Citibank has struck pay dirt again in the growing field of electronic benefits transfer.
The New York bank announced last week that it had won the bidding to provide those services in six western states. Sources estimated the Citicorp subsidiary could earn upward of $120 million in fees over the life of the seven-year contract.
With the Western States EBT Alliance under its belt, Citicorp expands its reach to 27 states, including eight in the Northeast, nine in the South, plus Ohio, North Dakota, South Dakota, and Texas.
Not content to stand on its U.S. successes, the bank has set its sights on providing "financial transaction processing and settlement services on a worldwide basis," said Mark E. MacKenzie, executive director of global cash management services at Citicorp Services Inc. in Chicago.
Mr. MacKenzie said the Citibank EBT platform can be applied in foreign countries where the bank has a presence.
Michael D. Megary, senior vice president of the Medford Group, a Berlin, Md.-based consulting firm, said Citicorp is "sitting in driver's seat" for EBT growth.
The bank modeled its benefits system on its huge bank card business. Mr. MacKenzie's unit processes more than a million transactions daily.
The western alliance will provide the bank with anywhere from 2.5 million to 4.8 million transactions monthly, serving 600,000 families collecting benefits, Mr. MacKenzie said.
Recipients get access to their benefits, such as food stamps and cash assistance, using a plastic card with a magnetic stripe, which is accepted at the point of sale for purchases and to withdraw cash at automated teller machines.
The western alliance states are Colorado, Alaska, Arizona, Hawaii, Idaho, and Washington.
Colorado, on behalf of the alliance, selected Citibank and its partners Lockheed Martin IMS, a unit of Lockheed Martin, and Deluxe Data, a unit of Deluxe Corp., through a competitive bidding process, said Dwight Eisnach, spokesman for Colorado's Department of Human Services.
Although the group sent out more than 100 requests for proposal, there were only four responses. IBM Corp., NationsBank Corp., and Transactive Corp. lost out in this round. Mr. Eisnach said few players in the business are capable of handling a program of such magnitude across a large territory.
Mr. Eisnach said each state would negotiate its own contract, but added "volume buying reduced all of our costs."
The Citibank team will work with local banks in each state - such as Norwest Corp., National Bank of Alaska, Bank of Hawaii, and U.S. Bancorp - to provide ATM and point of sale access.
Mr. MacKenzie would not reveal the exact size of Citicorp's growing EBT business, but said "transaction volume would be sizable."
The bank's immediate plans include working with clients to implement programs on schedule. Mr. MacKenzie hopes to launch the western state pilots in 1997, and the programs are to be fully implemented by 1998. He said the group will meet in 60 days to define the next steps to be taken.
Two states in the southern alliance - Missouri and Alabama - have concluded negotiations of their contracts with Citicorp. Florida has returned to the Southern fold, after a temporary withdrawal.