_______________________________________________________________________________
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                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

                                      FORM 10-K

            [X]        Annual Report Pursuant to Section 13 or 15(d)
           of the Securities Exchange Act of 1934 (No Fee required)

                        For the fiscal year ended December 31, 1996

            [ ]  Transition Report Pursuant to Section 13 or 15(d) of the
                     Securities Exchange Act of 1934 (No fee required)
                         for the transition period from          to     

                              Commission file number 1-10993

                           SPS TRANSACTION SERVICES, INC.
              (Exact name of Registrant as specified in its charter)

                 Delaware                                       36-3798295
    (State or other jurisdiction of                          (I.R.S. Employer
      incorporation or organization)                        Identification No.)

  2500 Lake Cook Road, Riverwoods, IL                              60015
(Address of principal executive offices)                         (Zip Code)

           Registrant's telephone number, including area code: 847/405-3700

             Securities registered pursuant to Section 12(b) of the Act:

                                                     Name of each exchange on
         Title of each class                             which registered	
         -------------------                         ------------------------
    Common Stock, $0.01 Par Value                   New York Stock Exchange


          Securities registered pursuant to Section 12(g) of the Act:  None


   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 ____

   Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein and will not be contained, to the 
best of the Registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.  [  ]

   As of January 31, 1997, the Registrant had 27,196,837 shares of Common Stock 
outstanding. The aggregate market value of voting stock held by non-affiliates 
of the Registrant as of January 31, 1997 was approximately $120,786,000.

                         Documents Incorporated by Reference

   Portions of the Registrant's Annual Report to Stockholders to be mailed to 
stockholders on or about March 31, 1997 for the year ended December 31, 1996 
are incorporated by reference in Parts II and IV.  Portions of the Registrant's 
Definitive Proxy Statement to be mailed to stockholders on or about March 31, 
1997 for the Annual Meeting to be held on April 29, 1997, are incorporated by 
reference in Part III.


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                                      PART I

Item 1.  BUSINESS

General 

   SPS Transaction Services, Inc. (the "Company") is a third party provider of 
technology-based outsourcing services concentrated in four primary businesses: 
the electronic processing of non-cash point-of-sale transactions (predominantly 
credit card transactions), consumer private label credit card program 
administration, commercial accounts receivable processing and call center based 
customer service applications.  As used herein, "Company" shall mean SPS 
Transaction Services, Inc. and its subsidiaries, unless the context otherwise 
indicates. 

   In its payment transaction processing business, referred to as Network 
Transaction Services, the Company provides a wide variety of clients with 
point-of-sale processing.  This includes authorization, data capture, reporting 
and routing for settlement of check, credit card and debit card transactions.  
The Company also manages private label credit card programs for merchants and 
other service providers through its Consumer Credit Card Services business.  
For these programs, the Company either administers the program for its merchant 
client or acts as an issuer and owns the credit card loans outstanding.  In 
addition, the Company offers billing and accounts receivable management systems 
for clients with businesses as their customers through its Commercial Account 
Processing Services business. The Company's call center TeleServices business 
includes on-line technical helpdesk support, catalog order entry and handling 
of customer service inquiries.

   The Company originated from an enterprise established by Sears, Roebuck and 
Co. ("Sears") in 1985.  The Company was organized as a Delaware corporation in 
October 1991 to carry on the businesses of its then two wholly owned 
subsidiaries, SPS Payment Systems, Inc. ("SPS"), a Delaware corporation, and 
Hurley State Bank ("HSB"), a South Dakota state chartered bank.  Prior to the 
Company's initial public offering in March 1992, the Company was a direct, 
wholly owned subsidiary of NOVUS Credit Services Inc. ("NCSI") and an indirect, 
wholly owned subsidiary of NCSI's parent, Dean Witter, Discover & Co. ("DWD").  
After the Company's initial public offering, NCSI owned 74.3% of the Company's 
common stock. On March 1, 1993, DWD completed its initial public offering of 
19.9% of its common stock, reducing Sears' ownership in DWD to 80.1%. On June 
30, 1993, Sears divested its remaining ownership of DWD's common stock by means 
of a special dividend to Sears shareholders. At December 31, 1996, the Company 
was a 73.6% majority owned subsidiary of NCSI, which in turn is a wholly owned, 
direct subsidiary of DWD.

   On February 5, 1997, DWD and Morgan Stanley Group Inc. announced a 
definitive agreement to merge.  The new company will be named Morgan Stanley, 
Dean Witter, Discover & Co.  The transaction, which is expected to be completed 
by mid-1997, is subject to certain regulatory approvals and the approval of 
shareholders of both companies.

Network Transaction Services 

   The Company provides electronic network transaction processing services 
primarily to national and regional merchants. The Company captures transaction 
information electronically at the point-of-sale; transmits the information 
utilizing the facilities of unaffiliated communication services providers to 
the credit card issuer, debit card issuer, or other appropriate on-line 
processor for authorization or verification; communicates the response to the 
merchant electronically; stores the information for reporting purposes; and 
submits processed data to the appropriate settlement entity. The authorization 
process is typically completed within seven seconds after the transaction data 
leaves the merchant's premises.




