First Data has agreed to divest its 64% ownership stake in the Nyce debit card network in return for regulatory approval of its proposed purchase of rival credit card processor Concord EFS.
The settlement, which includes a revised price tag of $6.9 billion for Concord EFS, eases US Department of Justice concerns that the merged entity would squash competition in the market for processing PIN-based debit transactions at the retail point of sale. First Data's majority interest in NYCE aligned with Concord's Star, MAC and Cash Station networks would have given the combined company a market share of 70% of all PIN-based debit transactions.
The Independent Community Bankers of Association (ICBA), the banking industry trade body which first pressed the DoJ to oppose the transaction, described the settlement as a "positive step" in protecting the competitiveness of the EFT networks. "However," says ICBA President and CEO Kenneth Guenther. "we are hopeful that there are additional yet-to-be-announced settlement terms that will allow issuing banks to control the routing of their customers' transactions to ensure a truly competitive EFT network environment that is not dominated by the largest players."
In a statement, First Data chairman and CEO Charlie Fote says: "This settlement removes uncertainty and allows the companies to proceed with achieving the benefits of this merger."
The transaction is expected to close sometime in the first quarter, 2004.