Most and Honor, two of the nation's largest automated teller machine networks, are making little progress in their six-month-old merger talks.

The two networks, operated respectively by Internet Inc., Reston, Va., and Southeast Switch Inc., Maitland, Fla., agreed in April to negotiate exclusively with one another for 90 days, in the hopes that eliminating distracting overtures from other networks would facilitate prompt completion of a merger deal.

However, that 90-day window closed without an agreement. While talks between the two networks continue, Honor and Most executives sound less and less convinced that a merger will be consummated any time soon.

|Inch by Inch'

"We were shooting to have a deal closed by the end of the year, but I would say now that. that's just not going to happen," said Thomas O. Bennion, president of Southeast Switch.

When asked how the talks were progressing this month, Mr. Bennion replied, "At a snail's pace -- inch by inch."

A merger between Honor and Most would create an ATM network that would dominate the Eastern Seaboard from Washington to Florida, while reaching as far west as Arkansas. The network would consist of 14,000 ATMs ranking it second in size behind California's Star System.

While Mr. Bennion declined to be specific about what caused the talks to stall, several observers indicated that sticking point between the financial institutions that own Most and Honor. is how equity in a new eastern mega-network would be determined.

|Complications Will Develop'

"No one said the [network] consolidation would be easy," said Richard Speer, chairman of Speer and Associates in Atlanta. "Anyone with any brains knows that complications will develop whenever a bunch of banks are asked to agree on something like this."

There are network-specific problems as well. Honor and Most are having trouble resolving differences over the role of the network, observers said.

Historically, Most has been a progressive network that sinks much of its revenues into research and development of new electronic banking businesses. Honor, on the other hand, functions more as a transaction processing utility, concerned mainly with lowering processing costs.

Pricing, Marketing Issues

These differences in basic philosophy have led to disagreements over what pricing structures and marketing strategies would work best in the new network.

Such concerns reportedly have already kept at least one potential mega-network -- Electronic Transactions Inc. -- from getting off the ground.

ETI was to have been a diversified ATM network and transaction processing company combining the electronic banking capabilities of 15 of the Midwest's largest financial institutions.

Talks progressed smoothly for several months but eventually broke down, at least in part because of disagreements regarding how a bank's stake would be tied to the number of ATMs that it drives.

Problems of Self-Interest

While the structure and dynamics of the Honor/Most merger talks differ from those of ETI, several sources said the talks are plagued by similar problems of self-interest.

Disagreements notwithstanding, experts said many influential financial institutions are still very interested in seeing the merger talks bear fruit.

Institutions -- such as Nationsbank Corp. and First Union Corp. -- that are members of both Honor and Most have repeatedly lauded the operational and organizational benefits of reducing the number of network affiliations.

Deal Expected to Get Done

As such, many believe that the networks themselves are actually to blame for the slow progress of the negotiations.

Yet despite all these obstacles, many experts believe an Honor/Most deal will eventually get done. However, like in previous network mergers, a stronger push from some of the financial institutions might be needed before network cultural differences can be resolved.

"We're still optimistic that we can nail this thing together," said Honor's Mr. Bennion. "But it looks like it's going to take more time than any of us anticipated."

Different Perspectives'

"There's no clock that we're working against, so there's not any real sense of urgency here," added David A. O'Connor, president of Internet. "There are a lot of different perspectives we've got to accommodate, and we're going to bring [the talks] along cautiously."

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