                                         -2-
<PAGE>
   The Company typically markets these services directly to large regional and 
national merchants and competes with other large networks and merchant 
acquirers for this business.

   The major components of the Company's Network Transaction Services business 
are described below: 

- Electronic Authorization/Data Capture - Transaction approval requests are 
processed through point-of-sale equipment using primarily "950" system dial-up 
telephone access, ISDN line access, leased line access, or satellite access 
into the communications network. The cardholder account number is checked 
against a computer file maintained by the issuer of the card and the purchase 
is approved or declined within seconds. A similar procedure is used for debit 
card processing and electronic check verification. At the time of 
authorization, pertinent transaction data is recorded and stored for use in 
settlement and client reporting. The Company's system provides for the 
redundant capture of transaction data at both the merchant's point-of-sale 
terminal and at the communications network data center. This data capture 
redundancy protects the merchant and the Company's system against potential 
loss of data. In addition, the Company's system provides multiple transaction 
routing capability from the merchant's point-of-sale location to ensure the 
user a high level of access to electronic authorizations. These features 
provide what the Company believes to be superior reliability and uptime for its 
clients. 

- Reporting and Settlement - Captured data is automatically processed within 
the Company's system for complete client reporting. This data is then 
transmitted for settlement to the appropriate financial institution or the 
designated processor. In the settlement process for a credit transaction, the 
merchant's account is credited and the card issuer is notified to post the 
transaction to the cardholder's account. For debit card transactions, the 
merchant's account is credited and the cardholder's checking account is 
debited. MasterCard(r) and Visa(r) card transaction data is transmitted to a 
settlement institution selected by the Company's merchant client. The 
settlement institution then enters transactions into the bankcard interchange 
settlement process. For NOVUS(sm) Card transactions (which include Discover 
Card, Private Issue(r) Card, BRAVO(sm) Card and affinity program cards) and 
American Express(r) Card transactions, data is transmitted directly to the card 
issuers of such cards.  For other card types, transaction data is transmitted 
to the appropriate processor for settlement of the transactions. 

   The Company maintains a 24-hour network services "help" desk which responds 
to inquiries from merchant locations and assists them in resolving terminal, 
network, communication and system training problems. The help desk provides 
terminal application consultation and, if necessary, downloads new applications 
to the merchant's point-of-sale terminals. The Company maintains a terminal 
preparation facility (the "TPF") which loads, tests and ships point-of-sale 
terminals to merchant locations. The TPF also provides repair services for 
point-of-sale terminals. The Company also markets point-of-sale terminal sales 
and maintenance, customer terminal application software development and 
customized reporting solutions as part of its Network Transaction Services 
business.

   The Company's Network Transaction Services are provided pursuant to written 
contracts with merchant clients. Such contracts are generally individually 
negotiated with each merchant, have terms varying from one to five years and 
frequently contain provisions that automatically extend the term of the 
contract unless either party takes affirmative action to terminate the 
contract. 









                                         -3-
<PAGE>
   The Company utilizes the computer and communications network (the "Network") 
of Advantis to process the majority of the Company's electronic transactions. 
The Company has access to the Network pursuant to an agreement between the 
Company and Advantis. Although Advantis is responsible for maintaining the 
Network and data centers, the Company develops and maintains most of the 
transaction processing systems and proprietary software that it runs on the 
Network. Processing performed by other communication providers is done through 
similar agreements.  The Company develops merchant and industry specific 
software tailored to the needs of its clients. Most data capture programs used 
in the Company's transaction processing services were developed and are 
maintained by Company employees and are not accessible, except as permitted by 
the Company, to other businesses that use the Network. 

   Through the Network, the Company maintains direct data links for NOVUS, 
Visa, MasterCard and American Express card authorizations and various other 
direct data links to proprietary card issuers and financial institutions for 
the purposes of authorizing and completing the Company's electronic transaction 
processing services. A wide variety of stand-alone point-of-sale terminals, 
electronic cash register systems and personal computers can be used by the 
Company's merchant clients at their individual locations to access the 
Company's system. 

Consumer Credit Card Services 

   The Company offers to national and regional merchants customized private 
label consumer credit card programs.  The Company's wholly owned subsidiary, 
HSB, issues the credit card on behalf of the client and owns the receivables 
that are generated through the use of the credit card (the "HSB Programs"). In 
programs that are managed but not owned (the "Managed Programs"), the Company 
administers the programs but does not act as the card issuer or own the 
receivables. 

   Whether the portfolio is owned or managed, the Company offers a full range 
of credit card services including: new account processing featuring custom 
scoring models; card design, embossing and issuance; sales authorizations; 
statement processing and mailing; remittance processing; handling cardholder 
inquiries; collections; and full marketing support.

   Services provided by the Company in a private label consumer credit card 
program typically include the following: 

- Implementation Support - The Company assists the merchant with card and 
statement design, software implementation and training before the processing of 
new accounts begins. 

