Rivals make deal as EDS sells ATM unit to Fiserv

BROOKFIELD, Wis. – Fiserv has announced that it is buying rival Electronic Data Services (EDS) Consumer Network Services (CNS), one of the nation’s largest ATM operators. The cost is $320 million. About 1,000 credit unions are CNS customers and are expected to move “seamlessly” from EDS to Fiserv, said one EDS official. CNS provides credit unions with switching and gateway services for their ATMs and debit cards, the official explained. The unit is one of the nation’s largest electronic funds transfer (EFT) transaction processors and automated teller machine operators, with projected 2003 processing and services revenues of $150 million to $160 million, Fiserv said. “CNS will add a significant dimension to Fiserv in terms of revenue, clients and financial technology services,” said Leslie M. Muma, Fiserv president and CEO. “With the addition of CNS, we will become one of the nation’s leading electronic transaction and payment processors.” Published reports about the sale have referred to EDS as cash poor, however EDS said it made the sale because the CNS unit no longer fit its business plan. “Fiserv’s EFT operations fully complement those of CNS,” said Coley Clark, president of EDS Financial Global Industry Solutions. “While profitable, CNS is not core to EDS’ long-term growth strategy. EDS will continue to serve its financial services clients and remain focused on developing opportunities in IT and business process outsourcing, and business transformation services, our market strengths.” Scott Butler, president of EDS’ Credit Union Industry Group (which primarily provides DP services) said that the sale will not have an impact on the roughly 400 credit unions that are group customers. “Previously, we purchased CNS services internally on behalf of our credit union customers and now we will continue to do so externally from Fiserv’s CNS,” he said. Over 400 credit unions are customers of the group, he said, and purchase more EDS services than just those provided by CNS. Despite EDS’ admission that part of its motivation for the sale had been its need for cash, Butler said that the “divestiture” of CNS had been planned for more than a year and that the company had taken steps to work with Fiserv to ensure that credit union customers had as close to a seamless transition as possible. Butler admitted that EDS and Fiserv have been great rivals in the past but noted that Fiserv is known for having very independent divisions that compete with one another. Butler predicted that EDS would still be a “fierce rival” of some of Fiserv’s divisions, even as the Credit Union Industry Group maintained a strategic relationship with its former EDS partner CNS.