Magazine article American Banker

1st Data-Visa Collections Service Flourishes

Magazine article American Banker

1st Data-Visa Collections Service Flourishes

Article excerpt

Recent sniping between Visa U.S.A. and First Data Corp. has not prevented them from cooperating on an increasingly popular collection service for bank card issuers.

The venture, launched in January as a test with eight issuers, has since added six. The partners expect to have taken on $1 billion of uncollected balances and six more customers by yearend.

ACB Business Services, the First Data division in Phoenix that is one of the top five debt collection agencies in the country, offers its High Performance Recovery Services through its alliance with Visa.

Both parties are high on the partnership even as their rivalry mounts in other aspects of their payments businesses.

The conflict was touched off early last year when Roger Pierce, Visa International executive vice president and chief systems officer, became president of First Data Electronic Funds Services.

Mr. Peirce recruited some former Visa colleagues and made a push for merchant processing and related business that Visa officials claimed would threaten banks' continued control over payment systems.

Visa U.S.A. president Carl Pascarella has been vocal about First Data's ability to "close the loop" between credit card issuing and processing, then potentially bypassing Visa and MasterCard - and allegedly their members' interests.

The ACB-Visa partnership has transcended that debate by focusing on the collections task, with clearly measurable benefits.

First Data and ACB said 23% of accounts taken on in the pilot phase are in "payment mode."

They estimated annual recoveries would increase $400 million a year if the program were adopted industrywide.

Kenneth R. Crone, Visa's vice president of issuer risk and its liaison to the partnership, said he has not "encountered any difficulties" in dealings with First Data. "This is good for the industry and good for our members," he said. …

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