By all outward appearances, NYCE Corp. is taking a steady, straightforward approach to seeking out growth as it nears what some see as the limits of its opportunities in the Northeast.
The company recently opened a sales office in Chicago as part of its Midwest expansion, and continues to develop an Internet payments product and a person-to-person payments service.
But through it all, the talk for months has been that NYCE Corp. has been soliciting bids, and over time the buzz has grown more specific, settling on one potential buyer in particular: First Data Corp., the Atlanta-based card processing giant.
Neither First Data nor NYCE, of Woodcliff Lake, N.J., has commented on the rumors - and for now, that's all they are. But as NYCE was conducting a "customer summit" on Tuesday, the drumbeat of an imminent deal only grew.
"Everything I hear says it's a done deal, but I'm unable to confirm it," said Michael Strada, the president of Electronic Commerce Strategies, a consulting firm in Atlanta.
One reason for the rumors may be that providing a rationale for each of the parties is so easy. First Data has shown prior interest in acquiring an electronic funds transfer network; reportedly it negotiated in 1997 to buy Electronic Payment Services Inc., the Wilmington, Del., company that owned the MAC network. (Soon after, EPS was acquired by Concord EFS Inc., which has since assembled the largest network in the nation.)
With additional financial wherewithal, NYCE would certainly find its expansion plans easier to achieve. Discussing its midwestern ambitions in a recent interview, vice president Joe Makarewicz described the strategy as "expand and saturate in our primary service area," a territory extending from the Northeast to Wisconsin.
NYCE already has a sales office in Dearborn, Mich., obtained through the July 1999 purchase of the Magic Line electronic funds transfer network. "We want to develop additional business and have a greater presence out there in managing existing business," Mr. Makarewicz said.
He refused to discuss rumors that NYCE might be sold.
NYCE has 217 financial institutional members in Illinois, with 3,719 automated teller machines, and is connected to 7,815 point of sale merchant terminals in the state. Most of those numbers were picked up when NYCE bought the Magic Line network.
Its main competition in the Midwest remains Cash Station, which Concord bought last year. This year Concord also purchased the Star Systems network; the plan is eventually to change the entire Concord network's name to Star.
Many industry sources said that because of Concord's quick expansion, NYCE has found itself boxed in, with little potential to grow geographically. In order to compete with Concord, some argue, NYCE would either have to acquire the few remaining ATM networks out there or team up with another company that can complete with Concord on a national level.
First Data, the largest credit card processor in the country, fits that profile.
NYCE is in a dead heat with Houston-based Pulse EFT Association as the second-largest EFT regional network. Concord is as large as both combined.
"The industry is rife with rumors about NYCE. But that's just street talk for now," said Stan Paur, the president and chief executive officer of Pulse.
Don't expect Pulse to bid for NYCE, however. Although a pairing would even the playing field, Mr. Paur said his network has no interest in buying NYCE.
Mr. Strada worked for EPS, the MAC owner, before forming his consulting company, and was the president of the Honor network of Maitland, Fla., which Star Systems bought before it, too, came under Concord's control.
He said NYCE is contending with some constraints on its growth potential. "There's no geography left to expand into," he said. "MAC almost surrounds them. It's almost like they're locked into their little corner."
Mr. Strada said that in order for NYCE to compete with Concord, which is nearly a national ATM network, the company would have to find a partner "with additional products, national coverage, and deep pockets."
First Data could provide that and it already is in the business in Australia. Like NYCE, First Data declined to discuss the rumors, refusing comment even on the reports of its past interest in EPS.
