First Data Corp. said it has agreed to take a 12.5% equity stake in iMall Inc., a developer of electronic commerce software for retail merchants.

The purchase of two million shares at $7 each is subject to approval from iMall shareholders. Through warrants, First Data could boost its stake to 30% over two years.

The companies plan to develop a means to simplify setting up shop on the Internet. iMall of Santa Monica, Calif., hosts 1,500 on-line merchants with about 20,000 products.

The Web site has been getting many as two million visitors a month.

The service from First Data and iMall would include Web site design, Internet hosting, and payment processing services through First Data's Merchant Services unit.

First Data would distribute the service, expected to be on the market next month, through its bank customers, which could use their brands in remarketing to their small and midsize merchant customers.

The merchants' cost would be around $129 a month.

On-line retail sales are expected to reach $17 billion by 2001, said Eula Adams, president of First Data Merchant Services, citing Forrester Research statistics.

"We would like to continue to strengthen our position as one of the leaders in this new, exploding Internet commerce arena."

iMall's stock closed Friday at $8.50, down 50 cents for the week. First Data's stock fell $2, to $24.625.

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