First Data eyes AIB's credit

[BPO Business Intelligence]

FIRST DATA, part of the giant Western Union, is in talks to take over
the credit card processing operations of Allied Irish Banks. AIB is
Ireland’s largest credit card provider with 34% of the market.
It is understood that an approach has been made, and a proposal to take
over the credit card operations could be tabled within months.

The bank would stand to make substantial savings from outsourcing the
credit card operations which insiders say is highly capital intensive.
The potential savings could run into “tens of millions” per annum,
according to industry sources.

First Data has credit card processing deals with banks across the world
and would handle all aspects of the credit card and loan processing
apart from the issuing of cards. It services 4.6m “merchant
locations” or outlets across the world and a total of 1,700 card
issuers. In September it signed a long term strategic alliance to
process cards for Barclaycard, Britain’s largest credit card issuer.

Under the deal, First Data will process payments for Barclaycard’s
growing partnership business, where the bank teams up retailers and
others to issue branded credit cards, such as Argos cards.

First Data has a large credit card processing centre in Glasgow’s
international financial services district.

Bank of Ireland has for many years outsourced its credit card
processing to euroConex and, up to last year, operated a joint venture
with the same company. In 2004, it also outsourced the issuing of cards
to another US company, TSYS.

First Data owns 25% of FEXCO, the Killorglin, Co Kerry-based money
transmission company. It has also been reported that FEXCO is in talks
to buy the Irish Credit Bureau, the monopoly provider of credit
ratings, of which AIB is a shareholder. The bureau is valued at
€100m.

First Data also made an unsuccessful attempt to buy Irish payments
company Alphyra in 2003.

Any deal on credit card processing at AIB is likely to be subject to
negotiations with the Irish Bank Officials Association, the main union
at the bank.

A spokesman for the union said they were unaware of the talks.

Source: www.timesonline.co.uk 03/12/2006