First Union taps EDS for card processing.

CHARLOTTE, N.C. -- First Union Corp., owner of the nation's 23d-largest credit card portfolio, has agreed in principle to hand over its card processing to Electronic Data Systems Corp.

The two companies expect to finalize the deal by the end of September. Neither party would estimate the value of the prospective contract.

A news release from Dallas-based EDS indicated that the deal is expected to place all aspects of First Union's credit card processing operations into EDS hands.

First Union is the nation's 19th-largest issuer, with more than 3.4 million customer accounts as of August. According to American Banker statistics, the bank carried a credit card loan portfolio of about $2.3 billion as of the end of the first quarter.

First Union officials indicated that the decision to outsource was driven by the fact that EDS could deliver certain system advances more efficiently than the bank could on its own.

"We believe that partnering with an experienced third-party processor will enable us to achieve our growth goals more quickly," said Steve Boehm, senior vice president of credit card operations at First Union.

"[The agreement] will enable us to effectively integrate our credit card processing with the bank's information systems environment."

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