SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



          For the quarter ended     Commission file number 0-13848
              March 31, 1999

                           ___________________________


                                CONCORD EFS, INC.

             (Exact name of registrant as specified in its charter)


                  Delaware                               04-2462252
       ______________________________              _____________________        

      (State or other jurisdiction of                (I.R.S. Employer
       Incorporation of Organization)              Identification Number)


          2525 Horizon Lake Drive, Suite 120, Memphis, Tennessee 38133
                    (Address of Principal Executive Offices)
                                 (901) 371-8000
              (Registrant's telephone number, including area code)

                                _________________


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes[X] No[ ]

The number of shares of the registrant's Common Stock,  $0.33 1/3 par value,  as
of March 31, 1999 was 128,330,320.
<PAGE>

                       CONCORD EFS, INC. AND SUBSIDIARIES


                                      INDEX



                                                                       Page No.
                                                                       --------
PART 1- Financial Information

Item 1.  Financial Statements (Unaudited)

  Condensed Consolidated Balance Sheets March 31, 1999
   and December 31, 1998                                                  1

  Condensed Consolidated Statements of Income Three 
   Months ended March 31, 1999 and March 31, 1998                         2

  Condensed Consolidated Statements of Cash Flows
   Three Months ended March 31, 1999 and March 31, 1998                   3

  Notes to Condensed Consolidated Financial Statements                    4

Item 2.  Management's Discussion and Analysis of Financial
  Condition and Results of Operations                                     8

Item 3.  Quantitative and Qualitative Disclosures About
  Market Risk                                                            12

PART II - Other Information

Item 2.  Changes in Securities and Use of Proceeds                       13

Item 4.  Submission of Matters to a Vote of Stockholders                 13

Item 6.  Exhibits and Reports on Form 8-K                                13


Signatures                                                               15

<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                            March 31   December 31
                                              1999        1998
                                           ----------  -----------
                                                (In thousands)
ASSETS
CURRENT ASSETS
    Cash and cash equivalents               $ 77,285     $ 82,029
    Securities available-for-sale            315,776      288,180
    Accounts receivable, net                 124,735      106,662
    Inventories                               11,324       11,396
    Prepaid expenses and other                13,158        7,863
    Deferred income taxes                      6,305        5,977
                                            --------     --------
           TOTAL CURRENT ASSETS              548,583      502,107

OTHER ASSETS                                  18,270       23,615

PROPERTY AND EQUIPMENT                       311,054      302,937
    Less accumulated depreciation
    and amortization                        (157,406)    (148,447)
                                            --------     --------
                                             153,648      154,490

INTANGIBLE ASSETS                            146,974      146,712
    Less accumulated amortization            (47,838)     (42,806)
                                            --------     --------
                                              99,136      103,906
                                            --------     --------
TOTAL ASSETS                                $819,637     $784,118
                                            ========     ========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable and other liabilities  $125,307    $ 112,376
    Accrued liabilities                       71,532       47,641
    Income taxes payable                      19,489       10,148
    Short-term borrowings                     17,000       21,000
    Current maturities of long-term debt      25,000       25,116
                                            --------     --------
           TOTAL CURRENT LIABILITIES         258,328      216,281

LONG-TERM DEBT, LESS CURRENT MATURITY        173,750      173,000
DEFERRED INCOME TAXES                         15,605       21,336
OTHER LIABILITIES                              8,905       12,966

STOCKHOLDERS' EQUITY:
    Common Stock-par value $0.33 1/3 per
    share; authorized 200,000 shares, 
    issued and outstanding 128,330
    shares at March 31, 1999; issued and
    outstanding 127,935 shares at
    December 31, 1998                         42,777       42,646
    Other stockholders' equity               320,272      317,889
                                            --------     --------
           TOTAL STOCKHOLDERS' EQUITY        363,049      360,535
                                            --------     --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $819,637     $784,118
                                            ========     ========

See Notes to Condensed Consolidated Financial Statements - Unaudited.


