Chase Manhattan Bank, the country's largest bank, has joined processing giant First Data Corp.'s network of alliances to provide processing services to card-accepting merchants.

The companies formed a joint venture, Chase Merchant Services, which is expected to begin operating in the first quarter as one of the largest merchant processors.

Under their agreement, Hackensack, N.J.-based First Data will transfer 30,000 large, national accounts to Chase Merchant Services. The New York bank will provide clearing and settlement, while First Data will do the transaction processing. Both companies will contribute to sales and marketing.

Financial terms were not disclosed, but the deal is clearly the biggest of the alliances that are a hallmark of First Data's strategy on the merchant side of the bank card business.

"This is the first time First Data has contributed all of the volume," said Richard Weingarten, principal, Montgomery Securities. "They are doing it because of the value of having Chase as a partner to go after corporate clients."

Mr. Weingarten said the $90 billion of credit and debit sales volume in the 30,000 national accounts represents 40% of First Data's current merchant volume and just under 20% of its merchant processing revenue.

Chase has more than 200,000 national, middle-market, and small-business customers, Mr. Weingarten said. "This is going to be FDC's vehicle for national accounts," he added.

Paul Martaus, president of Martaus & Associates, Clearwater, Fla., said First Data had competitive reasons to assign its top-tier merchants to a bank.

First Data "promised its constituents it would not compete against them," Mr. Martaus said.

Chase is the 11th bank in the merchant bank alliance program, in which typically the bank and First Data each contribute 50% of the merchants in a joint venture.

"Chase had been out of the merchant business since the late 1980s," said Gary Roboff, senior vice president of the bank. "This gets us back into a business that is central to the lives of our customers."

The merchant processing business, he said, has been growing at 20% a year and is "a basic service" that Chase merchant customers want.

"Our contribution will be national accounts, accounts that are not suitable for the other alliances" and not practical for others to take on, said Roger Peirce, group president of First Data card services group's electronic funds services division in Palo Alto, Calif. "From our perspective, it ensures a growing stream of processing revenue."

Last April, First Data and the newly merged Chase reached an agreement for First Data to process the bank's credit card accounts:$21 billion in consolidated receivables.

Between 1983 and 1986, Chase and the banks with which it was merging sold $12 billion to $13 billion of merchant servicing business to Nabanco, the leading merchant processor that merged with First Data last year.

"It's almost an irony that 15 years ago Chase was the first bank to exit the business when they sold off that portfolio," said Mr. Peirce. "That was how Nabanco was originally formed, and now it has come full circle to (Chase's) being the largest merchant processing bank."

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