Tuesday, June 30, 2009
Bank of America Corp. and First Data Corp. formed a new payment solutions company, Banc of America Merchant Services LLC. First Data will contribute about 140,000 merchant relationships and BofA will bring approximately 240,000 such relationships to BAMS. The new entity expects to process more than 1 billion transactions per month.
At the end of 2008, First Data parted ways with JPMorgan Chase & Co. The two companies had jointly provided payment solutions as Chase Paymentech Solutions LLC for 12 years. First Data stated at the time that the split signaled a new phase of product development and expansion.
BAMS will provide what it calls "a comprehensive suite of innovative payments solutions" such as credit, debit and prepaid cards, merchant loyalty programs and check and e-commerce payment services. The offerings include new services designed to drive return traffic to merchants' stores and provide consumers with security, convenience and customary rewards. BAMS will also provide enhanced business reporting tools.
Adil Moussa, a Senior Analyst at Aite Group LLC, said First Data's and BofA's joint venture "will create a new synergy in the merchant acquiring world." He stressed how critical it is for large companies and corporations to have relationships with major banks for their lines of credit, treasury and cash management needs.
Moussa feels those banking needs influence large merchants' choice of merchant services provider. "From a large merchant perspective, First Data will be in an even better seat to compete over large corporate accounts," Moussa said. "Conversely, Bank of America's merchants will benefit from the technology that First Data offers in payments."
Moussa extolled the benefits large merchants enjoy when their merchant processing and banking needs are met by one company, with one point of contact. He pointed out that it reduces inefficiencies that can plague larger companies or corporations.
Moussa noted that just a few days before news of BAMS' formation emerged, he had been discussing collaborating on a report that would look at the "different factors that lead large merchants to select a merchant processor and the importance of having a solid bank partner with a solid treasury solution."
Michael Capellas, First Data's Chairman and Chief Executive Officer, said, "Together, we will help clients keep pace with the dynamic virtual marketplace by delivering secure, scalable and reliable payment processing and the broadest set of innovative payments solutions at highly competitive prices."
He noted that the two companies have more than 70 years' combined merchant experience. First Data will own the largest interest in BAMS at 48.5 percent; BofA will hold 46.5 percent; an investment firm will hold the remaining 5 percent.
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