Deluxe Data Systems Inc. and Concord EFS Inc. have settled a lawsuit that had put a cloud over the future of electronic benefits transfer programs.
Concord, a Memphis-based transaction processing company, filed the original suit on Feb. 8, 1993.
In it, Concord charged Deluxe, a transaction processor, with violation of antitrust laws in carrying out a contract to handle Maryland's EBT program.
Industry observers expressed concern that the Concord lawsuit against Deluxe would put the brakes on electronic benefits transfer, which is in its infancy.
With electronic transfer, recipients of government benefits are issued cards similar automated teller machine cards and receive their payments through ATMs or point of sale terminals.
In a statement released last week regarding the settlement of the lawsuit, James G. McGowan, president of Deluxe Data, said that all disputes were resolved with Concord and that both companies will continue to compete against each other in the electronic funds transfer processing market.
Concord officials refused to comment, and neither party would disclose terms of the settlement.
The suit contended that Deluxe had monopolized the electronic funds transfer business in Maryland grocery stores.
Maryland had contracted with Deluxe in 1991 to receive EBT processing services for six years. The contract called for Deluxe to install POS terminals in grocery stores free of charge. When Concord filed its original suit, Deluxe had already installed 9,000 of the terminals, representing what a spokesman characterized as a "majority of the grocers" who would end up participating in the program.
In its lawsuit, Concord claimed that Deluxe had forced the grocers to agree to use only Deluxe for processing, thus allowing the company to get a jump on the competition just when point of sale automation of the grocery store industry was heating up.
Later that year, Concord filed a similar suit against Deluxe, citing its business practices in New Jersey.
The New Jersey suit was dismissed several months ago, said Mary Kleismet, who works in Deluxe's legal department.
Deluxe, working alone or with business partners, handles electronic benefits transfer processing for Maryland, New Jersey, Utah, Massachusetts, and New York.
Under the terms of most of these contracts, Deluxe processes the transactions, trains recipients and state agency staff, and provides the necessary equipment and cards to state offices for distribution.
The subsidiary of St. Paul-based Deluxe Corp., is said to be one of the companies interested in picking up the benefits transfer contract for a seven-state coalition in the Northeast.
The seven states - New York, Massachusetts, Connecticut, Rhode Island, Maine, Vermont, and New Hampshire - have issued a request for proposals and expect bids by Sept. 14.
Deluxe would not comment on the settlement of the lawsuit, nor plans to bid on the huge benefits transfer project.