transfer network is calling for new regulations to govern electronic benefits transfer programs. Officials of the Shazam network went to Washington this week to lobby for three proposals that it claims are needed to promote the delivery of welfare payments, food stamps, and other government benefits through automated teller machines and point of sale terminals. Shazam stands alone in seeking the legislation, and it has not yet found a sponsor in Congress. But the network's leaders are undaunted in their belief that federal laws can bring order to an increasingly crowded and confusing field of transaction processing companies, financial institutions, and state-by- state variations in the contracting and procurement process. "We support nationwide EBT, but we are concerned that we are putting way too much power in the hands of just a few government-designated issuers who are now in the position to monopolize EBT and exclude other players who are otherwise active in the (electronic funds transfer) world," said Dale A. Dooley, chief executive officer of Iowa Transfer System, which administers Shazam, the nation's 15th-largest electronic banking network. "To legislate at this point is not right," said J. John Miller, president of Nebraska Electronic Transfer System. "I believe in the free market. The states have to have the right to evaluate all the options and come up with the best solution without regulatory interference." Last week, Shazam's board approved creation of an ad hoc lobbying committee, comprising 45 of its member institutions, some of which were on the Washington trip this week. Shazam's bills would: * Prohibit any EBT contractor from gaining an unfair competitive advantage in marketing point of sale services to merchants. * Mandate interoperability to assure that all EBT cards work in any point of sale terminal. * Authorize the Federal Reserve System to provide a national clearing service for retail electronic benefits transfer transactions that cannot otherwise be processed and cleared at local or regional levels. Government intervention or other centralized rulemaking does not sit well with many on the EBT scene. The National Automated Clearing House Association's recently organized EBT Council has run into opposition from major processors like Deluxe Data and Transactive Corp., though it has the backing of the Federal EBT Task Force and other government bodies that support some degree of standardization. The Iowans are trying to enlist other industry groups for their lobbying crusade. Although Shazam executives would not name those it has approached, the Independent Bankers Association of America is widely believed to be one. The IBAA floated a proposal earlier this year, much like Shazam's, to prohibit any state electronic benefits transfer contractor from having the exclusive right to market debit point of sale services to merchants within that state. "This is a nonissue," said Tom McLaughlin, vice president of government services for Milwaukee-based Deluxe Data, which does EBT processing in several states. "When we go into a state, we notify all the other debit providers and offer certification to any bank or processor that wants to acquire commercial and EBT transactions," he said. He pointed to a recently awarded contract in Utah, where "Concord, Buypass, Arco, the Exchange, Explore, and ourselves all have contracts with merchants to process debit transactions." Concord EFS Inc. of Memphis filed a lawsuit in February accusing Deluxe of antitrust violations in Maryland, where it operates the first statewide EBT system. Concord claimed merchants were forced to use Deluxe for processing transactions. The suit was settled in July and Concord and Deluxe continue to compete against each other in the transaction processing business. But Concord's claims still resonate with Shazam's leaders. "No EBT contractor should be allowed to tie its EBT services to any other processing services," said Mr. Dooley. "There's no way to guarantee that without legislation."
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