- New Account Processing - The Company's New Account Processing System ("NAPS") 
enables new customer accounts to be opened in an average of four to six 
minutes. Applicant information taken at the point-of-sale is entered into NAPS, 
which maintains an on-line link to the major national credit bureaus and uses 
proprietary automated point-scoring  models selected by the issuer of the 
credit card to approve or decline credit applications. Applications received by 
mail are also handled through NAPS and are generally processed on the date of 
receipt. The Company's risk management department oversees the development and 
validation of new account approval models that are customized for an individual 
client and monitors and adjusts such models on an ongoing basis as applicants 
and economic conditions change. 

- Credit Card Embossing - The Company's software automatically generates a file 
of approved new account names and numbers for use in card embossing, and 
embossed cards are mailed to approved applicants.

- Sales Authorizations - The Company currently authorizes all transactions 
under its private label credit card programs through the Network. Merchants can 
utilize the same point-of-sale terminals they use for bank cards for private 
label credit card authorizations. 



                                         -4-
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- Mechanized Statement Processing - The Company sends monthly account 
statements directly to the cardholders. Large volumes and state-of-the-art 
equipment enable the Company to process statements efficiently. Statements can 
be customized to meet each merchant client's needs.

- Remittance Processing - The Company processes and deposits private label 
credit card payments typically within 24 hours of their receipt. 

- Cardholder Services - The Company has customer service representatives 
available to answer cardholder questions and handle billing inquiries during 
regular business hours. An automated call distribution system allows customer 
service representatives to answer telephone calls using the merchant client's 
name. The Company's cardholder service system enables the customer service 
representative to view the cardholder's file and billing statement information 
on a computer screen allowing for effective responses to cardholder inquiries. 

- Collections - The Company uses a sophisticated on-line collection system to 
identify and prioritize delinquent accounts. The Company contacts and attempts 
to work with delinquent cardholders to reach mutually agreeable payment plans. 

- Marketing Support - The Company assists its clients in developing a complete 
marketing plan that targets the merchant's private label credit cardholders. 
The Company also creates promotional materials to support such marketing plans. 

- Customized Reporting - The Company uses customized software to analyze a 
merchant client's cardholder base and to develop marketing information.

   The Company provides these services through two product offerings:

- Consumer Credit Card Outsourcing Services - For certain of the Managed 
Programs, the Company enters into a card services agreement with the merchant 
setting forth the credit card program services to be provided by the Company. 
The Company has traditionally charged flat processing fees under such 
agreements on a per service provided basis (for example, per collection call 
made, per card embossed, per statement issued). In some instances, the Company 
charges an aggregate flat processing fee under such agreements on a per 
cardholder account basis. Card services agreements typically have terms varying 
from one to five years and frequently contain provisions that automatically 
extend the term unless either party takes affirmative action to terminate the 
agreement.

- Owned Consumer Credit Card Programs  - For each of the HSB Programs, a 
merchant services agreement between HSB and the merchant is negotiated that 
sets forth the obligation of HSB to open credit card accounts for qualified 
customers of the merchant, the services to be provided by HSB and the merchant 
discount revenues to be paid by the merchant to HSB. In some of the HSB 
Programs, the merchant services agreement provides that the merchant discount 
revenues can be supplemented or adjusted in certain circumstances, as a result 
of prevailing interest rates and to mitigate anticipated increased credit 
losses. HSB's merchant services agreements typically have terms of five years 
and frequently contain provisions that automatically extend the term unless a 
party takes affirmative action to terminate the agreement.

   All finance charges (including late fees) paid by private label credit 
cardholders under HSB Programs are paid to and retained by HSB except to the 
extent that such fees are used to satisfy obligations under loan securitization 
agreements (see Hurley State Bank - Loan Securitization). SPS maintains a 
services agreement with HSB, pursuant to which SPS acts as the servicer for all 
private label accounts owned by HSB, and HSB pays SPS a monthly fee equal to a 
specified percentage of the outstanding receivables under such accounts.

Commercial Accounts Processing Services  

   The Company offers commercial accounts processing for clients whose 
customers are businesses rather than consumers. The processing of commercial 



                                         -5-
<PAGE>
accounts is accomplished through the use of a specialized accounts receivable 
management system developed by the Company called PARAGON Commercial 
Services(sm). The system allows the Company's clients to offer their commercial 
customers a monthly revolving statement or an invoice with custom terms and in 
each case the system may include supporting purchase order data. The Company 
also provides credit scoring models, cardholder services, collection procedures 
and marketing support. Revenues earned from commercial accounts processing are 
included in Managed Programs. 

   MountainWest Financial Corporation ("MountainWest"), a wholly owned 
subsidiary of NCSI, is the issuer of the majority of the Company's commercial 
private label credit cards as well as certain consumer private label credit 
cards with respect to which SPS acts as the servicer pursuant to a Service 
Agreement. SPS has also entered into a Marketing Services Agreement with NCSI 
pursuant to which SPS provides marketing and sales services for the benefit
of MountainWest.

