NPC Inc., has extended and expanded a merchant processing relationship with Visa U.S.A.

NPC has signed a contract to use Vital Processing Services, a joint venture of Visa and Total System Services Inc., for authorization, clearing, and settlement of transactions through 2000.

For the last 10 years, long before the formation of Vital in 1996, Visa had provided only authorization support to NPC, a subsidiary of National City Corp. of Cleveland.

Kurt Knipp, executive vice president of NPC merchant card services, said the agreement "formalizes a consequential relationship" and in "a contractual relationship that did not exist before."

NPC, No. 2 in the merchant processing business behind, First Data Corp., has built its reputation processing for high-profile national accounts.

In 1996, NPC reported 1.4 billion Visa and MasterCard transactions through its network.

In recent months, however, the Louisville-based processor has changed its strategy somewhat by reaching out for the potentially lucrative small- merchant market.

"NPC is steadily moving into the small-merchant business," Mr. Knipp said. "Rather than rebuild or enhance this capacity, NPC will use the Vital offering."

"Vital now complements the NPC strategy for small merchants," said Vital Processing spokeswoman Casey Watson. "There is no change to NPC's historical use of products and services, and they can avail themselves of our (new) services."

She added the contract demonstrates "the Vital construct works. We can sign large acquirers without competing for their merchant business."

In separate news, Vital Processing and Hypercom Inc., Phoenix, the point of sale terminal and software manufacturer, announced the creation of a check verification service. It allows merchants to customize check verification services using a Hypercom platform.

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