First Data Spins Off E-Payments Company

Disparate payment systems to be bundled under eOne Global umbrella

It may be a little late getting into the game, but Atlanta-based First Data Corp., the leading credit-card processor in the U.S. and owner of Western Union Holdings Inc., launched a $600 million electronic-payments company last week called eOne Global LP.

The company will combine all of First Data's electronic-payments businesses, including a business-to-business payments service for use in online exchanges and a tool that lets companies electronically pay federal and state taxes.

But except for the tax business, all of the online payments battlegrounds are already dominated by other, quicker companies, according to Paul Jamieson, an analyst at Lincoln, Mass.-based Gomez Advisors Inc. First Data has to move fast to gain ground on the dot-com start-ups, he said.

"This is their way of playing catch-up," Jamieson said. "Quite frankly, that should have been done a year ago.

"It is the small start-ups that are looking at niche innovative processes that either enhance or create a whole new segment in the online payments area," he continued. "That's where the innovation is happening.

Planning to Expand

First Data has bundled all of its disparate electronic-payment businesses under the umbrella of eOne Global.

For example, eOne Global's SurePay, a joint venture with Plano, Texas-based Entrust Technologies Inc., will provide a way for companies to make secure payments to other businesses in online exchanges and to consumers. But it won't be up and running until the fourth quarter, according to Garen Staglin, president and CEO of eOne Global.

Another division of eOne, CashTax, enables companies to pay taxes to the federal government and 20 states. It's a leader in its field, with 2 million business clients making 36 million annual payments worth more than $1 trillion.

EOne Global also plans to expand into a variety of other electronic-payments products.

Take person-to-person electronic payments. Currently, the leader in this space is X.com Corp.'s PayPal. However, PayPal has recently begun charging for some of its services and has announced plans to raise rates even further, giving potential competitors a chance to break into this market.

First Data will own 75% of eOne Global. The other 25% will belong to iFormation Group, created by The Goldman Sachs Group Inc., The Boston Consulting Group and General Atlantic Partners LLC to back online businesses.

Copyright © 2000 IDG Communications, Inc.

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