATM networks - to more complete payment system entities," said Gary Roboff, acting president of New York Switch Corp.

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