CoreStates Financial Corp. this week announced the formation of a credit card processing company, Synapsys Inc.
The unit, operating as a subsidiary of CoreStates Bank of Delaware, got an initial boost from Visa U.S.A., which assigned it to develop a system for the $430 billion commercial card market.
Synapsys will also offer a full range of transaction processing services to banks and merchants, with CoreStates its first customer.
Part of a Larger Strategy
"Synapsys is part of an ongoing strategy to provide sophisticated processing services to other banks and financial institutions," said William F. Githens, senior vice president of CoreStates and president of Synapsys.
In a parallel move in September, CoreStates established a check processing service company called Transys.
Both companies "capitalize on two of CoreStates' strengths: technology and processing," Mr. Githens said. "As processing becomes more and more capital-intensive and technology-driven, it makes sense for institutions to outsource these operations to specialists."
Mr. Githens said the designation by Visa - which also contracted with a First Bank System Inc. subsidiary - "put us in the processing business. Now. having a niche in the marketplace, we think we can bring a lot of value to the member institutions of Visa."
Expects to Process MasterCard Items
Although Synapsys will initially focus on Visa procurement and travel and entertainment programs, the company expects to be able to process MasterCard's purchasing card and corporate card transactions.
Visa has banned its commercial card issuers from also issuing the competing versions.
It has asked Synapsys to develop a system that enables Visa issuers to deliver better documentation and spending controls than MasterCard, hoping issuers will choose Visa.