Banctec Inc. is teaming up with Tandem Computers to sell item processing software and hardware to banks in China.

The two companies have packaged an item processing system that combines Tandem's S4000 computer servers and Banctec's reader/sorter equipment and processing software.

Banctec, a Dallas-based provider of computer software and equipment, has agreed to use Tandem, a Cupertino, Calif., computer manufacturer, as its sole distributor in China. Terms of the agreement between the two companies were not disclosed.

Tandem has experience in China as a participant in a government project to build a national automated teller machine network, said Norman Goldberg, vice president of financial services industry development at Tandem.

Most Chinese have gained only recently access to checking accounts and credit and debit cards, said Mr. Goldberg.

But China has begun to build a modern banking infrastructure in anticipation of broad consumer acceptance of automated teller machines, smart cards, and other electronic payment services.

Executives at Tandem and Banctec anticipate that growth in the use of consumer demand deposit accounts will translate into higher check volumes over the next decade.

"As China's economy and financial industry flourish, banks are finding themselves with more paper checks to process," said Jerome Brown, director of Banctec Asia-Pacific.

The Chinese government is operating 11 pilot programs in cities throughout the country to gauge consumer acceptance of ATMs and other services.

Tandem, which makes fault-tolerant computer systems considered ideal for real-time transaction processing, holds eight of those contracts, said Mr. Goldberg.

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