TeleServices

   The Company's TeleServices (formerly referred to as Operational Outsourcing) 
business markets call center teleservicing programs that focus on 
business-to-consumer applications based on the Company's technological 
capabilities and professional customer service. For such services, the Company 
develops or utilizes customized software applications primarily to respond to 
inbound calls from a client's customers and to facilitate  appropriate actions 
based on the calls.  

   The Company services a range of client outsourcing programs including:

- Help Desk and Technical Support - The Company provides user technical support 
programs for proprietary and off-the-shelf software applications, technical 
internet user support and problem analyses.

- Inbound Teleservice - The Company provides customized customer service 
applications for clients by responding to inbound inquiries from their 
customers.  Specific examples of this outsourcing service are the handling of 
billing inquiries, product feature inquiries, dealer locator applications, 
dispatch services for emergency road service or product repair, enrollment 
services, handling member benefit inquiries and many others.

- Catalog Order Management - The Company provides services to catalog and 
direct mail merchants to process inbound orders that are received via 
telephone, fax or internet.  Service features include order entry, cross-
selling, authorization of credit purchases, real time interfaces with client 
warehouses and fulfillment centers, resolution of customer problems and 
reporting of customer and product data.

Competition

   The Company's services are sold primarily to national and regional 
merchants. The Company competes on the basis of service quality, response time, 
customer support, customized system applications, reliability and price. The 
Company believes that it is among the industry leaders with respect to each of 
these factors.

   According to the Faulkner & Gray Credit Card Industry Directory (1997 
Edition), based on the volume of outstanding receivables administered, GE 
Capital Retailer Financial Services has over 50% of the third party private 
label credit card marketplace.  Also according to Faulkner & Gray, Household 
Retail Services, Beneficial National Bank and SPS Transaction Services are the 
next largest of the third party private label credit card providers identified, 
although the Company believes that no competitors other than GE Capital 
Retailer Financial Services are dominant in such marketplace. The principal 
competitors of the Company in the electronic network transaction processing 
marketplace include First Data Card Services, National City Processing Company, 
Alliance Card Services (formerly Business Services, Inc. and Limited Card 
Services), and BuyPass Corporation, although the Company believes that no 

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<PAGE>
competitors other than First Data Card Services are dominant in such 
marketplace. The Company's TeleServices business is client specific, and as 
such the Company does not compete with a defined set of competitors with 
respect to these services. Existing and potential competitors of the Company 
may have equal or greater financial, technological and/or marketing resources 
than the Company, and there can be no assurance that the Company will continue 
to be able to compete successfully with them.

Significant Clients

   Tandy is the Company's largest client, accounting for 24.0% of the Company's 
net operating revenues in 1996. The Company administers four owned private 
label credit card programs and provides electronic transaction processing 
services for Tandy. The Goodyear Tire & Rubber Company ("Goodyear") is the 
Company's next largest client, accounting for 12.0% of the Company's net 
operating revenues in 1996. The Company administers two owned private label 
credit card programs and provides electronic transaction processing services 
and TeleServices for Goodyear. None of the Company's other clients individually 
accounted for more than 10% of the Company's net operating revenues in 1996.

Seasonal Factors

   The Company's results of operations are impacted by seasonal patterns of 
retail purchasing, but because certain seasonal trends are typically 
offsetting, their impact does not significantly affect the Company's overall 
results of operations. The number of transactions processed and the level of 
credit card loans outstanding typically grows during the fourth quarter 
followed by a flattening or decline in the subsequent first quarter. This 
seasonality results mainly from higher levels of retail sales in the fourth 
quarter than in the first quarter. During the fourth quarter, merchant discount 
revenue and revenues derived from transaction processing services typically 
increase, but are accompanied by increases in expenses associated with the 
growth of credit card receivables. These increased expenses typically include 
the provision for loan losses, financing expenses, salaries and employee 
benefits expenses, processing and service expenses, and various other expenses. 
Correspondingly, in the first quarter, merchant discount revenue, revenues 
derived from transaction processing services and provision for loan loss 
expense typically decrease, but generally are accompanied by increased finance 
charge revenue related to the preceding quarter's credit card loan growth.

Hurley State Bank

   HSB is the credit card issuer and the receivables funding facility for the 
HSB Programs, all of which are administered by the Company. HSB is not a member 
of the Federal Reserve System. HSB is engaged only in consumer credit card 
operations and is not permitted to engage in commercial lending (which may 
include consumer credit card programs where the merchant is a recourse party).  
The terms and conditions of the credit card accounts owned by HSB are set forth 
in cardholder agreements entered into with each merchant's customers.

   Funding of Receivables 

   The HSB Programs involve making loans to private label credit cardholders 
which create receivables from the cardholders. As such, the business is capital 
intensive. The Company's ability to add to or expand the HSB Programs is 
limited by the amount of its available capital and by applicable regulatory 
ratios of capital to assets. The Company currently funds the capital needs of 
its operations by deposit taking activities utilizing certificates of deposit 
("CDs") in denominations of $100,000 or more, securitizations of credit card 
loans and borrowings from DWD.








