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Milwaukee Becoming Center for Electronic Commerce

January 19, 1996

MILWAUKEE (AP) _ Hartford, Conn., is known for insurance. Bethlehem, Penn., is synonymous with steel. Milwaukee, long typecast as the Brew City, is becoming a hub for electronic commerce.

From giant Fiserv Inc. to upstart U.S. Processing Inc., Milwaukee companies are grabbing a bigger chunk of the more than 20 billion annual electronic funds transactions between consumers, banks and businesses.

And that’s help jolt the local economy and place this Midwestern city on the map for something besides beer.

``The Midwest, in general, has become a hotbed for the industry,″ said Andrew Mayer, senior manager in the financial services industry consulting group at Ernst & Young in New York. ``As a region develops an expertise, others follow.″

Milwaukee has a number of companies involved in electronic commerce. Dubbed third-party processors, they are hired by financial institutions to process automatic teller machine and debit card transactions.

Banks looking for the most effective, least expensive way to provide services their customers demand have hired such companies to do their processing.

Milwaukee is an attractive location for many supplying such services because it has reliable electronic communication links and is geographically desirable, Mayer said.

U.S. Processing, which entered the market last year, is targeting medium and small financial institutions. It landed in Milwaukee because the city ``is one of the nation’s centers for transaction processing and attracts the best and brightest minds in the industry,″ said Michael Shutters, USPI’s president and chief executive officer.

Fiserv, the nation’s largest data processor for banks and savings institutions, is a pioneer in the industry and now provides ATM and point-of-sale debit support services to thousands of financial institutions and retail companies. That portion of its business involves 150 million transactions and $75 million in revenue annually.

``We saw it as an area of opportunity because it works in harmony with other services we offer banks,″ said George Dalton, Fiserv’s chairman and chief executive officer.

Other major players in electronic commerce in Milwaukee are Deluxe Data Systems Inc., a division of Deluxe Corp. of Minneapolis, and M&I Data Processing, a division of M&I Marshall & Ilsley Bank of Milwaukee.

``I like to characterize Milwaukee as the Silicon Snowbelt,″ said Paul Schmelzer, vice president of business development and strategy at Deluxe. The company hired 350 people in 1995 to keep up with the growth in its business.

Such expansion has helped boost the local economy, and many industry analysts expect further growth in the city in coming years.

``Whenever we can broaden the base of the types of businesses we have here, we’re strengthening the overall economy,″ said Julie Granger, spokeswoman for the Metropolitan Milwaukee Association of Commerce.

In the last 25 years, Milwaukee has gone from having 36 percent of its businesses in manufacturing and 16 percent in the service sector to 21 percent in manufacturing and 29 percent in the service sector.

Milwaukee, however, is not the base for all companies dealing in ATM and debit transfers.

Primary competitors include Mellon Network Service, a division of Mellon Bank of Pittsburgh, and Electronic Data Systems Corp., a General Motors Corp. subsidiary based in Plano, Texas. EDS is the country’s largest provider of computer services for business and government.

But both the businesses and local officials are satisfied with the industry’s growth in Milwaukee so far.

``We really have just barely scratched the surface,″ said Schmelzer of Deluxe. ``The growth is bounded only by our imaginations.″

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