First Data has signed an agreement to acquire the Citi Merchant Services unit, which provides credit and debit card payment processing services to around 15,000 merchant locations. Financial terms of the deal were not disclosed.
First Data spokesman Rodney Bell told reporters that the unit would continue to operate under the Citi Merchant Services name.
Under the deal, First Data will "share revenue" with Citibank under an ongoing "alliance". In return, Citibank will support First Data's marketing efforts and refer customers to the vendor's services.
In addition to providing payment-processing services and account management support, First Data says it will also contribute sales and management personnel to the unit.
First Data currently provides transaction processing services for Citibank's private label and co-branded private label credit cards along with cheque and money order services.
News of the Citi deal comes as First Data announces it is writing off its investment in mobile payments software firm Encorus Technologies and is reducing its full-year earnings forecast.
The vendor now expects full-year earnings of $2.19 to $2.23 a share, mainly due to a four cent charge related to its exit from the Encorus business. The firm had earlier forecast earnings of $2.23 to $2.32 a share.
First Data also says third quarter results will include a pre-tax gain of about $8 million from the sale of its remaining interest in Georgia-based International Banking Technologies.