STRATEGIC PARTNERS
The big news at Magic Line's recent EFT Technology Conference: the Midwestern network will take on the NYCE name. by Ann All, editor
August 12, 1999
Not that they weren't pleasant before, but the folks at the Magic Line network are about to get a lot, well, nicer as their merger with the NYCE network is finalized. Dearborn, Mich.-based Magic Line will adopt the brand name of Woodcliff, N.J. based NYCE after the merger is complete, according to Magic Line CEO John Bascom and NYCE CEO Dennis Lynch. Addressing attendees of Magic Line's recent EFT Technology Conference in Chicago, Bascom said, "This is one more step toward realizing the promise of better access, strong branding and better support for our members." The merger, announced last December, should close soon, after receiving approval from the Federal Reserve Board. The company will operate as NYCE Corporation and will serve over 45 million cardholders in 15 states. The combined network will include 35,000 ATMs and 185,000 POS locations. Lynch will continue as president and CEO of NYCE. Bascom will become executive vice president of NYCE and president of its Midwest Regional Business Unit, which will be based in Dearborn. The companies' decision to use the NYCE name was backed up by research conducted by the Interbrand Group, a corporate branding consultancy. More than 70 percent of customers in the Northeast were familiar with the NYCE brand, and it scored well on qualities like "convenience" and "trustworthiness." Interbrand also questioned consumers in the Midwest, Magic Line's home territory, and found consumers there were receptive to NYCE. "No real negatives came out of their research or our own internal analysis, and there were tons of positives," Bascom said. Founded in 1985, NYCE has a strong track record of brand adoption in three earlier mergers with smaller companies. Most recently, in 1994 NYCE merged with Yankee 24, a New England network. Brand identity is becoming more important to EFT networks as they expand their geographic reach. Following the lead of banks and others in the financial service industry, networks seem convinced that becoming bigger is the best way to serve their customers. The NYCE/Magic Line merger follows an earlier merger of San Diego-based Star System and Maitland, Fla.-based Honor Technologies. "As companies become interregional in scope, and eventually national, I think brand becomes more and more important," Bascom said. Lynch is confident that the NYCE brand will perform well as consumers are exposed to such new EFT technologies as smart cards, Internet debit purchases and real-time check authorization. "Trustworthiness, reliability... these attributes will be very important as we move consumers to a new generation of payments," he said. A strong brand takes on more importance in less mature markets. So while it may not be a strong selling point for an ATM user, it could be for someone making a POS purchase. "We see a lot of opportunities to extend that trustworthiness to people who aren't as confident in the new payments as they have been in the old," Lynch said. "The Internet -- that's a tremendous opportunity to help segue consumer confidence." Cash Station, a Chicago-based Magic Line competitor, formally objected to the merger because of anti-trust concerns. However, the Fed gave its approval after deciding that a merger provision requiring Magic Line financial institutions who accept cash for NYCE stock to use network processing services for the next three years would only affect a small number of financial institutions. Magic Line members seem eager to embrace the NYCE brand, Bascom said. "I have not had a single member express any concern about this merger. Our membership is more excited about this than anything else in our history." Member prices will likely go down, rather than up, after the deal is closed. "As we integrate the companies, we will operate on new efficiencies and new scales. Hopefully we can pass that along to our financial institutions," Lynch said. The two companies are offering incentives to members to help accelerate adoption of the NYCE brand in Magic Line territory. ATM decals will be provided, and a turnkey ATM signage program will be available free of charge for a year. Members can receive additional financial help for "exceptional" promotion. "Our marketing support will be for the new brand, not the old brand," Bascom said. "We think it's in the members' best interest to convert to the new brand as quickly as possible." Members must convert by Jan. 1, 2002. That's when the unified company will "get out the blowtorches and tell people they'll have to burn the old brand off of the machine," Lynch said.
