Furthering the trend toward consolidation in the merchant processing business, Nova Information Systems Inc. has acquired three independent service organizations and converted them into district offices.

The deals, made within the past month, involved Bancard USA Inc. of Seattle, American Bankcard Association in Denver, and Automated Merchant Systems in Salt Lake City.

Edward Grzedzinski, Nova's chief executive officer, said that the three were among five ISOs that Atlanta-based Nova had pursued since July. He indicated that Nova would continue to go after such acquisitions, especially those enhancing its western presence, which has been lacking.

"What we're buying here are existing businesses with reputations in a market where before we had no reputation," said Mr. Grzedzinski.

The deals came six weeks after merger partners First Union Corp. and First Fidelity Bancorp. signed over their merchant processing portfolios to Nova.

Mr. Grzedzinski sought to distinguish these acquisitions from the First Union/First Fidelity alliance. "They are unrelated, other than 'we are looking at any way we can to grow.' Those transactions substantially strengthened our market presence east of the Mississippi," he said.

With the portfolios of First Union and First Fidelity - banks that announced their merger deal in June - Nova will process $12 billion annually in bank card sales and serve more than 90,000 merchants.

This would make Nova the eighth-largest merchant processor. Four other nonbank companies - Nabanco, First Data Corp., First USA, and National Data Corp. - are among the top 10 in merchant processing contracts, according to The Nilson Report, an Oxnard, Calif.-based newsletter.

Nabanco's parent, First Financial Management Corp., merged in October with First Data, putting No. 1 and No. 3 under the same umbrella.

Liam Carmody of the Carmody & Bloom consulting firm in Woodcliff Lake, N.J., observed that "Nova is really set to be a player" in the merchant processing business.

Originally called Innova, Nova was founded in 1991 by Mr. Grzedzinski and William Kinard, who now works for First Data.

Mr. Grzedzinski envisioned the following scenario repeating itself many times in the industry: larger companies approaching small and medium-size ISOs and making the argument that they need to merge to survive.

ISOs are said to handle 70% to 75% of the card transaction market, which runs at least $200 billion annually.

Wyatt Baxter, formerly Bancard USA's president, and Diane Richards, former chief executive officer of Automated Merchant Systems, praised the new arrangement, which has transformed them into district office managers.

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