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<PAGE>
   HSB administers a certificate of deposit program through which CDs are 
issued to investors in denominations of $100,000 or more. Such CDs are issued 
to investors under two programs - an institutional CD program and a retail CD 
program.  CDs under the institutional CD program are issued directly by HSB to 
the investor and generally have a maturity of one to twelve months.  CDs under 
the retail CD program are issued to investors through Dean Witter Reynolds 
Inc., a subsidiary of DWD, and generally have a maturity of two to 10 years. As 
of December 31, 1996, CDs outstanding were $454.4 million, of which 
institutional CDs represented $213.2 million and retail CDs represented $241.2 
million.

   The Company engages in credit card loan securitization transactions through 
the sale by HSB of credit card loans. When the Company securitizes its credit 
card loans, it retains the right to service the underlying credit card 
accounts, for which it receives fees. Loan securitizations have the effect of 
converting net credit income and credit card fees into loan servicing fees 
while improving overall liquidity and capital ratios of the Company. See 
"Business - Hurley State Bank - Loan Securitization."

   Certain borrowings to support the HSB Programs are currently provided 
pursuant to an Amended and Restated Borrowing Agreement, as ammended, (the
"Borrowing Agreement") and a facility fee letter agreement, as ammended (the
"Facility Fee Agreement")(collectively, the "Financing Agreements") with DWD,
pursuant to which DWD has agreed to provide financing to the Company.  As of
January 31, 1997 the maximum amount available under the Borrowing Agreement,
which expires on April 17, 1997, was increased from $1.0 billion to $1.25
billion.  The interest rate to be paid by the Company reflects DWD's
borrowing costs. At January 31, 1997, the Company had $917.1 million
outstanding under the Borrowing Agreement.  Under the Facility Fee Agreement,
the Company has agreed to pay certain monthly facility fees in connection
with its financing arrangements with DWD.  An Amended and Restated Bridge
Agreement, under which DWD provided loans to the Company of up to $250
million, expired on January 31, 1997.  The Company expects to renew or
replace the Financing Agreements prior to the expiration dates of such
Financing Agreements.  The Company is continuing to evaluate alternative
sources of financing to replace all or a portion of its financing
arrangements with DWD.  If the Company is unable to reach a satisfactory 
agreement with DWD for the renewal or the replacement of the Financing 
Agreements, the Company believes it will be able to meet its financial 
requirements over the next twelve months from other sources.

   Loan Securitization  

   Selling loans through securitizations results in net income and fee income 
from credit card loans under HSB Programs effectively being converted into loan 
servicing fees, while improving overall liquidity and capital ratios of the 
Company. A securitization transaction involves the sale by HSB of the credit 
card loans generated by a pool of HSB Program credit card accounts to a 
separate legal entity created for loan securitizations. The securitizations 
result in removal of the credit card loans from the Company's balance sheet for 
both financial and regulatory accounting purposes. The private label credit 
cardholder is generally not aware that the credit card loans from his or her 
account have been included in a pool of securitized loans because the Company 
services on-balance-sheet and securitized loans in the same manner. Under the 
securitization agreements, the existence of certain conditions could cause 
early amortization of the affected pool of securitized loans and thereby 
increase the Company's need for alternative forms of financing. Such conditions 
include an increase in the amount of charge-offs over a specified rate. 

   Payments by HSB Program cardholders of finance charges and other amounts 
relating to the credit card loans are used to pay a rate of return to the 
holders of ownership interests in the receivables pools. Such payments are also 
used to pay a fee to the agent and a fee to SPS and to reimburse the purchaser 
for cardholder accounts that are charged off. Any remaining amounts are 
effectively paid to HSB. In the event that such payments are insufficient to 
cover charge-offs, and to pay the rate-of-return and agent fee, SPS, as the 
recourse party under the Receivables Capital Corporation ("RCC") program, or 
the Company, as the recourse party under the Barton Capital Corporation ("BCC") 

                                         -8-
<PAGE>
program, have agreed to make up such shortfall up to their respective maximum 
recourse obligations. DWD is the guarantor of such recourse obligations. In 
addition, HSB is obligated to pay a monthly commitment fee to the purchaser of 
the credit card loans if any portion of the facility is unused. 

   HSB maintains a loan securitization program with RCC, and at December 31, 
1996, outstanding loans sold under such program were $280.0 million.  HSB also 
maintains a loan securitization program with BCC, and at December 31, 1996, 
outstanding loans sold under such program were $300.0 million.  At December 31, 
1996, $580.0 million or 26.2% of the HSB Program loans had been sold through 
loan securitizations. 

   The RCC and BCC loan securitization programs are scheduled to expire in 
April 1997.  The Company expects to renew or replace these facilities on or 
prior to the expiration dates.  If these programs are not extended on or prior 
to their expiration dates, collections allocable to RCC and BCC following the 
expiration dates of the programs will be paid to RCC or to BCC, as applicable, 
and the interests of RCC and BCC in the applicable securitization pool will 
gradually decline to zero.  Any receivables originated after the applicable 
program's expiration date would remain on the Company's consolidated balance 
sheet. 

