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ARLINGTON, Va. – The merger agreement between EFT giants Concord EFS and First Data could dramatically alter the overall ATM and EFT market, but industry analysts caution that a lot more has to happen before the deal is finalized. First Data, based in Denver, announced on April 2 that it intended to purchase Concord EFS for $7 billion. Concord EFS owns the STAR ATM Network and last made news among credit unions in mid-January when it offered to purchase the Florida-based Credit Union 24 ATM Network for a reported $30 billion. Credit Union 24 backed out of that offer after the 60-day letter of intent lapsed. The chief obstacle to the deal that industry executives and analysts cited was the deal’s potential anti-trust problems. If it went through, the merged Concord/First Data entity would control 75% of debit transactions that require a personal identification number for authentication, according to Dennis Lynch, president of the NYCE Network, which is majority owned by First Data. Lynch, speaking at PSCU Financial Services’ 2003 Annual Conference in Orlando, Florida, argued that regulators would focus not on the relatively narrow market for PIN-based debit transactions, where the anti-trust implications would loom large, but pay attention instead to the larger overall payment industry. But Stan Paur, CEO of the Houston-based PULSE Network and long-time industry observer, said the drive to look at the anti-trust implications in the deal would come from merchants, and not regulators. Merchants are already expressing uneasiness about having to work with only one company when negotiating PIN-based debit arrangements, Paur explained. “These merchants will petition the regulators to pay attention to the anti-trust questions,” Paur said. Wall Street analysts who would not speak for the record doubted that the regulators would nix the merger outright but speculated that the government may require First Data to shed all or part of NYCE in order for the deal to go forward. The analysts pointed out that the very things that made the purchase seem a good deal economically are its monopolistic implications. The only way they can keep from having some of Concord’s problems signing banks will be to say play with us or else, observed one analyst. If the proposed merger goes through, St. Petersburg, Florida-based PSCU Financial Services will be eager to take the lead in an offer for the CU24 ATM Network, PSCU executives said during the firm’s annual conference in Orlando, Florida. “First of all the economics would have to be there and our board would have to support it,” said Brian Crawford, PSCU’s chief marketing officer. “But we feel now that we would be the appropriate party to lead such a merger offer, should the opportunity arise again,” he said. PSCU facilitated a previous offer the New York based NYCE Network made for CU24. Why was PSCU involved with NYCE’s CU24 offer? First Data is majority owner of NYCE Network, and PSCU is a strong partner of First Data. CU24 did not evaluate that offer because it officially arrived past the deadline. If PSCU did acquire CU24 it would likely involve intertwining of First Data products and services, and potentially even some financial backing from First Data to make the deal, though that was not decided. Dave Serlo, president of PSCU said the firm had taken more of a back seat in the previous offer because the firm concluded it could not take a more active role. “For us and for me personally, it was more a matter of timing,” Serlo said. “At the time [the CU24] original request came out, we were still in the midst of realigning our company,” he said. For its part, CO-OP Network said that it has not been in contact with CU24 except to address client issues and that it was not currently preparing a bid for the Florida Network. “From our perspective the First Data and Concord merger is interesting, but it is still months away, and that may be an ambitious timetable to address all their technologic and other issues,” said Gene Polito, president of the Network’s EFT services. CU24 said it had not received any offers from anyone else to discuss merger possibilities and that mergers happen in the ATM market all the time. “We are focused on addressing service opportunities which went by the wayside [during the firm's merger discussions with Concord],” reported Jim Park, CEO of the CU24. [email protected]

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