Equifax Inc. has agreed to acquire the nation's fifth-largest credit card processor, which serves credit unions.
Atlanta-based Equifax said Monday that it would buy the Credit Union National Association's card services division, a unit of CUNA Services Group Inc.
Terms of the deal were not disclosed. The companies said the transaction should close this year.
Once the deal is completed, Equifax said, its Payment Services subsidiary in St. Petersburg, Fla., is to process MasterCard and Visa transactions for 17 million cardholders and 5,000 financial institutions.
"This acquisition is just a natural extension of the business that we have operated for a number of years," said Lee A. Kennedy, president of Equifax Payment Services.
The deal broadens Equifax's penetration in card processing. It has a long-term contract with IBAA Bancard, a unit of the Independent Bankers Association of America, to process card transactions for small-town banks.
"Equifax will nearly double its reach of 3,000 financial institutions with the acquisition," said Michael Bush, senior vice president and general manager of Tampa-based Equifax Card Services.
The companies have been moving in opposite directions recently.
Equifax consolidated its check and card services and acquired a data processing platform known as the FBS Card Processing system to strengthen its market position.
Meanwhile, on the heels of a $19.7 million loss last year, CUNA Services Group's card services division streamlined its operations by eliminating temporary employee positions, curtailing overtime, and halting capital expenditures on new services and product development.
"I wouldn't say that the acquisition was tied specifically to our financial position this year," said Brenda Furlow, general counsel for CUNA and affiliates. "I do think that given our circumstances we needed to make some change in the ownership structure of the organization."
Because the CUNA unit is affiliated with a trade group, Ms. Furlow said, "our primary concern is service to our member leagues and our credit unions. We think that Equifax certainly provides that."
The Madison, Wis., card services division had considered a joint venture but decided an acquisition was the best opportunity for all involved.
"Equifax has a reputation of acquiring small financial institutions in a cost-effective way," said Angelo R. Palombi, president and chief executive officer of Republic Services Co., Columbia, S.C.
"In light of the losses that CSG's card services division had suffered the previous year," Mr. Palombi said, "Equifax probably thought that they would be able to manage it more effectively."