PNC Bank Corp. has entered into merchant processing alliance with First Data Corp.
As in similar arrangements that First Data has made with other banks, the companies will set up a joint venture, known in this case as PNC Bank Merchant Services. While First Data performs processing functions, the bank will continue to own the retailer relationships.
The new unit will target merchants in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky, and Indiana. PNC will turn over its current base of 18,000 merchants to the venture.
PNC Bank Merchant Services is expected to be operational later this year, after it gains Federal Reserve approval. Terms of the agreement were not disclosed.
"We view First Data as a strong technology company with the ability to benefit our merchant customers," said John M. Koopman, vice president and manager of PNC's merchant services division.
"This agreement is a further definition of our good working relationship with First Data," he added.
On the card-issuing side of its business, PNC has a marketing partnership with Card Issuer Program Management Corp., an Atlanta-based company that offers promotional and administrative support. Through this partnership, PNC's customer service, collections, and transaction processing are handled by First Data's card services group.
First Data's Omaha-based operation is the largest nonbank processor of MasterCard and Visa accounts. Last year it became No. 1 in merchant processing after its merger with First Financial Management Corp.
First Data handled 1.4 billion merchant transactions in 1995. It provides services to more than 1.7 million merchant outlets and 1,400 financial institutions.
"We expect to be able to offer our merchant processing customers enhanced products and services by taking advantage of the exceptional technology and economies of scale First Data brings to this new enterprise," said Thomas S. Kunz, vice president of electronic banking for PNC.
For example, the venture will offer extended customer service hours, purchasing cards, and debit cards that can be used within more than one regional network.
"First Data has a very good system, well backed up, which is very important," said Mr. Koopman, adding that merchants don't like downtime.
First Data also has merchant alliances with units of Wachovia Corp., Bancorp Hawaii, Barnett Banks Inc., Banc One Corp., U.S. Bancorp, and Norwest Corp.
