First Data Corp. said Thursday it will close a check and money-order division for financial institutions to focus on credit- card, check and other electronic-processing operations.
The Denver-based division purchases official checks, such as cashier’s checks, from financial institutions and invests the money in securities, but it does not fit First Data’s core operations, the company said. First Data will maintain the Tele- check electronic check-acceptance service for merchants.
“A strategic review of our official check and money-order operation highlighted the fact that the business is in a declining market and providing unacceptable returns on both assets and equity,” chairman and chief executive Ric Duques said in a statement.
First Data expects to free up between $250 million and $300 million in cash by quitting the business over the next two to three years, and plans to use the money for acquisitions, buybacks or other purposes.
Company spokesman Colin Wheeler said the decision comes as First Data’s contracts with a number of financial institutions are due to expire.
Job cuts are expected, he said.
