First Data Gets Kohl's Private-Label Deal

First Data Corp. will handle processing for Kohl's Corp.'s private-label credit cards.

Kohl's has handled its card processing in-house, a representative for the department store chain said. Under the new arrangement, which was announced Jan. 20, First Data will manage "supporting interfaces and technologies" associated with processing Kohl's credit card transactions and will maintain the cards' payment platform, the representative said.

In August Capital One Financial Corp. announced an agreement to acquire Kohl's credit card receivables involving 20 million accounts. JPMorgan Chase & Co. currently owns the portfolio. The conversion will take place "in the next few months," the Kohl's representative said. The seven-year agreement calls for Capital One to issue the cards and manage the risk and underwriting, while Kohl's will continue to advertise and promote the credit card program to its customers.

In Capital One's Jan. 20 earnings conference call, Gary Perlin, its chief financial officer, called the store chain's credit card operation "a $3 billion to $4 billion portfolio." Richard Fairbank, Capital One's chairman and chief executive, said on the call that the Kohl's portfolio has "lower revenue margin and lower chargeoffs" than Capital One's core credit card accounts and that he expected "strong risk-adjusted returns" from the Kohl's deal.

First Data is a unit of the private-equity firm Kohlberg Kravis Roberts & Co.

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