First Data Corp.'s deal for the Argentine processor Argencard SA would be its first major acquisition in South America.
Argencard, of Buenos Aires, is one of the top merchant processors in Argentina and Uruguay, and also handles transactions for MasterCard-issuing banks. It has relationships with more than 70 banks, with 9 million cardholders, and more than 150,000 merchants.
Pamela Patsley, the president of First Data's international division, called Argencard a "mini-First Data."
"It has a recurring-revenue model," she said Friday, the day after the Denver payment processor announced the deal. "It processes on the issuance and the acquiring side, and it has a premier list of customer banks. Our appetite for international growth coincided with the next phase for the owners of Argencard."
Argencard also has a subsidiary called Posnet that provides point of sale services to more than 60,000 merchants and 75 private-label credit card issuers. Argencard recently began offering prepaid services for mobile phones under the Carga al Toque brand.
First Data did not give the price of deal, which is expected to close next quarter.
Though Argencard would be its first significant purchase in South America (it also acquired a small Brazilian company several years ago), First Data already does business there. When it bought its VisionPlus payment processing software in 2001, it inherited a customer base of Brazilian issuers that are still using VisionPlus to manage their credit cards in-house.
"It's not the typical First Data recurring-revenue model. But it's a very strong presence," Ms. Patsley said.
First Data also has a data center in Panama and processes for 27 banks in Central America and the Caribbean.
Ms. Patsley said that "for the near term" Argencard would operate independently; the management team and staff, about 800 employees, are to be retained.
"Over time we will introduce and bring more of what I would call the First Data suite of products and services to the Argentina marketplace," she said.
Augusto Medelius, an independent consultant to ESP Consulting Group, a division of Phoenix Marketing International in Rhinebeck, N.Y., said Argencard was relatively well known in the early 1990s but has become "more of a behind-the-scenes brand" in recent years.
Argentina's economy slumped between 1999 and 2001. Before that Argentine consumers regularly used credit cards as payment tools, Mr. Medelius said, but did not generally carry balances.
When the economy went into crisis, "people didn't want to carry credit cards, and the banks didn't want to issue them," he said.
The Argentine economy has been on the upswing for the past year, Mr. Medelius said, and payment cards have "come back pretty quickly in the form of debit cards, which is a low risk for a bank." Credit card use has also recovered.
Ms. Patsley said First Data likes the growth rates it has had in Argentina. "I think there's very positive economic metrics coming out of the market, not just for the economy as a whole, but also most specifically for the utilization of electronic payments," she said.
