The Independent Bankers Association of America has narrowed its field of electronic funds transfer processing candidates from 15 to three.

The IBAA wouldn't name the three companies, but observers mentioned four as leading contenders: Electronic Data Systems Corp., Electronic Payment Services Inc., Fifth Third Bancorp's Midwest Payment Systems, and Deluxe Data Systems.

Liam Carmody of Carmody & Bloom, Ridgewood, N.J., believes EDS has the edge. The Plano, Tex., computer services giant, a General Motors Corp. subsidiary, has processing arrangements with some IBAA member banks and "does a ton of processing for credit unions, so they're used to serving small financial institutions," Mr. Carmody said.

Linda Echard, president and chief executive of IBAA Bancard Inc., declined to name the finalists, but said she expects the association will announce a letter of intent this month, and will begin to offer EFT services to its members by July.

"Anyone of them could do the job," Ms. Echard said of the unnamed top three, "but there's one that seems to be a better match strategically right now. It doesn't rule out any of the others."

One industry source said the winner will have to offer a comprehensive set of services: "When you start including home banking, along with ATM- driving and point of sale, the field of players that can provide such a comprehensive solution narrows significantly."

The board of IBAA Bancard, one of the community banking trade group's operating subsidiaries, formed an EFT/Electronic Banking subcommittee and in February hired consultant David Petro to guide the processor selection and strategic development.

"I'm working very hard within IBAA that we address this an electronic banking division instead of just EFT," Mr. Petro said. "Electronic funds transfer tends to mean some very specific and fairly narrow but important functions: the ATM and the card-based transaction sets.

"Electronic banking - the full delivery of services electronically - is going to be one of those great levelers in allowing the community banks to truly compete for business well beyond their limited brick and mortar."

After he completes his work as a consultant, Mr. Petro will be in line to head the IBAA's electronic banking division, Ms. Echard said.

"It's very rare that you find the elements he has in his background in one person, and they're exactly what we need for this," Ms. Echard said. "Not only does he have the technology background and telecommunications background, he has a marketing background (and) has worked with some community banks."

Mr. Petro, 43, has worked a SunTrust's SunBank subsidiary, GTE, and Ameritech, in such fields as electronic banking and marketing management.

"We're just tremendously excited about being able to do this," Ms. Echard said of the new division. "We think we've got a pretty good track record with Bancard and the other IBAA subsidiaries."

So far, about 10% of IBAA's membership, or 500 banks, have expressed interest in using the services, she said.

"To have the IBAA say, 'We've negotiated this contract with gigantic EDS and it'll get you favorable rates, and it'll give you state-of-the-art services,' that means a lot to (member banks)," Mr. Carmody said. "In fact, an IBAA endorsement is pretty effective."

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