                                       -1-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

                                   Three Months Ended
                                        March 31
                                -----------------------
                                 1999            1998
                                -------         -------
                         (In thousands, except per share data)

Revenue                        $170,234        $134,666

Cost of operations              120,849          95,029

Selling, general and
 administrative expenses         12,368          13,100

Acquisition expenses and  
 restructuring charges           34,810              -
                                -------         -------
        OPERATING INCOME          2,207          26,537

Other income (expense):
 Interest income                  5,265           4,095
 Interest expense                (3,533)         (3,346)
                                -------         -------
           INCOME BEFORE
            INCOME TAXES          3,939          27,286

Income taxes                      6,807           9,937
                                -------         -------
       NET INCOME (LOSS)        $(2,868)        $17,349
                                =======         =======

Per share data:
 Weighted average shares        128,014         127,486
                                =======         =======

 Basic earnings (loss)           ($0.02)          $0.14
  per share                     =======         =======

 Adjusted weighted average
  shares and assumed
  conversions                   133,083         130,849
                                =======         =======
 
 Diluted earnings (loss)         ($0.02)          $0.13
  per share                     =======         =======

See Notes to Condensed Consolidated Financial Statements - Unaudited.















                                       -2-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                Three Months Ended
                                                      March 31
                                               ---------------------
                                                 1999         1998
                                               --------     --------
                                                   (In thousands)
NET CASH PROVIDED BY OPERATING
 ACTIVITIES                                    $ 41,124     $ 19,521

INVESTING ACTIVITIES:
 Acquisition of property and equipment          (11,628)     (11,255)
 Purchases of securities available-for-sale     (48,467)     (43,795)
 Purchase of securities held-to-maturity                      (4,539)
 Sale of securities available-for-sale           13,575       12,667
 Maturities of securities available-for-sale      5,564        8,851
 Maturities of securities held-to-maturity                     2,944
 Merchants contracts purchased                   (4,896)      (2,936)
 Other                                                          (928) 
                                               --------     --------
NET CASH USED IN INVESTING ACTIVITIES           (45,852)     (38,991)

FINANCING ACTIVITIES:
 Proceeds from sale of common stock               3,350          903
 Proceeds from notes payable                      7,000       26,275
 Payments under credit agreement, net            (4,000)      (9,000)
 Payments on notes payable                       (6,366)      (6,272)
                                               --------     --------
NET CASH PROVIDED BY (USED IN) FINANCING
 ACTIVITIES                                         (16)      11,606
                                               --------     --------
DECREASE IN CASH AND CASH EQUIVALENTS            (4,744)      (7,864)

Cash and cash equivalents at beginning
 of period                                       82,029       82,592
                                               --------     --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD     $ 77,285     $ 74,728
                                               ========     ========


For  purposes of these  statements,  the  Company  considers  all highly  liquid
investments  with a maturity of three  months or less when  purchased to be cash
equivalents.

See Notes to Condensed Consolidated Financial Statements - Unaudited.

















                                     -3-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                 MARCH 31, 1999

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all adjustments considered
necessary for a fair presentation have been included.  Operating results for the
three month period ended March 31, 1999 are not  necessarily  indicative  of the
results that may be expected for the year ended  December 31, 1999.  For further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto  included in the  Registrant's  annual  report on Form 10-K for the year
ended December 31, 1998.

The balance  sheet at December 31, 1998 has been  derived from the  consolidated
audited financial  statements  included in exhibit 99 of the Company's Form 10-K
for the year ended  December 31, 1998. The balance sheet does not include all of
the  information  and  footnotes  required  by  generally  accepted   accounting
principles for complete financial statements.

Restatement for Poolings

The historical  financial  information  presented in this Form 10-Q has been re-
stated to include the results of Electronic  Payment  Services, Inc. ("EPS") and
Digital Merchant Systems of Illinois,  Inc. and American Bankcard International,
Inc.  (jointly named "DMS").  EPS and DMS were acquired in separate  pooling-of-
interests  transactions.  In  accordance  with  pooling-of-interests  method  of
accounting,  no adjustments have been made to the historical carrying amounts of
assets and liabilities of either DMS or EPS.  However, the financial information
has been restated to include the operating results of DMS and EPS for all stated
periods prior to the combinations.

On February 18, 1999, the stockholders approved the Company's issuance of shares
in connection with its acquisition of EPS. The Company completed the merger with
EPS on February 26, 1999 by exchanging 30,064,838 shares of the Company's common
stock for all of the outstanding  common stock of EPS. EPS provides  transaction
processing  services to financial  institutions  and  retailers  throughout  the
United  States.  EPS also  owns and  operates  electronic  data  processing  and
data-capture  networks  that  process  transactions   originating  at  ATMs  and
point-of-sale terminals.

