Chemical Banking Corp. said it has decided to sell its home-banking processing business, the country's largest, to MasterCard International for an undisclosed sum.

For MasterCard, the deal is a boon, since it will bolster the association's recently announced bid to become a home banking powerhouse through a joint venture with Checkfree Corp. of Westerville, Ohio, called MasterBanking. The aim is to provide back-office processing for bill payments and banking transactions initiated by computer or telephone.

"It's a big move for us," said Glenn F. Santmire, MasterCard's senior vice president of remote banking, who explained that the association wants to build up economies of scale in its MasterBanking service bureau.

And the deal enables Chemical to exit a long-standing business that has failed to bring in acceptable returns, officials said.

"The business was not meeting our return targets," said Ronald A. Braco, Chemical's vice president of electronic banking.

The home banking service bureau that Chemical is selling was started by Manufacturers Hanover Trust Co. in 1985. That year, the bank started marketing to other banks the computer system it had used to support its own personal computer home banking service. called Excel.

MAC Was First to Sign

The first client was the MAC automated teller machine network, now owned by Electronic Payment Systems Inc. of Wilmington, Del., a joint venture of CoreStates Financial Corp., Banc One Corp., PNC Bank Corp., and Society Corp.

MAC markets the Chemical service to banks on the MAC network that want to offer home banking but don't want to run the back-office systems.

Banks that use the service include CoreStates, PNC, Midlantic Corp., and Wilmington Trust Co., according to Jack Small, a director of client relations and sales at MAC.

Manufacturers Hanover later struck a deal to do bill payment processing for BillPay USA, an electronic bill payment service available on the the Prodigy computer network, which is used by two million personal computer owners.

Manufacturers Hanover also became Prodigy's recommended service bureau for banks that offer home banking through Prodigy.

This enabled Manufacturers to strike processing agreements with many of the 16 banks that offer home banking through Prodigy, including Chevy Chase Federal Savings Bank, Comerica Inc., First Interstate Bank of Denver, and Wells Fargo & Co.

The Prodigy network is run by Prodigy Services Co., of White Plains, N.Y., a joint venture of International Business Machines Corp. and Sears, Roebuck and Co.

Mr. Santmire said that the Chemical unit provides back-office processing for home banking transactions made by nearly 70,000 consumers. Nearly half of these people are users of the Excel service developed by Manufacturers Hanover, according to Jupiter Communications Co., a market researcher in New York.

Clients of the processing business are expected to be moved to the MasterBanking systems by yearend.

Bill Payment Services

Additionally, MasterCard will handle back-office processing of bill payment services for Chemical customers. Chemical will continue to process other home banking services for its own retail customers.

Mr. Braco said Chemical will benefit by being able to focus on more strategic home banking areas, namely, the development of new "front-end" technologies, including computerized telephone systems with display screens.

Mr. Braco declined to comment when asked if the service bureau was losing money. But he said that Chemical would have needed to invest large sums of money to keep it technologically competitive.

The fewer than 100 full-time Chemical staffers in the home banking unit will either continue to support Chemical's surviving operation or be transferred to other areas, Mr. Braco said.

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