Recent sniping between Visa U.S.A. and First Data Corp. has not prevented them from cooperating on an increasingly popular collection service for bank card issuers.

The venture, launched in January as a test with eight issuers, has since added six. The partners expect to have taken on $1 billion of uncollected balances and six more customers by yearend.

ACB Business Services, the First Data division in Phoenix that is one of the top five debt collection agencies in the country, offers its High Performance Recovery Services through its alliance with Visa.

Both parties are high on the partnership even as their rivalry mounts in other aspects of their payments businesses.

The conflict was touched off early last year when Roger Peirce, Visa International executive vice president and chief systems officer, became president of First Data Electronic Funds Services. Mr. Peirce recruited some former Visa colleagues and made a push for merchant processing and related business that Visa officials claimed would threaten banks' continued control over payment systems.

Visa U.S.A. president Carl Pascarella has been vocal about First Data's ability to "close the loop" between credit card issuing and processing, then potentially bypassing Visa and MasterCard - and allegedly their members' interests.

The ACB-Visa partnership has transcended that debate by focusing on the collections task, with clearly measurable benefits.

First Data and ACB said 23% of accounts taken on in the pilot phase are in "payment mode." They estimated annual recoveries would increase $400 million a year if the program were adopted industrywide.

Kenneth R. Crone, Visa's vice president of issuer risk and its liaison to the partnership, said he has not "encountered any difficulties" in dealings with First Data. "This is good for the industry and good for our members," he said.

A. Wayne Johnson, president of ACB, praised Visa for "once again being an outside-the-box thinker" in recognizing the value of the service and its cost-effectiveness for card issuers.

The venture's aim is to reduce issuers' costs while getting more that is owed by delinquent customers. Visa said more than $8 billion, including bankruptcies, is lost each year through bank card chargeoffs.

Typically, lenders pay 33% of recovered funds to debt collectors, but ACB Business Services is charging an average 20%.

Household Credit Services eliminated its in-house recovery program to work with ACB, said Michael L. Diamond, executive vice president of ACB Business Services.

The new service handles only accounts 120 to 240 days past due. Collectors call delinquent consumers for up to 45 days until contact is made. Then they establish repayment plans that do not assess interest charges.

"The major advantage (to banks) is a level of intensity at an early stage of the collection process," said Mr. Johnson.

Unlike traditional providers, said Mr. Johnson, ACB determines early on whether or not a borrower is amenable to a payback plan. If the person is unwilling, ACB refers the account to its legal services. Many other collection agencies would keep calling back over a four to six months.

ACB reports that within four months it collects 5.27% of the outstanding dollars handed over by clients. According to Mr. Johnson, the comparable industry average is only 2% to 3%. He predicts ACB will eventually return 18% to 20% of the debt it handles.

ACB and Visa claim to offer the only collection service geared exclusively for bank cards. Visa provides marketing support and benchmarking data that allow issuers to compare their results to in-house collection efforts as well as to competitors.

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