Midwest Payment Systems has joined with Atalla Corp. to offer banks a cost-effective way to issue automated teller machine cards in their branches.

The strategic alliance will allow bank clients of MPS, a leading provider of electronic banking and card processing services, to install the Atalla Card Activation and Pin Selection system. It gives institutions the option of issuing cards on the spot, instead of relying on an outside service.

And instead of purchasing the expensive Tandem computer normally required to run the system, smaller banks need only purchase an inexpensive terminal for each branch, which dials into the MPS host computer.

Atalla, based in San Jose, Calif., has a similar joint marketing agreement with Orlando-based Kirchman Corp. that makes the system available with the Dimension core processing software for midsize banks.

The CAPS terminal gives banks the opportunity to issue personalized cards, rewrite the magnetic stripe of a damaged card, or instantly replace a lost or stolen card.

"Most of the large banks in the United States have this kind of system," said Mark Pickens, Atalla's director of telebusiness. "Our alliance with Midwest Payment Systems allows the smaller banks to compete against these large banks."

"Our client banks have indicated that they want this service," said Henry W. Hobson 3d, senior vice president of MPS, a subsidiary of Fifth Third Bancorp in Cincinnati.

"It's a win-win-win situation," he said. "The small banks benefit because they are more competitive. The consumers win because they get their ATM cards more quickly. And everyone wins because of the increased ATM use."

Banks will purchase the terminal directly from MPS for a not-yet-determined charge, and then pay MPS per transaction.

MPS says it is the only electronic funds transfer processor offering this service.

An Atalla spokesman said the company is in final contract negotiations with a large West Coast processor and is talking to several other large ATM organizations.

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