On June 30,  1998,  the Company  merged with DMS.  DMS is an  independent  sales
organization in the credit card industry. The Company exchanged 4,425,000 shares
of its common stock for all of the outstanding common stock of DMS.
















                                    -4-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                   (UNAUDITED)
                                 MARCH 31, 1999

Restatement for Pooling - continued

The following table presents selected financial information, in thousands, split
between the  Company,  EPS and DMS for the three months ended March 31, 1999 and
1998, respectively.

                                       Three months ended
                                            March 31
                                  ----------------------------
                                       1999           1998
                                   ------------- -------------
                                    (Unaudited)  (Unaudited)
Revenue
  Concord EFS, Inc.                  $124,129       $ 69,632
  EPS (1)                              46,105         58,399
  DMS (2)                                              6,635
                                     --------       --------
                                     $170,234       $134,666
                                     ========       ========

Net income (loss)
  Concord EFS, Inc.                   ($7,782)      $ 11,367
  EPS (1)                               4,914          5,189
  DMS (2)                                                793
                                     --------       --------
                                      ($2,868)      $ 17,349
                                     ========       ========

(1) The 1999  amounts  reflect the results of  operations  from  January 1, 1999
through February 28, 1999. The results of operations from March 1, 1999 to March
31, 1999 are included in Concord EFS, Inc. amounts.

(2) As the  acquisition  of DMS was completed on June 30, 1998, the 1999 amounts
are included in Concord EFS, Inc. amounts.

Stock Split

The Board of  Directors  approved a  three-for-two  stock split on May 14, 1998.
Shareholders of record as of June 1, 1998 were distributed  additional shares on
June 8, 1998.

Comprehensive Income

As of January 1, 1998, the Company adopted Financial  Accounting Standards Board
(FASB)  Statement  130,   "Reporting   Comprehensive   Income".   Statement  130
establishes new rules for the reporting and display of comprehensive  income and
its  components;  however,  the adoption of this  Statement had no impact on the
Company's net income or stockholders' equity.  Statement 130 requires unrealized
gains or losses on the Company's  available-for-sale  securities, which prior to
adoption were  reported  separately  in  stockholders'  equity to be included in
other  comprehensive   income.   Prior  year  financial   statements  have  been
reclassified to conform to the requirements of Statement 130.

During the first quarter of 1999 and 1998, total comprehensive income (loss), in
thousands, amounted to ($3,747) and $17,485, respectively.






                                   -5-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                   (UNAUDITED)
                                 MARCH 31, 1999

Earnings (Loss) Per Share
The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per share (in thousands, except per share data):

                                          Three Months Ended
                                               March 31
                                         1999            1998
                                       -------          -------
Numerator:
 Net income (loss)                    $ (2,868)         $17,349
                                        ======           ======
Denominator:
 Denominator for basic earnings per
 share, weighted-average shares        128,014          127,486

 Effect of dilutive securities,
 employee stock options                  5,069            3,363
                                       -------          -------
 Denominator for diluted earnings per
 share adjusted for weighted-average
 shares and assumed conversions        133,083          130,849
                                       =======          =======

Basic earnings (loss) per share         ($0.02)           $0.14
                                       =======          =======

Diluted earnings (loss) per share       ($0.02)           $0.13
                                       =======          =======

Excluding  acquisition costs and restructuring charges described in management's
discussion and analysis of financial condition and results of operations,  basic
and diluted  earnings  per share for the first quarter 1999 was $0.19 and $0.18,
respectively.

Earnings  per share and related per share data have been restated to reflect all
stock splits.

Operations By Industry Segment

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  About Segments of an
Enterprise and Related  Information," which establishes  standards for reporting
financial  information about operating  segments in annual and interim financial
statements.  SFAS No. 131 requires that financial information be reported on the
same basis that is reported  internally for evaluating  segment  performance and
allocating  resources  to  segments.  SFAS No. 131  addresses  how  supplemental
financial information is disclosed in annual and interim reports; therefore, its
adoption in 1998 had no impact on the financial  condition or operating  results
of the Company.













