First Data and Bank of America end paytech partnership
The joint venture between First Data and Bank of America, known as Bank of America Merchant Services (BAMS), will terminate as of June 2020.
Farewell, First Data
The speculation around the deal termination was reported by FinTech Futures earlier in May, and now has been officially confirmed by Fiserv, which acquired First Data at the start of this year.
Both First Data and Bank of America expect to be assigned clients and revenue to their proportionate ownership stakes, 51% and 49%, respectively.
The two firms set up the joint venture ten years ago. Bank of America manages sales and customer service, whilst First Data handles the transaction processing. The latter’s revenue accounts for 10-12% of its overall revenue, according to Bernstein analysts.
BAMS clients will keep being serviced by First Data until at least June 2023 at current pricing. First Data says it expects to be an important service provider to new Bank of America merchant clients after June 2020.
Both firms have said that the financial impact of the separation will be neutral to accretive to Fiserv adjusted earnings per share (EPS) and free cash flow for the next three to five years. They aim to evaluate the addressable JV expense structure – as First Data’s proportion is more than $150 million – aiming at efficiency and leverage across the existing First Data cost structure.
First Data will have decision rights for cross-sell, pricing, and product prioritisation for the 51% of revenue transferred from the venture.
