Magazine article American Banker

Processor Finding Bank Ownership A Big Advantage

Magazine article American Banker

Processor Finding Bank Ownership A Big Advantage

Article excerpt

Fifth Third Bancorp of Cincinnati's payment processing subsidiary, Midwest Payment Systems Inc., has made a practice of snapping well-known merchant names such as Kmart, Saks Fifth Avenue, Barnes & Noble, and Walgreen's away from its larger rivals.

The growth of Midwest Payment Systems, one of the last remaining bank-owned processors, has been so impressive that one industry consultant calls it "the stealth processor."

Last week it indicated that it planned to keep growing: It announced that it had acquired the remaining 51% of the private Milwaukee processor Universal Cos. Earlier this year the Fifth Third unit bought the other 49% of the nine-year-old Universal, which does processing for agent banks, independent sales organizations, and 55,000 small and midsize merchants and last year handled more than $4 billion of transactions.

Barry L. Boerstler, executive vice president of Midwest Payment Systems, said the acquisition broadened his company's service line.

Though Midwest prefers to grow by winning over customers on its own, Universal "had some products we didn't have," Mr. Boerstler said. "They had a check truncation product and a check verification product" that it sold to independent sales organizations.

Furthermore, Mr. Boerstler said, "We focus on middle-size to large merchants, and their cup of tea is little merchants."

Midwest Payment Systems does so well because it offers a combination of credit, debit, and ATM processing, along with traditional banking services, he said. "There are very few (companies) that do what we do. We are a specialist, but we offer multiple specialties."

Mr. Boerstler said his firm's bank ownership gives it an advantage in the processing business. Midwest is one of only three merchant processors owned by banking companies. The others are National Processing Inc., which is owned by National City Corp. …

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