Electronic Data Systems Corp. has won a $100 million contract from a Visa International affiliate to support merchant processing activities in Brazil.
Under the agreement, EDS' Brazilian subsidiary will provide the technology for customer service, back-office functions, merchant accounting, applications and reporting, distribution, and voice authorizations for all Visa payment services.
The multiyear deal, announced last week, underscores Visa International's resolve and flexibility in trying to keep its member banks in control of the acquiring side of the card business - the services provided at the merchant end of transactions.
After much of the U.S. merchant-acquiring business had slipped away to such nonbank specialists as First Data Corp., Visa responded in May by opening Vital Processing Services, a 50-50 joint venture with Total System Services Inc.
On a slightly different tack, MasterCard International and National Data Corp. had shortly before formed Global Payment Systems, a merchant servicing company in which MasterCard retained only a minority stake.
In Brazil, Visa International joined forces with its member banks last November to form VisaNet do Brasil, which borrows its name from the VisaNet global technology infrastructure.
Incorporated formally as Companhia Brasileira de Meios de Pagamento, and with the status of "national group acquiring member," the Brazilian entity hopes to capture a significant share of a fast-growing market that is still at a relatively early stage of credit and debit card development.
Brazil's population is almost two-thirds that of the United States, but its 1995 bank card volume of $16 billion was only 3% of the MasterCard-Visa total in the U.S.
With a former American Express executive, Reginaldo Zero, as its president, VisaNet do Brasil has described its role as providing a "centralized platform for acquiring transactions" while helping banks usher in such new products as the Visa Electron card, recently introduced by Banco do Brasil.
"EDS systems will support the new structure to ensure that Visa member banks maintain control over the acquiring segment," said James F. Partridge, president of Visa's Latin America and Caribbean region. "This will mean greater profitability for our members and better service for our cardholders and merchants in Brazil."
Mr. Partridge said Visa is working with banks in other Latin American countries to form similar group acquiring members, which could provide further opportunities for Plano, Tex.-based EDS.
A rival of First Data and Total System in processing cardholder accounts for banks, EDS is also pursuing specialized roles in payment-system outsourcing.
"The VisaNet do Brasil relationship is strategically important to EDS' activities in the Latin America market, where we are making considerable investments in our technical infrastructure," said Coley Clark, the EDS senior vice president responsible for services to financial institutions worldwide.
