First Data And Chase To End Joint Venture By End Of Year

First Data Corp. and JPMorgan Chase & Co. today announced they have agreed to end their joint venture, merchant acquirer Chase Paymentech Solutions LLC, by the end of the year. New York-based Chase will retain 51% of Chase Paymentech's assets, including most of its employees, its Canadian and European operations and the company's Dallas-based headquarters, according to the announcement. Greenwood Village, Colo.-based payments processor First Data will assume management of the ISO and Agent Bank division of Chase Paymentech and will integrate 49% of the assets, including a portion of the staff, into its established merchant acquiring business. The September buyout of First Data by Kohlberg Kravis Roberts & Co. triggered a clause in the joint-venture contract that enabled Chase to end the alliance (CardLine, 3/14). Chase and First Data formed Chase Paymentech in 2005. Observers expect fierce competition between Chase and First Data when they operate as two separate entities, according to Adil Moussa, an analyst with Boston-based Aite Group LLC. Chase "used to compete quite openly with First Data. There's no secret about that," Moussa tells CardLine sister publication ISO&Agent Weekly. "They would go after the same accounts and really outbid each other. Now it's going to be even more so." Banks and ISOs typically use differing strategies to acquire merchants, with ISOs usually acting more assertively, Moussa says, adding that First Data has no such advantage in this case. Chase "has proven it's not that type of bank. [Chase is] not going to sit back and wait for merchants to show up. They will go after them aggressively."