Credit Card Processors Improving Systems for Battle with Nonbanks

ORLANDO -- Seeking to give financial institutions more weapons for fighting nonbanks, three companies that process credit card accounts have announced improvements in their systems.

The upgrades, announced at this week's American Bankers Association bank card conference, are by Total Systems Services Inc., Columbus, Ga., First Data Resources Inc., Omaha, and Banc One Financial Card Services Corp., Westerville, Ohio, a unit of Banc One.

More Flexibility Sought

The improvements unveiled vary greatly in scope and cost, but all have the goal of giving banking clients more ability to tailor credit card products to the needs of individual customers.

The ability to custom-design card products will become increasingly important bankers said, as the advent of nonbanks such as General Electric Co. and General Motors Corp. steps up competition for new card business.

"The fact that the landscape's changing so rapidly makes it hard to predict exactly what the credit card business will look like in 10 years," said Mark S. Young, vice president at Banc One Financial Card Services, "but this much is clear: It won't be 18.9% [interest rate] and $25 a year to every customer. Bankers have got to be able to give the customers exactly what they want or risk losing them to someone who will."

Total Systems, First Data, and Banc One Financial all plan to complete upgrades of their systems in the first quarter of next year.

Many financial institutions that contract with these companies have small card portfolios, which would not justify an in-house processing operation. Since credit cards are perhaps the most profitable retail product a bank can offer, however, even low-volume issuers are eager to retain what business they have.

But bankers said the entrance of nonbank companies -- namely, American Telephone and Telegraph Co., GE, and GM -- into an already competitive market has forced them to call for more services from their card processors.

"When we told our customers we were rewriting our system, we were flooded with more than 6,000 requests for special features," said Richard W. Ussery, chairman and chief executive of Total Systems Services, second-largest U.S. card processor.

Offering an example of planned service improvements, Mr. Ussery said that -- if a customer with $200,000 on deposit at a bank were unhappy with the terms of his credit card -- a bank employee will be able to change the parameters of the customer's card account in a matter of minutes through a personal computer. Those changes -- including interest rates and annual fees -- would not affect any other account.

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