MasterCard International raised many eyebrows with its announcement late last week that it intends to acquire BankMate, a St. Louis-based regional automated teller machine network.

Although neither party would comment on the price MasterCard paid for Monetary Transfer System, the company that operates BankMate, industry watchers estimated it at $15 million to $20 million. The company had been expected to fetch only $8 million.

"We are getting involved in ATM/POS/debit processing on a more intimate level," said Ed Hogan, senior vice president of MasterCard. "MasterCard member banks want us to do this."

BankMate, one of the top 15 regional ATM networks, was put on the block by its owner banks -- Boatmen's Bancshares, Mercantile Bancorp, and United Missouri Bancshares -- in early September. At that time, Cash Station Inc., Magic Line Inc., and Electronic Payment Services Inc. were rumored to be among the potential bidders.

Any of those alliances would have made more sense than the MasterCard acquisition, said a source who preferred anonymity. Asked to explain the MasterCard move, he said, "It's an enigma wrapped in a mystery."

Bank consultants theorized that the deal would make sense if MasterCard intended to acquire other regional networks, thus replacing Maestro, its national debit card. However, this scenario does not seem likely. MasterCard defends the acquisition, saying it is a good strategic fit.

"We see MasterCard's role as leveraging its expertise and economies of scale in transaction processing to benefit our members," said John O. Smith, executive vice president of global debit products. Some have speculated that Norman Tice, who is both chairman of the MasterCard board and executive vice president of Boatmen's, played a significant role in the decision.

MasterCard minimized the Tice connection, saying Mr. Tice was excused from all meetings concerning the deal to avoid conflict of interest. Mr. Hogan added that all MasterCard member banks, not just those in the Midwest, would benefit greatly from the BankMate acquisition.

"As MasterCard becomes quite competent with processing this kind of volume, that capability can be used by other banks, even outside the St. Louis area," said Mr. Hogan. "It is in the interest of our bank members to have a full menu of services available from us."

BankMate boasts about 2,500 ATMs and a strong point of sale debit program in six states, including Missouri, Illinois, and Kansas. Although Mr. Hogan said no further deals are in the works, he left open the possibility that MasterCard might align itself with other regional networks.

"Hypothetically, if another network came to us and wanted us to do it, we would think about it," he said. "This is a whole new phase for us; where it goes remains to be seen."

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