JPMorgan Chase & Co.'s decision to process the Washington Mutual Inc. consumer card portfolio in-house was the latest in a series of moves giving the New York banking company tighter control of its cards business.

Speculation had been rife among observers — and even from Wamu's processor, Total System Services Inc. — that JPMorgan Chase would take the processing in-house after it acquired the Seattle thrift's banking operations in September.

TSYS, a Columbus, Ga., processing company, said Tuesday that JPMorgan Chase would bring Wamu's consumer card portfolio in-house by March. JPMorgan Chase uses a licensed version of TSYS' consumer processing software. The banking company agreed to pay a termination fee for ending the TSYS contract early.

The decision comes after last month's breakup of Chase Paymentech Solutions LLC, a joint venture between JPMorgan Chase and the processor First Data Corp. The bank, which owned 51% of the venture, took with it 51% of its clients. The split was made possible by a change-of-control provision in the venture's contract, invoked after the private-equity firm Kohlberg Kravis Roberts & Co. bought First Data last year.

Tanya Madison, the vice president of external affairs for Chase card services, said that taking the Wamu processing in-house "is consistent with what we've done with the Chase portfolio" in the past. Last year, the banking company moved its own processing in-house, from TSYS.

TSYS did not make an executive available for comment.

Observers said that, by exerting more control over its card relationships, JPMorgan Chase is gaining the ability to reduce costs and earn a larger share of the revenue generated by its cards.

Brian Riley, a research director in the bank cards practice at TowerGroup, the independent research firm owned by MasterCard Inc., said, "They're taking a lot of it into the Chase mothership directly" and "getting the economies of scale from their acquisition."

Taking Wamu's card processing in-house was not a knee-jerk move, he said. "It's a big thing to shift a bank's processor." JPMorgan Chase would probably consider taking in-house the card portfolios of other banks it may buy if those portfolios are big enough to justify the switch, he said.

Though this may be a blow to TSYS, the processor has weathered such losses before. In 2006, Bank of America Corp. moved its consumer card processing business away from TSYS, deciding to handle the work in-house. "TSYS has had to deal with much bigger losses than losing Wamu," Mr. Riley said.

TSYS said Wamu accounted for 4% of its revenue in the first nine months of 2008 and that B of A had generated 8.7% of its revenue in 2005, when the Charlotte bank first said it would bring its consumer card processing in-house.

Adil Moussa, an analyst at Aite Group LLC, said, "Having a really strong acquiring and strong issuing [business] is becoming a necessity, especially for the Top 10 banks, and the reason for it is, from a revenue standpoint, you're getting twice the revenue."

By owning the acquiring side through its half of Chase Paymentech, JPMorgan gets money from the merchants who accept its cards as well as from the consumers who pay with them, Mr. Moussa said. Owning the processing gives it the potential to cut costs as well, he said.

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