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Genpass service unit changes hands -- again

April 5, 2006

This article appeared in the ATM & Financial Self-Service Executive Summary, Spring 2006.

U.S. Bank's decision to sell the ATM service and maintenance unit it acquired nearly a year ago from Genpass wasn't a surprising one.

The Minneapolis-based subsidiary of U.S. Bancorp isn't interested in overseeing service and maintenance, said U.S. Bank's Jan Estep. It's interested in processing.

"We looked at all the aspects of Genpass Inc., and the expectation was to blend Genpass with Elan Financial Services," said Estep, the executive vice president of U.S. Bank Transaction Services and manager of U.S. Bancorp's processing business, Elan Processing Services. "We have spent quite a bit of time looking at how we can best grow, and with the servicing business, we thought it would help to partner with someone."

In May 2005, U.S. Bank bought Fort Washington, Penn.-based Genpass Inc. (also dba Irving, Texas-based Genpass Technologies LLC.)

The purchase, which included Genpass' three EFT network brands -- MoneyMaker, Money Belt and MoneyPass, the subset surcharge-free network of MoneyMaker and Money Belt -- made Elan the third-largest third-party processor in the United States, trailing First Data and RBS Lynk. (Source: ATM & Debit News' 2006 EFT Data Book)

The sale to Diebold

U.S. Bank's long-standing relationship with North Canton, Ohio-based Diebold Inc. made Diebold an obvious choice for the Genpass Service Solutions' (GSS) purchase, Estep said.

"U.S. Bank, because of our background, has grown through acquisition over the years," she said. "From a hardware standpoint, we have used Diebold, and we have used their servicing organization. They have the largest financial institutions from the U.S. Bank proper standpoint, but we have used others, too."

Of the 31,000 ATMs for which Elan processes transactions, 7,100 are under contract for service and maintenance, and most of those are served by Diebold. Now the 6,000 ATMs under existing service contracts with GSS customers will be serviced by Diebold as well, Estep said.

From Diebold's perspective, the acquisition isn't unique. It's the third of its kind and is merely another way for the company to expand its service footprint, said Chuck Ducey, Diebold's vice president of global development and services.

"Prior to this, we worked with Bank of America on their self-maintenance organization," Ducey said. "And prior to that we worked with Fleet Bank and acquired their maintenance organization."

B of A, the U.S.'s largest ATM owner at 16,000 machines, signed the seven-year outsourcing agreement for approximately 10,000 ATMs in December 2001. That deal was valued at $71 million and was expected to contribute approximately $28 million to Diebold's annual revenue.

Financial details surrounding the acquisition of GSS were not released. But Diebold spokesperson Carrie Kandes said the company is expected to include financial information when it files first-quarter earnings in April.

For now, Ducey said, Diebold is focusing on integrating GSS and its employees - a process that will take between six and 12 months.

"It will become part of the family - part of the Diebold brand," Ducey said. "We're absorbing the whole company and all of the staff."

Ducey said additional customer service staff might be necessary, beyond the 100 employees expected to come from GSS.

"We believe service is one of the leading factors in the purchase of ATMs," he said. "How well you service the machine and how well you take care of your customer makes a big difference. The ability to respond and fix it right the first time has a direct impact on how our customers' customers view their whole experience with the ATM."

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