Interest Rate Risk 

   The Company's interest rate risk policies are designed to reduce the 
volatility of earnings resulting from changes in interest rates.  This is 
accomplished primarily through matched financing, where possible, which entails 
matching the repricing schedules of credit card loans and the related 
financing.  Matched financing includes the funding of variable rate credit card 
loans that are primarily indexed to the prime rate with floating rate financing 
that is primarily indexed to commercial paper rates and the federal funds rate. 
The Company generally retains basis risk between the prime rate and commercial 
paper/federal funds rates on variable rate credit card loans.  Fixed rate 
credit card loans are generally funded with fixed rate financing (financing 
with an initial term of one year or greater).

   The Company also funds fixed rate credit loans with floating rate financing 
by utilizing interest rate swaps, cost of funds agreements and interest rate 
caps to adjust the repricing characteristics of its financing to fixed rate 
financing.  Under interest rate swaps and cost of funds agreements, the Company 
effectively exchanges the interest payments on its financing with those of a 
counterparty.  Interest rate cap agreements effectively establish a maximum 
interest rate on certain of the Company's floating rate borrowings.  Interest 
rate swap agreements are entered into with an affiliate.  Interest rate cap 
agreements are entered into with institutions that are established dealers in 
these instruments and that maintain certain minimum credit criteria established 
by the Company.  Cost of funds agreements are entered into as part of 
agreements pursuant to which the Company owns the credit card loan portfolio 
and provides private label credit card processing services to certain of its 
credit card merchant clients.

   To reduce the volatility of interest expense from changes in interest rates, 
the Company had outstanding interest rate swaps and cost of funds agreements of 
$46.6 million and $752.8 million at December 31, 1996 and 1995, respectively.

   During 1995, the Company converted several of its fixed interest rate credit 
card programs to variable interest rate programs. At December 31, 1996 and 
1995, approximately 69% and 58% of the Company's credit card loans including 
securitized loans were variable interest rate loans.









                                         -9-
<PAGE>
Executive Officers of the Registrant

   The following sets forth certain information concerning executive officers  
of the Company during the past five years:
		
       Name                   Age                     Present Position
---------------------        ------    ----------------------------------------
Robert L. Wieseneck            59	      President, Chief Executive Officer and 
                                                   Director
Thomas C. Schneider            59      Chief Financial Officer and Director
Robert W. Archer               58      Senior Vice President -- Sales
Richard F. Atkinson            60      Senior Vice President -- Operations
Russell J. Bonaguidi           45      Vice President -- Controller
Thomas W. Clarke               43      Vice President -- Network Services 
                                                         Operations
Robert J. Ferkenhoff           54      Vice President and Chief Information 
                                                          Officer
Thomas M. Goldstein            38      Vice President -- Finance
Larry H. Myatt                 53      Vice President -- Marketing and 
                                                         Administration
Ruth M. O'Brien                43      Vice President -- TeleServices
David J. Peterson              39      Vice President -- Network Services and 
                                                         Corporate Development
Serge J. Uccetta               51      Vice President -- Card Services
Mary Ann Warniment             47      Vice President -- Electronic Information
                                                         Services


   Mr. Wieseneck has served as President, Chief Executive Officer and a 
director of the Company since its formation. He has served as President of SPS 
since 1987 and as a director of SPS since 1988. Mr. Wieseneck has also served 
as President and Chairman of the Board of HSB since 1989. He has served as a 
director of NCSI since 1991 and as an Executive Vice President of NCSI from 
December 1986 to April 1987 and since April 1988.

   Mr. Schneider has served as Chief Financial Officer and a director of the 
Company since its formation. Mr. Schneider has served as an Executive Vice 
President of DWD since 1980 and as its Chief Financial Officer from 1981 until 
1982 and since 1987. He has also served as Executive Vice President and Chief 
Financial Officer of NCSI since 1987 and as a director of NCSI since 1986. Mr. 
Schneider has been Chief Financial Officer of Dean Witter Reynolds, Inc. 
("DWR") since 1987, an  Executive Vice President of DWR since 1984 and a 
director of DWR since 1981. 

   Mr. Archer has served as Senior Vice President -- Sales of the Company and 
as a Senior Vice President of SPS since 1994.  Mr. Archer served as Vice 
President -- Sales of the Company from 1992 until 1994 and as a Vice President 
of SPS from 1988 until 1994.

   Mr. Atkinson has served as Senior Vice President -- Operations of the 
Company and as a Senior Vice President of SPS since 1994. Prior thereto he 
served as Vice President -- Operations of the Company from 1992 until 1994 and 
as a Vice President of SPS from 1986 until 1994. Mr. Atkinson has served as a 
Senior Vice President of HSB since 1991.

   Mr. Bonaguidi has served as Vice President -- Controller of the Company, HSB 
and SPS since 1994.  Prior thereto he was National Manager of Credit Card 
Banking for Sears, Roebuck and Co. from 1992 until 1994 and Vice President -- 
Controller of Prime Option Services, Inc. (an affiliate of the Company) from 
1990 until 1992.

