Ownership Issue May Delay ETrade's ATM Plans

FRAMINGHAM (03/24/2000) - ETrade Group Inc.'s plans to create a nationwide, branded ATM network could be stymied by the fact that takeover target Card Capture Services Inc. (CCS) owns only a small fraction of the 8,500 ATMs it manages, analysts said.

The deal would make ETrade the third-largest operator of ATMs in the U.S. -- but may require the Menlo Park, California-based firm to negotiate new agreements with all the clients of CCS, which is headquartered in Portland, Oregon. These include independent merchants as well as national chains such as Rite Aid Corp., Safeway Inc. and Chevron Corp.

"CCS focused more on the electronic delivery rather than owning the real estate," confirmed ETrade spokesperson Deborah Newman, but she said this won't be an obstacle.

"We don't need to own the machine in order to create a network that is appealing to the retailer."

Most of the machines currently have some kind of CCS branding on them, she said. At the very least, each machine has a sticker that tells customers that the machine is a member of the CCS network.

But the process of renegotiating the agreements with the retailers may delay the rebranding process, which is scheduled to begin this summer.

Retailers probably won't object to ETrade's brand on the ATMs, said Gomez Advisors analyst Alan Alper, because then their customers would have access to ETrade's financial services network.

"I don't see it as being a major hurdle," said Alper. But the fact that CCS owns few of the machines "may complicate and elongate the (branding) process," he added.

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