Updated from 1:04 p.m. EDT

Betting that two companies would perform better than one,

Equifax

(EFX) - Get Report

, the nation's largest credit reporting agency, said Monday that it would spin off a division that processes credit card transactions and concentrate instead on consumer credit information.

Although each division in the past has posted strong profits, the units have different strategic goals, sales forces, technologies, markets and customers and would move ahead more efficiently on their own, said Tom Chapman, chairman and chief executive of Equifax.

"The real risk was the status quo," Chapman said in a telephone interview Monday. "You've got to be showing action. Just making your numbers quarter to quarter is simply not enough."

Equifax, which is based in Atlanta, hopes to spin off the payment-services division to its shareholders by the summer of 2001, though Chapman said he believed that his company could complete the deal before then.

"Payment services has been growing faster anyway," said Bradley Berning, who follows Equifax for

U.S. Bancorp Piper Jaffray

. The firm has not done any underwriting for Equifax. "This should make it easier for investors to understand."

Shares of Equifax, which sank below the $20 mark near the beginning of the year before rising again, dipped 25 cents, or 0.9%, to close at $26.69 on Monday. Analysts said that the decision at least partially reflects frustration with the company's stock price.

Each division, according to the company, also would be in a better position to grow more aggressively. Until now, the union actually has hindered each side's ability to attract customers and go after new business opportunities, the company said.

For example, the biggest customers of the information-services unit "pose a significant competitive threat" to the customers served by the payment-service's largest unit,

Equifax Card Solutions

," Chapman said.

"It wasn't a big problem," Chapman said. "But by separating them, you absolutely eliminate that conflict. It takes the possibility of friction away."

The information-services side assesses credit risk and detects fraud for the financial services, retail, utility and other industries, while the latter unit processes credit and debit card transactions and provides cardholder customer services for banks and credit unions.

Splitting the company in two would enable the card-processing unit to dive into a potentially hot emerging sector. The Equifax division, along with

Concord EFS

(CEFT)

,

First Data

(FDC) - Get Report

and others, could benefit from a rise in the number of electronic payment transactions, U.S. Bancorp's Berning determined in a study.

"Growth of electronic transactions will drive the number of payment transactions that have to be authorized, processed and settled," he wrote. "We expect many opportunities for payment services companies that provide these vital services."

Equifax also informed Wall Street Monday that it expects earnings between $1.67 and $1.71 a share for the year 2000, close to analysts' estimate of $1.70 a share, according to

First Call/Thomson Financial

. For 2001, Equifax anticipates an 8% to 10% growth in information-services revenue and a 13% to 15% rise in payment-services revenue.

For the 12 months ending on June 30, the information-services division recorded revenue of $1.12 billion, while the payment unit generated $736 million in revenue, according to the company.

Chapman, who joined the company 10 years ago, will remain at the helm of Equifax and become chairman of the new payment-services company. Meanwhile, Lee Kennedy, a 28-year Equifax executive and current president and chief operating officer, will assume the role of president and chief executive of the new group.

At the top of the division, Kennedy will seek to capitalize on mounting credit and debit card activity across the globe, extending the new group's reach while building on its efforts in Brazil and the United Kingdom. The group also recently secured a five-year contract with

National Australia Bank

to process 4.5 million cards in four nations.

"While our domestic business continues to be strong, we believe the greatest growth will come from our international operations," Kennedy said in a statement.

David Kerdell, an analyst at

CIBC World Markets

, said he believed the card processing group would post even better financial performances in future quarters as it finishes paying for international start-up costs in those regions.

"It's a scale game," noted Kerdell, who rates the stock a buy. His firm has not done any underwriting for Equifax. "And now they can take on new business with a fixed cost structure."

Equifax has not yet picked a name for the new company, which also would be based in Atlanta. And at this point, the company said it does not anticipate any layoffs or facility closures because of the planned separation.

The spinoff, which likely will result in a one-time charge, is expected to take the form of a tax-free stock dividend. "We didn't want to sell the business," Chapman said, "and have a huge tax bite. Shareholders certainly wouldn't be happy with that."