NEW YORK-JPMorgan Chase's announcement that it and First Data are breaking up their Chase Paymentech Solutions joint venture could signal JPMorgan's intent to expand its focus on merchant acquiring and processing side of its cards operations, according to Credit Union Journal sister publication American Banker.
The banking company is one of the largest card issuers and said it had decided that handling its own acquiring and processing was a core part of its payment cards strategy. The joint venture's contract runs through 2010, but the move to break it up had been widely expected by analysts, who said that bringing the merchant operations in-house would let the company reduce its costs, notably by handling some transactions internally rather than passing them off to third-party processors.
For its part, First Data said it likely will seek other partners for a similar joint venture. Under the break-up deal, JPMorgan Chase will get 51% of the venture's assets, including the majority of employees and the Paymentech name. First Data gets 49% of the assets and will take over the agent bank and independent sales organization unit, American Banker reported.
