First Data Says It Will Fight Hard for Concord Debit Business

First Data Corp. officals vowed today they expect to fight hard to add to the debit business of Concord EFS Inc., the debit processor First Data is buying for $6.9 billion. In a meeting with securities analysts to present 2003 full-year and fourth-quarter results, First Data chairman and chief executive Charlie Fote tackled the question of how First Data plans to deal with the problem of recent bank defections from the Concord network. Last fall, Wells Fargo & Co. and Wachovia Corp. both announced they would drop Concord's Star System debit card in favor of Visa's Interlink debit product. “We're going to add customers,” Fote promised. “We'll be a strong competitor even against NYCE.” He indicated that interest is running strong from potential buyers of First Data's 64% interest in the NYCE electronic funds transfer network. “We've got probably 50 people interested in seeing the property,” he said. “It will be a normal sale process.” Under the terms of a settlement First Data reached with the U.S. Department of Justice in December, the company agreed to sell its stake in NYCE in return for the DOJ's green light for the Concord deal. The DOJ had sued to stop the merger on the grounds that it was anti-competitive. Fote said First Data expects to close on the merger with Concord Feb. 27, the day after Concord shareholders are expected to vote on the deal. Partly as a result of the Concord acquisition, Fote said First Data expects to close 2004 at $10 billion in revenue, up from $8.4 billion in 2003. The company posted net earnings of $1.4 million last year, up 13% from 2002. Other highlights of the year included the fact that the company's ValueLink prepaid card unit generated 900 million transactions last year, up 30%. The company's merchant-services unit, which provides transaction-processing for the point of sale, posted a 23% increase in transactions to 12.2 billion. Company officials said during the presentation that they do not expect the decision by Wal-Mart Stores Inc. to stop accepting MasterCard signature-based debit cards, which went into effect Sunday, to have a “major impact” on First Data's acquiring business. First Data and J.P. Morgan Chase & Co. jointly own Chase Merchant Services, Wal-Mart's acquirer. And the card-issuing unit, which provides processing support for credit and debit card issuers, closed the year with 348 million accounts on file, with another 70 million in the pipeline. Of these, Fote said, some 50 million would be converted by mid-year.