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Kohl’s To Outsource Credit Card Processing To First Data Corp.

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First Data Corp. will handle credit card processing for Kohl’s Corp.’s private-label credit cards in a multiyear agreement the two companies announced Jan. 20.

Kohl’s previously handled its card processing in-house, a spokesperson for the department store chain tells PaymentsSource.

Under the new arrangement, First Data will manage “supporting interfaces and technologies” associated with processing Kohl’s credit card transactions and will maintain the cards’ payment platform, the spokesperson says.

The companies did not disclose the agreement’s terms.

Capital One Financial Corp. in August announced plans to acquire Kohl’s credit card receivables involving 20 million accounts. JPMorgan Chase & Co. currently owns the portfolio (see story). 

The conversion from Chase to Cap One will take place “in the next few months,” the Kohl’s spokesperson said. The seven-year agreement calls for Cap One to issue the cards and manage the risk and underwriting, while Kohl’s will continue to advertise and promote the credit card program to its customers.

In Cap One’s Jan. 20 conference call with analysts to discuss its fourth-quarter earnings (see story), Gary Perlin, Cap One’s chief financial officer, described the store chain’s credit card operation as “a $3 billion to $4 billion portfolio.”

Richard Fairbank, Cap One’s chairman and CEO, later in the call noted that the Kohl’s portfolio has “lower revenue margin and lower charge-offs” than Cap One’s core credit card accounts and that he expected the Kohl’s acquisition to result in “strong risk-adjusted returns.”

Menomonee Falls, Wis.-based Kohl’s operates 1,089 stores in 49 states.

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