   Mr. Clarke has served as Vice President -- Network Services Operations of 
the Company since 1996 and as Vice President Network Services Operations of SPS 
since 1994.  Prior thereto he was Vice President -- Network Services 
Operations/Development from 1994 until 1996, Controller of the Company from 
1992 until 1994, Controller of SPS from 1986 until 1994 and Vice President and 
Controller of HSB from 1992 until 1994.

                                         -10-
<PAGE>
   Mr. Ferkenhoff has served as Vice President and Chief Information Officer of 
the Company since 1994 and of SPS since 1993.  Prior thereto he was Vice 
President -- Information Technology of the Company from 1993 until 1994 and 
Vice President -- Information Services for Sears Merchandise Group from 1989 
until 1993.

   Mr. Goldstein has served as Vice President -- Finance of the Company and as 
a Vice President of HSB since 1995.  Prior thereto he was First Vice President 
-- Group Director of Funding and Capital Markets/Investor Relations of DWD from 
1989 until 1994.

   Mr. Myatt has served as Vice President -- Marketing and Administration of 
the Company since 1996.  Prior thereto he was Vice President -- Marketing and 
Product Development of the Company from 1992 until 1996 and as a Vice President 
of SPS since 1986.

   Ms. O'Brien has served as Vice President -- TeleServices of the Company 
since 1996.  Prior thereto she was Director of Operational Outsourcing for SPS 
and Director of Client Services for SPS from 1994 until 1996 and from 1990 
until 1994, respectively.

   Mr. Peterson has served as Vice President -- Network Services and Corporate
Development of the Company since 1995.  Prior thereto he was Vice President
-- Corporate Development of the Company from 1994. Mr. Peterson was an
investment banker for DWR from 1987 until 1993

   Mr. Uccetta has served as Vice President -- Card Services of the Company 
since 1995 and Vice President -- Card Services of SPS since 1993.  Prior 
thereto he was Director of Commercial Accounts for the Company from 1993 until 
1995.  Prior to joining SPS, Mr. Uccetta was Director -- Strategic Programs of 
Citibank from 1991 until 1993.

   Ms. Warniment has served as Vice President -- Electronic Information 
Services of the Company since 1993 and as a Vice President of SPS since 1990.  
She was Vice President -- Information Technology of the Company from 1992 until 
1993.

   There are no family relationships between any of the foregoing persons.

Employees 

   As of December 31, 1996, the Company had 3,881 full-time equivalent 
employees, of which 612 were salaried and 3,269 were hourly. Of the hourly 
employees, approximately 28% were part-time. Approximately 3,390 of the 
Company's full-time equivalent employees were located in field operations 
centers providing customer service and support. Of the approximately 385 full-
time equivalent employees located at the Company's headquarters, 70 were 
engaged in sales and marketing, 155 were engaged in systems development and 
maintenance, and 160 were engaged in supporting the Company's various 
businesses and administration.  None of the employees of the Company is covered 
by a collective bargaining agreement. The Company has not experienced any work 
stoppages and considers its relations with its employees to be good.

Regulatory Matters

   Restrictions on Activities of HSB 

   HSB, a federally insured, South Dakota state chartered bank, operates as a 
limited purpose credit card bank under federal law. The federal Competitive 
Equality Banking Act of 1987 ("CEBA") established several categories of 
financial institutions that do not fall within the meaning of "bank" for 
purposes of the Bank Holding Company Act ("BHCA"). Among those exempted are 
credit card banks. As a credit card bank, HSB may engage only in credit card 
operations and may not engage in the business of making commercial loans. 
Additionally, HSB may not accept savings or time deposits of less than $100,000 
and may not accept demand deposits or other transaction accounts of any amount. 
Finally, HSB may maintain only one office at which it can accept deposits. HSB 
is subject to deposit insurance assessments payable to the Bank Insurance Fund 
of the Federal Deposit Insurance Corporation ("FDIC"). The rates for these 
                                         -11-
<PAGE>
assessments may vary based upon HSB's capital levels, risk categories, and a 
rate structure established by the FDIC. The bank is subject to comprehensive 
regulations and periodic examinations by the South Dakota Division of Banking 
and by the FDIC.

   CEBA Limitations 

   CEBA provides that if HSB fails to comply with the statutory restrictions 
affecting its status as a credit card bank, any entity controlling HSB may, 
among other things, be required to divest control of HSB. HSB believes, 
however, that in light of the programs it has in place, the limitations of CEBA 
will not have a material impact on HSB's ability to service, or to maintain the 
level of, the cardholder programs. Future federal or state legislation, 
regulation or interpretation of federal or state legislation or regulation 
could, however, adversely affect the business of HSB or the relationship of any 
such controlling entity with HSB.

   Exportation of Interest Rates

   The terms and conditions of the credit card accounts owned by HSB are 
governed by the laws of South Dakota, where HSB is chartered, and by applicable 
federal law. Under federal law, HSB may charge interest at the rate allowed by 
the laws of South Dakota, which do not limit the amount of interest that may be 
charged on credit card loans offered by HSB. As a result, HSB is permitted to 
export interest rates pursuant to federal law.

