Magazine article American Banker

Processing Move Signals Chase's Going In-House

Magazine article American Banker

Processing Move Signals Chase's Going In-House

Article excerpt

J.P. Morgan Chase & Co.'s decision to use Total System Services Inc. for credit card processing is seen as the first step in its long-term plan to move in-house.

TSYS' winning bid over First Data Corp. to handle the merged portfolios of Bank One Corp. and the JPMorgan Chase did not come as a surprise. But the New York bank's ultimate pick of Bank One's vendor over its own implies that the former is following the acquired company's cards strategy.

After Wednesday's announcement, JPMorgan Chase confirmed that Bank One's 51 million credit card accounts are on track for in-house processing by 2006 (under a licensing arrangement using TSYS software). The company will have the option of bringing Chase's 36 million accounts inside as well but did not say whether it would. Those will move from the First Data platform to TSYS over the next 18 months.

In-house operations at the No. 2 credit card issuer, which will do business under the Chase brand, would replicate the practice at most other top-10 card companies. According to information supplied by TSYS and the companies, Citigroup Inc., MBNA Corp., Capital One Financial Corp., and Household International Inc. process their transactions in-house. Bank of America Corp. and Providian Financial Corp. use TSYS.

JPMorgan Chase has not confirmed its long-term strategy, but internal processing has been a known ambition of president and chief operating officer (and former Bank One chief executive) James Dimon, who orchestrated the Chicago company's conversion from First Data to TSYS last year.

Troy Woods, TSYS' president and chief operating officer, said Bank One's accounts would be converted from First Data by October as scheduled. The first 11 million are slated to convert Aug. 6.

TSYS, of Columbus, Ohio, is 81% owned by Synovus Financial Corp.

Mr. …

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