                                      -6-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                   (UNAUDITED)
                                 MARCH 31, 1999

Concord has two  reportable  segments:  Merchant Card Services and ATM Services.
Merchant Card Services include  the processing of credit card  transactions  for
all major  credit card brands  including  VISA,  MasterCard,  American  Express,
Discover  and  Diners  Club;  the  processing  of debit  card  transactions  for
financial  institutions  issuing these and similar  cards;  and the provision of
electronic  payment services to supermarket  chains and multiple lane retailers,
financial  institutions,  petroleum  and  convenience  stores,  grocery  stores,
trucking companies and other retailers.

ATM Services  revenue  consists of fee income and other  surcharges  charged for
proprietary  ATMs and  processing  fees for third party ATMs. The balance of the
Company's   revenue  is  derived   principally   from  check   verification  and
authorization services,  sales of point-of-sale terminals and payroll processing
services.

ATM Services include  transactional fee income and other surcharges  charges for
proprietary ATMs and processing fees for third party ATMs.

The remaining balance of the Company's revenue is derived principally from check
verification and authorization  services, and sales of point-of-sale  terminals.
The Company  evaluates  performance  and allocates  resources based on profit or
loss  from   operations.   Items  classified  as  "Other"  include  revenue  not
identifiable  with the two  reportable  segments  described  above  and costs of
operations  and  selling,  general  and  administrative  expenses  which are not
allocated to the reportable segments.

No single  customer  of the  Company  accounts  for a  material  portion  of the
Company's revenues.

Industry segment information, in thousands, for the three months ended March 31,
1999 and 1998 is presented below:
<TABLE>
<CAPTION>
                                             Merchant       ATM
                                          Card Services   Services        Other          Total
                                          ------------- ------------- ------------- -------------
<S>                                       <C>           <C>           <C>           <C>

Three months ended March 31, 1999
  
  Revenue                                     $112,326      $ 52,449      $  5,459      $170,234

  Cost of operations                           (63,564)      (31,105)      (26,180)     (120,849)

  Acquisition costs and restructuring
    charges                                                                (34,810)      (34,810)

  Selling, general, & administrative                                       
    expenses                                                               (12,368)      (12,368)

  Taxes & interest, net                                                     (5,075)       (5,075)
                                          ------------- ------------- ------------- -------------
  Net income (loss)                           $ 48,762      $ 21,344      $(72,974)     $ (2,868)
                                          ============= ============= ============= =============

Three months ended March 31, 1998

  Revenue                                     $ 85,203      $ 45,202      $  4,261      $134,666

  Cost of operations                           (46,654)      (26,264)      (22,111)      (95,029) 

  Selling, general, & administrative                                       
    expenses                                                               (13,100)      (13,100)

  Taxes & interest, net                                                     (9,188)       (9,188)
                                          ------------- ------------- ------------- -------------
  Net income                                  $ 38,549      $ 18,938      $(40,138)     $ 17,349
                                          ============= ============= ============= =============
</TABLE>
                                       -7-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q may contain or  incorporate  by  reference  statements  which may
constitute "forward-looking"  information,  within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Act of
1934, as amended.  Any such statements are not guarantees for future performance
and involve risks and  uncertainties,  and actual results may differ  materially
from those contemplated by such  forward-looking  statements.  Important factors
that  could  cause   actual   results  to  differ   materially   from  those  in
forward-looking statements include (i) the loss of key personnel or inability to
attract additional qualified personnel,  (ii) the failure to fully integrate the
operations of EPS, (iii) changes in card association rules, (iv) changes in card
association fees, (v) restrictions on surcharging or a decline in the deployment
of  automated   teller   machines,   (vi)  dependence  on  VISA  and  MasterCard
registrations,   (vii)  the   credit   risk  of   merchant   customers,   (viii)
susceptibility  to fraud at the merchant level, (ix) the failure of the Company,
its vendors or its customers to  appropriately  manage Year 2000 code  problems,
(x) increasing  competition,  (xi) the success of a new VISA debit card product,
(xii) the loss of key customers,  (xiii) continued  consolidation in the banking
and retail  industries,  (xiv) risks  related to  acquisitions,  (xv) changes in
rules and regulations governing financial  institutions,  (xvi) the inability to
remain current with rapid technological change, (xvii) dependence on third-party
vendors,  (xviii) the imposition of additional state taxes,  (xix) volatility of
the Company's common stock price and (xx) changes in interest rates. The Company
undertakes  no  obligation  to update or revise  forward-looking  statements  to
reflect changed  assumptions,  the occurrence of unanticipated events or changes
to future results over time. See the cautionary  statements  included as Exhibit
99 to this Form 10-Q for a more  detailed  discussion of the foregoing and other
factors.

