First Data to Keep Card Issuing Business

DENVER – After almost two months of hints from the company and speculation from analysts, First Data Corporation, the card processor for many credit unions, announced last week that it would stay in the card issuing business after all. Company officials had noted that when compared to its Western Union business, card issuing made less money and one executive even described it as a “drag” on the company’s bottom line. Media reports had speculated that the firm had not kept its card issuing operation caught up with the most recent technology and best practices and this would lead the firm to sell it. Ric Duques, CEO of the card processor, said that the company had “concluded that our shareholders will derive long term benefit from keeping the U.S. card issuing business and part of First Data and taking concerted efforts to improve this business.” Instead the company will reorganize itself along the lines of its primary customer groups, consumers, merchants and financial institutions. Thus there will be a new First Data Financial Institution Services which will include card issuing and debit divisions. First Data Merchant Services will include the Merchant and telecheck units. First Data International will handle all of First Data’s operations overseas and Western Union will exist as its own, high growth division. Scott Wagner, executive vice president with TNB Card Services, the card processing arm of credit union-owned Town North Bank, said the firm was very encouraged with Duques’ commitment to wring 8-10% annual growth out of First Data’s card operation. The firm was also pleased at Duques’ confidence that First Data had the human and other resources it needed to make that growth happen.