Magazine article American Banker

Move Seen as Sign That Deluxe May Be Considering an Exit from EBT

Magazine article American Banker

Move Seen as Sign That Deluxe May Be Considering an Exit from EBT

Article excerpt

Deluxe Data Systems is changing the way it does its electronic benefits transfer business.

The electronic transaction processing company is moving the flow of electronic benefits transaction data from its own network to another.

Last week the subsidiary of Milwaukee-based Deluxe Corp. signed a deal with Transaction Network Services Inc., a telecommunications network that acts as a conduit for the flow of transaction data.

Deluxe wants to develop scale and get a better price by moving its data flow business to Reston, Va.-based Transaction Network. But experts said Deluxe may also be getting ready to shed its electronic benefits transfer business.

Deluxe has emerged as one of top two processors in the electronic benefits transfer business over the last five years, but it has expressed some ambivalence about whether it will stay in the business. It competes with the Transactive Corp., Austin, Tex., which also uses Transaction Network.

Since 1992, Deluxe has used Transaction Network for transactions in small towns, reserving those in large cities for its own operations.

Deluxe realized that it is a data processor, said Brian Bates, Transaction Network's general manager, point of sale division. "Our strength is in transporting data."

Deluxe has electronic benefits transfer contracts in Colorado, Connecticut, Kansas, Louisiana, Utah, Maryland, and New Jersey. It said it expects contracts with 20 other states.

About 31 million people receive $112 billion in government benefits each year electronically. …

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