Overview

Concord EFS, Inc.  (the  "Company") is a fully  integrated  leading  provider of
electronic transaction authorization,  processing, settlement and funds transfer
services on a nationwide basis. The Company focuses on marketing its services to
supermarket  chains  and  multiple  lane  retailers,   financial   institutions,
petroleum and  convenience  stores,  grocery stores,  the trucking  industry and
other retailers.  The Company's  primary activity is Merchant Card Services,  in
which it provides integrated  electronic  transaction  services for credit card,
debit card and electronic  benefits  transfer ("EBT") card  transactions.  These
transaction services include data capture, authorization and settlement services
for over 400,000  point-of-sale  terminals.  The Company also provides automated
teller  machine  ("ATM")  Services,  consisting  of  owning  and  operating  the
MAC-branded  electronic funds transfer network and processing for  approximately
35,000 ATMs nationwide, of which it owns approximately 1,000.

Recent Acquisitions

On June  30,  1998,  the  Company  completed  a  merger  with  DMS,  which is an
independent sales  organizations for the transaction  processing  industry.  The
merger  was  accounted  for as a  pooling  of  interests  in which  the  Company
exchanged approximately 4.4 million of its shares for all of DMS.

On February 26, 1999 the Company  completed  its  acquisition  of EPS, a company
which provides  transaction  processing  services to financial  institutions and
retailers  throughout the United States.  The acquisition was accounted for as a
pooling of interests in which the Company  exchanged  30.1 million of its shares
for all of the  outstanding  common  stock of EPS.  The Company  incurred  $34.8
million of expenses  related to the  acquisition  in the first  quarter of 1999.
These expenses included communication  conversion costs, advisory fees and asset
write-offs.  Management continues to review potential operational synergies from
the acquisition,  such as duplicate  facilities,  computer hardware and software
and other contractual relationships.

                                      -8-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Restatement for Poolings

The  historical  financial  information  presented  in this  Form  10-Q has been
restated  to  include  the   results  of  EPS  and  DMS.  In accordance with the
pooling-of-interests  method of accounting, no adjustments have been made to the
historical  carrying  amounts  of assets and  liabilities  of either DMS or EPS.
However,  the financial  information  has been restated to include the operating
results of EPS and DMS for all stated periods prior to the combination.

Components of Revenue and Expenses

The substantial  majority of the Company's  revenue (66% in the first quarter of
1999 and 63% in the first quarter of 1998) is generated  from fee income related
to Merchant Card Services. These services include:

  -- the processing of credit card transactions for all major credit card brands
     including VISA, MasterCard, American Express, Discover and Diners Club;

  -- the  processing  of debit  card  transactions  for  financial  institutions
     issuing these and similar cards; and

  -- the  provision of electronic  payment  services to  supermarket  chains and
     multiple lane retailers, financial institutions,  petroleum and convenience
     stores, grocery stores, trucking companies and other retailers.

Revenue from Merchant Card Services includes  primarily discount fees charged to
merchants,  which are a  percentage  of the dollar  amount of each  credit  card
transaction the Company  processes,  as well as a flat fee per transaction.  The
discount fee is  negotiated  with each  merchant  and  typically  constitutes  a
bundled rate for the transaction authorization, processing, settlement and funds
transfer services we provide.  This revenue and fees from other transactions are
recognized at the time the merchants' transactions are processed.

The other principal component of the Company's revenue derives from ATM Services
(approximately  31% in the first quarter of 1999 and 34% in the first quarter of
1998). ATM Services revenue consists of fee income and other surcharges  charged
for  proprietary  ATMs and processing  fees for third party ATMs. The balance of
the  Company's  revenue  is derived  principally  from  check  verification  and
authorization services,  sales of point-of-sale terminals and payroll processing
services.

Cost of operations includes all costs directly  attributable to the provision of
services to the Company's customers.  The most significant  component of cost of
operations  includes  interchange and assessment fees, which are amounts charged
by the credit and debit card  associations.  Interchange and assessment fees are
billed  primarily as a percentage  of dollar volume  processed  and, to a lesser
extent,   as  a   per-transaction   fee.  Cost  of   operations   also  includes
telecommunications costs, occupancy costs,  depreciation,  the cost of equipment
leased and sold,  the cost of  operating  the  Company's  MAC  network and other
miscellaneous merchant supplies and services expenses.

