400 Instant Tellers Idle in Two States : Firm Serving Safeway and 7-Eleven Stores Now in Liquidation
Cash-dispensing automated teller machines sit lifeless today in more than 400 Safeway and 7-Eleven stores in California and Washington, testament to the failed ambitions of an El Segundo electronic banking firm that fell victim to deepening red ink and the loss of its chief financial backer.
The money machines went dead on Christmas Eve as National Transaction Systems (NTS) of El Segundo ran out of money to operate the fast-growing network that it began in 1983. Only eight months earlier, the firm had announced aggressive plans to expand its system at the rate of 100 machines a month.
Today, NTS is in liquidation, in part because the outside money that fueled its rapid growth dried up, according to the Credit Managers Assn. of Southern California, which handles credit claims at insolvent companies.
The main source of the NTS funds was Frederick W. (Ted) Field, a scion of the Marshall Field family of Chicago that made a fortune in publishing and the department stores that bear its name.
Field, through his Westwood-based private firm, Interscope Group, has interests in entertainment, movie equipment and Grand Prix race cars.
Banking industry sources said Field may have invested as much as $8 million in NTS’ electronic banking venture. Neither Field nor any representative of his company returned telephone calls Monday.
A Safeway spokeswoman said the system went down the day before Christmas with little warning. She added that the Oakland-based grocery chain’s efforts to find out what happened have been unavailing. “The machines aren’t operational and the company that operates them is unavailable,” Bonnie Lewis of Safeway said.
“The sign we put on them is ‘Temporarily Out of Service,’ because we thought they were. I don’t know if the system is defunct or not. We have not issued anything formally because we don’t have enough information to issue a statement.”
A number of major financial institutions, including New York’s Citibank, Merrill Lynch, Sears Savings, Great Western Savings and First Interstate of Washington, used NTS to operate other automated teller networks on the West Coast.
NTS’ innovation was to expand the placement of the now-familiar cash-dispensing electronic tellers to retail outlets and to allow account holders at hundreds of different institutions to use a single network of machines. Most California automated tellers are proprietary, meaning that they are available only to account holders at a single bank or savings and loan.
But NTS failed to sign up California’s five major banks--Bank of America, Crocker National, First Interstate of California, Security Pacific and Wells Fargo--costing it a pool of 9 million potential customers.
Available to Any Card
In April, the El Segundo company announced that it would try to tap that well by making its Safeway and 7-Eleven store teller machines available to the holder of any bank money-machine card. But expansion was slowed by the 75-cent fee that NTS charged for each transaction and a limit of $100 a week in withdrawals.
“It was a hell of a good concept, but they couldn’t get the financing they needed,” said John F. Kane, who handled NTS’ public relations until last month. “They couldn’t get the second person (to join Field in backing the venture) and they had to pull the plug at that point.
Great Western Savings was a major participant in the NTS program, with a direct link between its computers and the NTS system. All Great Western cash-machine card holders could use the NTS-operated Safeway and 7-Eleven outlets until the system went down.
Don Bartell, Great Western Savings senior vice president in charge of electronic banking, said the loss of NTS was an inconvenience to the thrift’s customers but not a serious blow. He said he hoped that some other firm or group of investors could be found to resurrect the system.
A spokesman for First Interstate Bancorp, parent of First Interstate of Washington, said NTS’ demise took down 120 teller machines operated jointly with the bank in 7-Eleven stores in the state of Washington. He said, however, that the machines would be usable again later this week through an arrangement with another data- processing firm.
