First Data Corp. says its merchant services business, its largest revenue generator that accounted for $4.1 billion in 2008 revenue, will bear the financial brunt of the weakened economy and the dissolution of its Chase Paymentech Solutions alliance with J.P.Morgan Chase & Co. last year (CardLine, 11/3/08). The unit's average transaction size fell nearly 8% during the fourth quarter, "driven mostly by a decrease in petroleum bankcard dollar volumes due to declining gas prices," the Greenwood Village, Colo.-based transaction processor revealed in a report filed with the U.S. Securities and Exchange Commission. First Data's financial services unit, which includes card issuers, faces a similar situation as issuers reduce credit limits and tighten credit-risk standards, the company says. "Such practices could adversely impact credit and retail card processing revenue in 2009," First Data said. "Credit and retail card accounts on file, both active and inactive, are expected to decline during 2009, and debit transactions are expected to be relatively flat as a result of the impact of bank consolidations and the weakened economy." The third-largest revenue source, First Data's international business, also expects challenging times because of transaction growth pressures, less new business, fewer merchant accounts and potential reduced average transaction values. The prepaid services unit was spared the effects of the down economy until the fourth quarter, "when the growth rate experienced through the first nine months of the year declined significantly," First Data said. The company expects products within the prepaid services segment that are not consumer focused, such as payroll cards, to continue growing this year while retail gift and transportation card volume will "be flat or down."