company's entry into electronic commerce, it is that it did not happen sooner.

"We felt a little bit late getting into the game," said Eula L. Adams, president of the First Data Corp. unit that processes card transactions for merchants. But the organization has spent the last year making up for any tardiness.

The leading card processor serves 53,000 World Wide Web merchants, up from 3,000 in January 1998. It has cooperative arrangements with International Business Machines Corp., iMall Inc., Verio Inc., Yahoo Inc., and banks such as Wells Fargo & Co and Bank One Corp.

This month First Data Corp. formally established an Internet commerce group, led by chief financial officer Lee Adrean, to coordinate these initiatives companywide.

Henry C. "Ric" Duques, chairman and chief executive officer, said in a conference call with analysts last week that the "goal is simple. We want to be involved in every electronic payment transaction on the Internet."

Much revolves around the Atlanta company's merchant group, based in Englewood, Colo. Internet transactions are only 1.5% of transaction volume, Mr. Duques said, but that is expected to skyrocket.

Unlike some "early adopters," First Data had held on to a once-popular view that the Web was insecure for financial transactions. According to one analyst, it passed up the chance to handle's business, though it later landed

Mr. Adams, 49, said he wants that late start to become irrelevant. Progress is "terrific," he said, and First Data has earned a "solid reputation."

Raimundo Archibold Jr., an analyst at J.P. Morgan Securities, said the formerly "flatfoooted" company is doing well to establish "a very large footprint."

Analysts said the newly enlightened view was among the factors that helped First Data pull out of the 1997 slump that stemmed from bank-customer losses in merchant processing and management turnover that dragged its stock price down.

The company turned its attention to employee morale and shoring up its remaining merchant-bank processing alliances. In the third quarter, merchant services reported revenue of $388 million, up 12% from the 1998 period. The subsidiary's operating profits rose 37%, to $108 million.

First Data Merchant Services processes and settles more than $250 billion in transactions annually, for nearly two million merchant locations throughout the United States.

There is more to merchant processing life than the Internet. Mr. Adams' expansion plans include capturing more business-to-business transactions -- on and off the Internet -- and international markets. First Data has one merchant alliance with a foreign bank -- Lloyds TSB of London -- and wants to pursue more. Mr. Adams said he wants to piggyback on relationships established by a sister First Data division, Western Union, which has agents in 172 countries.

Last month the merchant services unit teamed with Western Union and another affiliate, Telecheck, to introduce SurePay, an Internet payment gateway for the Internet. First Data said it is the first to support credit cards, checks, and -- by yearend -- cash payments.

First Data Merchant Services cut its first big Internet deal last November, spending $14 million for an 11% stake in iMall, a Santa Monica, Calif., company that designs and hosts Web sites for retail merchants. Three months later iMall and First Data announced a soup-to-nuts package for merchants that want to open on the Web. Three months ago iMall agreed to be acquired by Excite Home for $425 million, resulting in a mutual marketing commitment with First Data.

The iMall portal site offers Web-storefront design, hosting, shipping coordination, shopping cart and cash register capabilities, and presence in a virtual mall, and First Data's core transaction processing program. First Data says that on-line merchants can set up bank accounts and begin accepting card payments within a day.

The merchant package -- or any of its components -- can be rebranded by banks. Wells Fargo has done this with its One-Stop eStore for small and midsize retailers, for example.

IBM is working with First Data on its HomePage Creator, a do-it-yourself kit for small Internet merchants. Yahoo, which offers a merchant services package called Yahoo Store, uses Bank One Payment Services -- a First Data bank alliance -- for card processing and instant account approval.

The Internet is "a great opportunity for our (bank) clients to be there when their merchants go to the Web," said John F. Duncan, executive vice president in First Data's Internet commerce group. First Data recently invested in the New York authentication technology company Passlogix Inc., and with that investment entered into a nonexclusive agreement to develop a digital wallet for e-commerce.

"If a wallet can enable transactions to happen faster and easier for both consumers and merchants, that's good for First Data because we're in the transaction processing business," Mr. Duncan said. Though it is unclear whether wallets will take hold, "there are certainly a lot of people attacking it."

First Data's competitors are also alert to these opportunities.

Donna Embry, senior vice president of marketing at Vital Processing Services in Tempe, Ariz., said her company has cast a wide net, hoping to attract resellers that develop on-line merchant software. "We have a whole additional distribution channel with these developers," she said. "No one has been talking to them."

Ms. Embry said Vital, a joint venture of Visa U.S.A. and Total System Services Inc. of Columbus, Ga., uses an "open architecture" that makes it easy for resellers to integrate Vital's payment engine. She contrasted that with First Data's more "defined parameter" in which "all merchants look alike."

Bank of America Corp.'s Bank of America Merchant Services this month introduced the Internet Order Center, a line of products for small and medium-sized businesses.

First Data executives say the company's strength rests partly in the power of its bank partners. Consolidation has trimmed the number of banks in First Data alliances from 13 in mid-1997 to eight, but they are powerhouses such as Chase Manhattan Corp., Wachovia Corp., Wells Fargo, and Bank One.

First Data also owns part of Cardservice International Inc., an Agoura Hills, Calif.-based independent sales organization that serves small companies and has an aggressive Internet strategy.

In January 1998, the man generally credited as the architect of First Data's merchant-bank alliances, Roger Peirce, stepped down as president of merchant processing. Mr. Adams took over, reporting to Charles Fote, the head of Western Union who expanded his duties to include supervising merchant services.

Mr. Adams, previously a partner at Deloitte & Touche, joined American Express Information Services -- American Express Co. formerly owned First Data -- in 1991. After serving in several management positions, Mr. Adams left Western Union to become chief operating officer of merchant services in October 1997.

In September 1998, Mr. Fote was named president and chief operating officer of First Data Corp., and Mr. Adams was named president of merchant services.

A self-described "numbers guy," Mr. Adams, a Harvard Business School graduate, does not "profess to be a visionary in lots of respects." For direction on the Internet, he looks to Mr. Duncan, 38, who came from MasterCard International and Citicorp.

"We felt two years ago that (merchant services) was underperforming," Mr. Adams said. Resources were stretched too thin to do all that the company was trying to do, he said. He was called in "to help give it a short-term focus, to get its profitability on track, and then to help kind of limit the things we were trying to do."

Mr. Duncan said Mr. Adams "was and still is the champion for Internet commerce within First Data. He was the one who supported our initial efforts."

Mr. Archibold, the Morgan analyst, said Wall Street has been impressed at the company leaders' unified commitment to the Internet.

"There are a lot of companies that claim to have Internet initiatives, but it stops in the mailroom," Mr. Archibold said.

"There are new competitors springing up every day," Mr. Duncan said.

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