The Company's selling,  general and administrative expenses include salaries and
wages, and other general administrative expenses (including certain amortization
costs).

Results of Operations

Revenue  increased  26.4% to $170.2  million  in the first  quarter of 1999 from
$134.7  million in the first  quarter of 1998.  Of first  quarter 1999  revenue,
merchant card  services,  ATM services and other  services  accounted for 66.0%,
30.8% and 3.2%,  respectively.  Revenue from merchant  card  services  increased
31.8%,  due  primarily to increased  transactional  volumes.  Increased  volumes

                                      -9-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Results of Operations - continued
resulted from the addition of new  merchants,  the widening  acceptance of debit
and EBT card  transactions at new and existing  merchants and higher credit card
transaction  processing  fees.  The  increase  in  fees  was a  pass-through  to
customers of higher interchange processing fees that were assessed by the credit
card  associations  in April 1998. ATM services  revenue  increased  16.0%;  the
placement  of  new  ATMs,  new  ATM   processing   customers  and  increases  in
transactional volumes accounted for the increase.  Other revenue increased 28.1%
due to increased terminal sales primarily to our new merchants.

Cost of  operations  increased in the first  quarter of 1999 to 71.0% of revenue
compared to 70.6% in the first  quarter of 1998.  While credit card  association
interchange  fees  and  certain  other  operating  expenses  were  higher  as  a
percentage  of revenue in the first quarter of 1999 than in the first quarter of
1998,  this was largely  offset by a decrease,  as a percentage  of revenue,  in
payroll expenses.

Excluding the acquisition expenses, restructuring charges and related tax items,
net income, as a percentage of revenue,  increased to 14.1% in the first quarter
of 1999 compared to 12.9% in first quarter of 1998.  The primary  factor in this
increase was that selling,  general and  administrative  expenses decreased from
$13.1  million or 9.7% of total  revenue  in the first  quarter of 1998 to $12.4
million or 7.3% of total  revenue in 1999 as personnel  related  costs were were
lower in the first quarter of 1999.

Net loss as a percentage of revenue was (1.7%) in the first quarter of 1999. Net
income as a percentage  of revenue was 12.9% in the first  quarter of 1998.  The
primary  factor in the change was the  acquisition  expenses  and  restructuring
charges incurred in the first quarter of 1999 in connection with the acquisition
of EPS. The total pretax charges were $34.8 million, as summarized below:

     Acquisition expenses               $10.5
     Communication conversion costs      12.4
     Asset write-offs                     8.2
     Off-line debit conversion            2.8
     Severance and other                  0.9
                                        -----
                                        $34.8
                                        =====

Acquisition  related  expenses  were  $10.5  million  consisting   primarily  of
investment  banking fees, as well as legal,  accounting,  registration and other
fees and expenses were also incurred.

In order  to  create a single  communication  infrastructure  for the  Company's
transaction processing  businesses,  the Company adopted a plan to convert EPS's
communication  network to Concord's.  As the plan is implemented over the course
of  the  next  year,  the  Company  expects  to  achieve  operational  and  cost
efficiencies.  The accrual for the plan of conversion was $12.4 million.

Asset write-offs of $8.2 million were incurred. For competitive reasons, certain
geographic  areas  of the MAC  network  of EPS  have  been  deemphacized  by the
Company,  causing  impairment to the related  intangible assets of approximately
$2.8 million.  After review of certain EPS customer  lists and the  undiscounted
cash flows  estimated  to be  generated by the related  intangible  assets,  the
Company  recognized  an  impairment  loss of  approximately  $3.6  million.  The
remainder of the  write-off  was for assets that are no longer used or supported
under revised marketing and business plans.




                                      -10-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Results of Operations - continued
EPS currently uses a third party bank for its off-line debit processing.  During
the quarter,  the Company  adopted a plan to take this process  in-house and the
related restructuring charges of $2.8 million were accrued.

In addition to the pre-tax  charges,  a tax component  write off of $1.3 million
for impaired state tax net operating  losses of EPS was incurred.  Combined with
the non-tax  deductibility of certain  acquisition  costs, these items increased
the effective tax rate in the first quarter of 1999.

