Vital Processing Services Inc. has named Jonathan J. Palmer, former chief technologist and head of retail operations at Barnett Banks Inc., to be president and chief executive officer.

The appointment fills an eight-month void at Vital, the fifty-fifty merchant processing venture formed in 1996 by Visa U.S.A. and Total System Services Inc. of Columbus, Ga., which in turn is owned by Synovus Financial Corp.

Vital, which calls itself a bank-owned alternative to First Data Corp. and other vendors, has not been seen as faltering or losing market share during the interregnum, during which Philip W. Tomlinson, president of Total System and a Vital board member, filled the top post.

Mr. Palmer, 55, is well known in retail banking circles-before his six years at Barnett, he spent 23 years at Fidelity Bank in Philadelphia. But he is a newcomer to payments processing.

Mr. Tomlinson, who headed the search committee, said in an interview, "We didn't just look in the normal circles of someone who has experience in this area-we were going for something bigger and broader than that."

Mr. Palmer, who will begin his new job Feb. 15, said he had "learned a lot over the years about how to apply technology in business" and felt confident he could "contribute to helping Vital prosper."

At Barnett, where he worked from 1990 to 1996, Mr. Palmer was credited by analysts with improving profitability through a systemic deployment of technology.

Since leaving Barnett, Mr. Palmer has been chairman, president, and CEO of Wellspring Resources, an outsourcing firm that handles human resources administration for large companies such as Boeing, Sears Roebuck & Co., and US West. Sears is also a client of Total System.

Mr. Palmer said that since joining Wellspring, which is based in Jacksonville, Fla., and owned by State Street Bank, he has "missed" working in the financial services industry and welcomed the opportunity to return. He will move to Tempe, Ariz., where Vital is based.

Mr. Palmer said he aims to help Vital sign up more bank customers and expand internationally. Canada and Latin America will be the first targets.

"There's double-digit growth in electronic payments volume in this country, and it will continue," Mr. Palmer said in an interview. "There is even higher double-digit growth in many other parts of the world, and there is a growing need for the types of electronic payments services that Vital Processing provides today."

Though Mr. Palmer's predecessor, Fred O. Gumbel, resigned last May, 1998 was "the best year we've had since Vital was formed," Mr. Tomlinson said.

"There has been a lot of activity going on in the merchant acquiring business these days," Mr. Tomlinson said. "We are very close to bringing out some very significant new products, we're talking to a lot of potential new clients, and we're going to help our current customers continue to grow their business."

David Robertson, president of the Nilson Report, a credit card industry newsletter, said Vital seemed to be closing the gap between itself and the industry leader, First Data Merchant Services.

"Vital had no problems in 1998 other than a search for a leader," Mr. Robertson said. "Phil Tomlinson is a first-rate manager, and his position in the industry is terrific. Knowing that Vital had him at the helm was certainly something that helped them out through this period."

Vital's largest clients include BankAmerica Corp. and U.S. Bancorp. Industry experts said subsidies from Vital's parent companies have helped it compete on price and build up advanced systems.

Mr. Robertson said Vital's choice of a leader with Mr. Palmer's background "indicates to me they're really serious about making sure that bottom-line profitability is maintained." The existing management team already has the necessary industry contacts, he said.

Two industry consultants described the job Mr. Palmer will take as a challenging one because of the competing influences of Visa and Total, which they described as having drastically different management cultures. The president of Vital must "deal with those two masters and at the same time be able to compete in a very dynamic and cutthroat processing business," said Stanley Anderson, president of Anderson & Co. in Arvada, Colo.

Paul Martaus, president of Martaus & Associates of Clearwater, Fla., called Mr. Palmer's new job "the most difficult in any industry" but said he "has a reputation for being a solid politician, which is what they've needed at Vital."

Both Mr. Martaus and Mr. Anderson said a dearth of candidates with relevant industry expertise may have stalled Vital's search.

Mr. Tomlinson blamed himself for the length of the process, saying he was "a little slow on it" because "we just wanted to make sure we got the right person-someone with great people skills, customer skills, and sales skills."

Mr. Palmer, he said, has those qualities as well as "extensive technical knowledge."

Mr. Tomlinson disputed the difficulty of serving a board of directors that includes Visa and Total. "Early on, we were somewhat concerned about" a culture clash, he said. But "we get along about as well as any two companies can get along. We both have the same agenda, we both feel very strongly about what we want (Vital) to be."

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