Bidding to end a turbulent year on a high note, First Data Corp. announced it has signed a long-term card processing contract with Wells Fargo Bank.

The 10-year deal solidifies a relationship with the Wells Fargo & Co. subsidiary and restores some momentum to First Data's industry-leading transaction processing business.

Despite its No. 1 position in both bank card account processing and merchant acquiring, First Data fell short of growth targets this year, and its stock price declined almost 30%. It suffered a public relations setback in September when U.S. Bancorp decided to terminate its processing alliance with First Data and move all its merchant processing business to Vital Processing Services, a First Data competitor owned by Visa U.S.A. and Total System Services Inc.

On the card-issuing side of the processing business, where First Data also competes against Total System, growth depends on the ability to sign major MasterCard and Visa banks that have historically done their own processing.

In Wells Fargo, First Data has locked up the 17th-biggest issuer. Wells had $5.1 billion of outstandings as of June 30.

"We have a track record of working with clients like Wells and coming up with innovative alliances that allow them to enhance the value of their business," said Jack McDonnell, president of First Data Enterprises, a subsidiary of Hackensack, N.J.-based First Data Corp.

Wells is among the 12 banks, the biggest of them Chase Manhattan, that have entered into joint merchant processing ventures with First Data.

In card issuing, First Data was the processor for First Interstate Bancorp, which San Francisco-based Wells Fargo acquired in 1996. In addition to the 1.4 million credit card accounts First Data has been processing for Wells, it handles 3.5 million of Wells' debit cards.

Once the transfer of accounts is complete, the new contract could generate an additional $30 million to $45 million in annual revenues for First Data, according to Mark Wolfenberger, an analyst for Deutsche Morgan Grenfell Inc. of New York. First Data will take responsibility for two million more Wells credit card accounts that are now processed in-house at a bank-owned facility in Concord, Calif.

Wells Fargo said it will maintain the Concord center and most of its 1,000 employees. The transition to First Data is expected to be completed by early in the fourth quarter of 1998, Mr. McDonnell said.

"We're seeing more and more of the larger financial institutions objectively assessing the true cost of processing as well as the investment required in their systems to remain competitive," Mr. McDonnell said.

Like others that have made the decision to outsource, Wells cited a desire to concentrate on priorities other than backroom processing.

M. Lucile Reid, executive vice president of the bank, said, "This expansion of our relationship with First Data demonstrates our confidence in their commitment to deliver the highest level of performance and innovative technology."

She said Wells also looks for "an edge in achieving our strategic goals for the future."

Those goals may involve more electronic commerce than pure credit and debit services, said Stanley W. Anderson, president of Anderson and Associates, Arvada, Colo.

Wells has been among the most aggressive promoters of Internet banking, is the lead U.S. investor in the Mondex smart card venture, and works closely with Hewlett-Packard Co. and its Verifone subsidiary in developing on-line merchandising and payment systems.

Wells' relationship with First Data extends to MSFDC, First Data's joint venture with Microsoft Corp. in electronic bill presentment and processing. Wells has said it will be one of the first banks to test the system in 1998.

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