The largest private lender, ICICI, has sold of its network of electric point of sales (PoS) terminals that accept credit and debit card payments to First Data Corporation (FDC).

The bank has hived of its network of over 1.5 lakh electronic swipe machines to a separate company, ICICI Merchant Services. First Data has acquired a stake of 81 percent in the company. The company has been valued at over $90 million.

When questioned, the bank declined to comment on the move. It has however, communicated to merchants having ICICI bank terminals that the PoS network has been transferred to ICICI Merchant Services.

"First Data, along with partner banks, is keen to proliferate payment transactions not just at top retailers but also through small cities or towns in India," said Amrish Rau, country manager, First Data Corporation. Mr Rau is expected to head the new payments company.

The apex bank has already given its nod for the deal. Banking sources say that the deal value has gone up after RBI said that merchant establishments, including grocery stores and supermarkets could swipe customer cards and offer them cash.

ICICI bank feels that the specialized company will lower the cost of transactions and expand the payment network more efficiently. This is the first time that an Indian bank has hived off its PoS terminal network.

Up till now only foreign banks had outsourced these functions but their networks were of smaller scale.

The company will earn a fee every time a credit or debit transaction is processed through the point of sale network. The fee would be borne by the merchant and a major part of it would go to card issuing bank.