First USA Paymentech shares took a beating last week, amid rising concerns over the payment processor's future.

The Dallas company continues to sign new business and has not had any alarming reductions in its revenue streams, analysts and company executives said.

But several recent developments have thrown Paymentech's continued prosperity into doubt.

Primary among investors' concerns is how Banc One Corp.'s stake in the company will affect Paymentech's ability to compete. Banc One acquired 57% of Paymentech when it completed the purchase of the company's former parent, First USA Inc., in May.

Gregory M. Gould, an analyst at Goldman, Sachs & Co. in New York, said Banc One's share might affect "Paymentech's ability to close bank customers for third-party merchant processing."

Rodney Bell, a spokesman at Paymentech, acknowledged that Banc One's position in the company could be a hindrance.

"The perception among some bankers might be, 'Why would I want to let Paymentech drive my terminals if'" Banc One is majority owner, he said.

But, he noted, Banc One said it is willing to divest itself of Paymentech. In addition, Banc One lets Paymentech operate as an autonomous unit, and there has been no obvious backlash from customers so far, he said.

Nonetheless, Goldman Sachs removed First USA Paymentech's stock from its "recommended for purchase" list.

On word of the downgrading, Paymentech's stock dropped $5.625. It closed Friday at $25.25, down $5.50 from the prior week's close.

Mr. Gould said he hadn't expected such a reaction in the market, since he did not reduce earnings estimates for the next quarter or for fiscal 1998.

"I am not saying this company's business model has fallen apart," he said. "The stock is attractive now."

But he said there are some points of concern in addition to the Banc One situation.

For example, he said, he wonders what effect, if any, this summer's United Parcel Service strike had on Paymentech.

The company derives about 35% of its revenues from direct marketing and catalogue businesses that rely heavily on UPS, but management has been tight-lipped about whether the strike did any major damage.

The silence is unusual for Paymentech, Mr. Gould said.

"They have usually been very up-front about business trends," he said. But lately "management has been very circumspect. ... And I just got a little worried."

Paymentech was an exception to a generally good week among bank technology stocks.

Goldman Sachs' technology index of U.S.-traded technology stocks, which lists many bank vendors, edged up 3.5 points, to close at 163.03. Meanwhile, the Dow Jones industrial average rose 174.3 points, to close at 7,917.

In news at other bank technology vendors, National Data Corp. reported first-quarter net income of $10.6 million, a 29% increase from the year before.

The Atlanta company, which offers credit card processing services, earned 38 cents per share - a penny more than Wall Street's consensus estimate. The stock rose $1.125, to close at $40.50.

Meanwhile, Electronic Data Systems Corp. landed a consulting contract with Mellon Bank Corp., Pittsburgh.

The Plano, Tex., computer services firm will help Mellon develop software for banking, trust, and mutual fund operations. Financial terms of the 40-month deal were not disclosed.

EDS' stock dropped $1.688 for the week and closed at $35.50 Friday.

Also, BHC Securities Inc. said it will provide clearing and execution services for Washington Mutual Inc.'s brokerage unit. Philadelphia-based BHC was acquired by Fiserv Inc. this year.

Seattle-based Washington Mutual, which has $92 billion of assets, operates a brokerage services unit that processes an estimated 1,000 securities trades a day.

Securities and annuities trades are cleared through three undisclosed firms. BHC expects the brokerage accounts to be converted to its system early next year.

Terms of the deal were not disclosed, but sources said the two-year, renewable contract would be valued at about $5 million annually.

"We are delighted with the relationship," said William Spane, president of BHC. "There has been a good rapport developed between the two companies."

Shares of Fiserv's stock rose 50 cents for the week, to close at $48.

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