Liquidity and Capital Resources

In the first quarter of 1999, the Company  generated $41.1 million net cash from
operating  activities.  The Company also  received $7.0 million in proceeds from
notes  payable,  and $3.4 million  from stock  issued from  exercises of options
under the Company's  stock option plans.  From cash provided from  operating and
financing activities, $29.3 million was invested in securities, net of sales and
maturities,  $11.6 million was spent on capital  expenditures,  $4.9 million was
spent  to  purchase  merchant  contracts,  and  long-term  debt  and  short-term
borrowings  were reduced by $6.4  million and $4.0  million,  respectively.  The
capital expenditures were primarily for communications equipment,  point-of-sale
terminals, new computer equipment and capitalized software.

The Company  believes that available  credit and cash generated from  operations
are adequate to meet the  Company's  capital  needs.  EFS National  Bank and EFS
Federal Savings Bank, wholly-owned  subsidiaries of the Company, exceed required
regulatory capital ratios.

Impact of Year 2000

The Year  2000  preparedness  efforts  of the  Company  cover  both  information
technologies  ("IT") and non-IT  systems.  Non-IT systems  include those systems
used in the daily  operations of buildings and  facilities.  IT systems  include
computer hardware, software and related applications.

The Company has instituted a five-phase  plan with the goal of having its IT and
non-IT  systems  function  properly  with  respect to dates in the year 2000 and
beyond. These five phases are: awareness, assessment, renovation, validation and
implementation.  Based on  progress  to date,  the  Company  has  completed  the
awareness and assessment phases for all systems. The renovation,  validation and
implementation  phases for internal and external  mission  critical  systems and
entities have been instituted  concurrently  and are on schedule for completion.
The validation  phase includes an independent  review of results for all mission
critical  applications  by  the  Company's  internal  audit  staff  and  various
regulatory agencies.

There is no guarantee that the systems of other companies on which the Company's
systems rely will be converted in a timely manner.  However,  contingency  plans
have been created for all mission  critical  vendor  products and services.  The
contingency  plans will be further  enhanced  and  expanded to include  business
resumption  planning  during the first two quarters of 1999 with  completion  to
coincide with the completion of the Year 2000 project.  These plans will include
both the Company's internal mission critical systems and third-party  exposures,
based on the evaluation of progress at that time.








                                      -11-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued

Impact of Year 2000 - continued
Additional  testing of new or remediated  systems and applications will continue
as needed.  If the Company does not complete the phases of its plan that are now
underway,  then its ability to process  transactions  for its customers could be
adversely affected.  The potential liability or lost revenue under this scenario
could have a materially adverse effect on the Company's  financial condition and
results of operations.

Quantitative and Qualitative Disclosures About Market Risk

There have been no significant  changes to our disclosures on  quantitative  and
qualitative   disclosures  about  market  risk  since  December  31,  1998.  For
additional  information,   refer  to  Exhibit  99  -  Supplemental  Consolidated
Financial Statements in our Form 10-K for the year ended December 31, 1998.
















































                                      -12-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES

                                    PART II

                                OTHER INFORMATION

Item 2:  Changes in Securities and Use of Proceeds

On February 26, 1999, the Company issued  30,064,835  shares of its common stock
in connection with the Company's  acquisition of all of the  outstanding  common
stock of EPS. In the  acquisition,  EPS merged with a wholly owned subsidiary of
the Company,  and the shares, and options to purchase shares, of common stock of
EPS  outstanding  at the time of the merger  were  converted  into  shares,  and
options to purchase shares,  of common stock of the Company at a ratio of 7.9091
shares of common stock of the Company for one share of common stock of EPS.

The 30,064,835  shares were issued to the 12 shareholders of EPS who held all of
the  outstanding  shares of EPS common stock at the time of the merger,  without
registration under the Securities Act of 1933 in reliance on the exemption under
Section 4(2) of that Act. The Company  believes  that each of these  persons was
either an accredited  investor or had such knowledge and experience in financial
and business  matters as to be capable of evaluating the merits and risks of the
investment in shares of the Company; was afforded access to material information
about the  Company,  understood  that the shares of the Company  acquired in the
merger were  "restricted  securities"  and agreed not to transfer  those  shares
except pursuant to an effective  registration statement under the Securities Act
of 1933 or an exemption from registration under that act.

