First Data Corp. made a strong statement last month to the electronic payments industry when it said it would purchase a majority stake in NYCE Corp. and acquire Achex Inc. The biggest player in the traditional payments industry, First Data made it plain it wants to be the biggest in the electronic payments field as well.

First Data will take a 60% to 65% equity interest in NYCE when the deal is completed by the end of the summer. The remaining 35% to 40% will be held by four banks — Citibank, FleetBoston Financial Corp., HSBC USA and J.P. Morgan Chase & Co. By partnering with these banks, First Data further solidifies its already strong relationships with financial institutions, many of which use its processing services.

First Data long has had its sights set on the NYCE electronic funds transfer network. The network processes real-time transactions made at both ATMs and point-of-sale locations, including credit and debit card transactions.

Dennis Lynch, the president and CEO, says NYCE will be an integral piece of First Data Net—a new service that First Data says it is developing to sell to both banks and merchants. But Lynch declined to give any details of what the service would be. All he would say was, First Data "will absolutely continue seeking new business opportunities" for First Data Net.

Several days later, First Data acquired San Francisco-based Achex, an online payments provider. Achex payment technology will be integrated into First Data's existing online services, allowing First Data to more easily integrate new merchants to its services.

First Data, which is already one of the leading processors in offline debit transactions, plans to target the online, point-of-sale market. NYCE services roughly 48 million cardholders through 44,000 ATMs and 270,000 point-of-sale locations. First Data currently processes 10 billion transactions at 2.6 million point-of-sale merchant locations.


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