On May 5, 1999, the Company filed with the Securities and Exchange  Commission a
registration  statement on Form S-3 to register a total of 35,607,525  shares of
its common stock for sale to the public.  Of the  35,607,525  shares to be sold,
2,000,000  shares will be offered by the Company and  28,963,125  shares will be
offered by selling stockholders who acquired their shares in connection with the
acquisition by the Company of Electronic Payment Services,  Inc. on February 26,
1999.  An  additional  4,644,400  shares will be offered by the Company to cover
over-allotments.

Item 4:  Submission of Matters to a Vote of Security Holders

A special  meeting of stockholders of the Company was held on February 18, 1999.
At that meeting, the stockholders voted on the following matters:

(1) A proposal to approve the  Company's  issuance of shares of common  stock in
connection with the Company's  acquisition of Electronic Payment Services,  Inc.
There were a total of  64,417,855  votes were cast for,  171,221 votes were cast
against or  withheld,  and  228,867  abstentions  and broker  non-votes  on this
proposal.

(2) A proposal to approve a proposed  amendment to the Company's  1993 Incentive
Stock  Option Plan to increase  the number of shares of common stock that may be
issued under that plan from 13,668,750  shares to 25,000,000 shares and to add a
new method for payment of shares upon exercise of options. There were a total of
41,456,130 votes were cast for,  22,997,923 votes were cast against or withheld,
and 363,890 abstentions and broker non-votes on this proposal.

Item 6:  Exhibits and Reports on Form 8-K.

(a)  Exhibits

     (a) Exhibits
     Exhibit 10.1 - Employment Agreement, Richard N. Garman
     Exhibit 10.2 - Employment Agreement, Ruth Ann Marshall
     Exhibit 21 - Subsidiaries of the Registrant
     Exhibit 27 - Financial Data Schedule
     Exhibit 99 - Cautionary Statements

                                      -13-
<PAGE>

                                     PART II

                          OTHER INFORMATION - Continued

(b)  Reports on Form 8-K

On March 10, 1999,  the Company filed a Report on Form 8-K,  dated  February 26,
1999, to report, under Item 2 of that form, the Company's  acquisition of all of
the outstanding common stock of Electronic Payment Services, Inc.  The report of
independent auditors and audited consolidated financial statements of Electronic
Payment Services, Inc. set forth below were filed with that Form 8-K pursuant to
Item 7:
     
     Report of Independent Auditors

     Consolidated Balance Sheets as of December 31, 1998 and 1997

     Consolidated  Statements  of Income for the years ended  December 31, 1998,
       1997, and 1996

     Consolidated Statements of Changes in Stockholders' Equity (Deficiency) for
       the years ended December 31, 1998, 1997, and 1996

     Consolidated  Statements  of Cash Flows for the years  ended  December  31,
       1998, 1997, and 1996

     Notes to the Consolidated Financial Statements

The unaudited pro forma consolidated financial statements as of and for the nine
months ended September 30, 1998 and 1997, and for the three years ended December
31,  1997,  including  the  notes  thereto,  of  the  Company,   reflecting  its
acquisition of Electronic Payment Services, Inc., were incorporated by reference
in Item 7 of the Form 8-K.
































                                      -14-
<PAGE>

                             Signatures



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                 CONCORD EFS, INC.



Date: May 10, 1999       By: /s/ Dan M. Palmer            
                             ---------------------------
                             Dan M. Palmer
                             Chairman of the Board and
                             Chief Executive Officer



Date: May 10, 1999       By: /s/ Thomas J. Dowling   
                             ---------------------------
                             Thomas J. Dowling
                             Vice President and Chief
                             Financial Officer






































                                      -15-
<PAGE>
                       CONCORD EFS, INC. AND SUBSIDIARIES

                         FORM 10-Q LISTING OF EXHIBITS


Exhibit Number                          Exhibit Description
--------------   ---------------------------------------------------------------
 Exhibit 10.1    Employment Agreement, Richard N. Garman
     
 Exhibit 10.2    Employment Agreement, Ruth Ann Marshall

 Exhibit 21      Subsidiaries of the Registrant

 Exhibit 27      Financial Data Schedule

 Exhibit 99      Cautionery Statements



 


 











































                                      -14-