   Dividends and Transfers of Funds

   There are various legal limitations on the extent to which HSB can finance 
or otherwise supply funds, through dividends, loans or otherwise, to the 
Company and its affiliates. The FDIC is authorized to prohibit HSB from 
engaging in any unsafe and unsound practice in conducting its business, and it 
is possible that under some circumstances the FDIC could claim that payment of 
a dividend was an unsafe and unsound practice. In addition, under federal law, 
a bank cannot pay a dividend that will cause such bank to be 
"undercapitalized". HSB's state regulator also has the authority to prohibit 
unsafe and unsound practices. The payment of dividends by HSB may also be 
affected by other factors, such as the need to maintain adequate capital or to 
meet loan demands.

   HSB is also subject to certain restrictions which limit the transfer of 
funds to the Company, and certain other affiliates in the form of loans, 
extensions of credit, investments or purchases of assets or services and which 
require that HSB's transactions with its affiliates be on terms no less 
favorable to HSB than comparable transactions with unrelated third parties.

   Consumer Protection Laws and Debtor Relief Laws 

   The relationships among cardholders, credit card issuers and sellers of 
merchandise in transactions financed by the extension of credit under credit 
accounts are extensively regulated by federal and state consumer protection 
laws and regulations. Such laws and regulations include the federal 
Truth-in-Lending Act (and the Federal Reserve Board's Regulation Z issued 
thereunder), Equal Credit Opportunity Act (and the Federal Reserve Board's 
Regulation B issued thereunder), Soldiers' and Sailors' Civil Relief Act, Fair 
Credit Billing Act, Fair Credit Reporting Act and Fair Debt Collection 
Practices Act. These statutes and regulations require credit disclosures on 
credit card applications and solicitations, on an initial disclosure statement 
required to be provided when a credit card account is first opened, and with 
each monthly billing statement. They also prohibit certain discriminatory 
practices in extending credit, impose certain limitations on the charges and 
fees that may be imposed and regulate practices utilized in collections. In 
addition, cardholders are entitled, under such laws and regulations, to have 
payments and credits promptly applied on credit accounts and to require billing 
errors to be promptly resolved. A cardholder may be entitled to assert 
violations of certain of such consumer protection laws by way of set-off 
against the cardholder's obligation to pay amounts owing on the cardholder's 

                                         -12-
<PAGE>
account or, in certain cases, by claims against the lender or seller. For 
example, under the federal Truth-in-Lending Act, a credit card issuer is 
subject to all claims (other than tort claims) and defenses arising out of 
transactions in which a credit card is used to purchase merchandise, if certain 
conditions are met. These conditions include requirements that the cardholder 
make a good faith attempt to obtain satisfactory resolution of the dispute from 
the person honoring the credit card and meet certain jurisdictional 
requirements. Where the seller of the goods or services is the same party as 
the card issuer, or controls or is controlled by the card issuer directly or 
indirectly, these jurisdictional requirements are not applicable. These 
statutes further provide that in certain cases a cardholder's liability may not 
exceed $50 with respect to charges to the credit card account which resulted 
from unauthorized use of the credit card. The application of federal and state 
bankruptcy and debtor relief laws affect HSB to the extent such laws result in 
any credit card accounts being charged off as uncollectible. 

   FDICIA

   Under the Federal Deposit Insurance Corporation Improvement Act of 1991 
("FDICIA"), the federal bank regulatory agencies are required to take "prompt 
corrective action" with respect to banks that do not meet minimum capital 
requirements, and FDICIA imposes certain restrictions upon banks which meet 
certain capital requirements but are not "well capitalized" for purposes of 
FDICIA. FDICIA establishes five categories: well capitalized, adequately 
capitalized, undercapitalized, significantly undercapitalized and critically 
undercapitalized.  A bank may be downgraded to, or be deemed to be in, a 
capitalization category that is lower than is indicated by its actual capital 
position if it is determined to be in an unsafe or unsound condition, or  
receives an unsatisfactory examination rating.  The FDIC has issued regulations 
to implement the prompt corrective action provisions of FDICIA. Under FDICIA 
and implementing regulations adopted by the FDIC, a bank that is not well 
capitalized is generally prohibited from accepting brokered deposits and 
offering interest rates on any deposits significantly higher than the 
prevailing rate in its normal market area or nationally (depending upon where 
the deposits are solicited). HSB currently solicits deposits through brokers.  
If HSB were unable to use brokered deposits as a funding source, the funding 
costs for HSB would be likely to increase.

   FIRREA Cross-Guarantee Provisions

   Pursuant to certain provisions of the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 ("FIRREA"), an insured depository 
institution which is commonly controlled with another insured depository 
institution is liable to the FDIC for any loss incurred, or reasonably 
anticipated to be incurred, by the FDIC in connection with the default of such 
commonly controlled institution, or any assistance provided by the FDIC to such 
commonly controlled institution which is in danger of default. The term 
"default" is defined to mean the appointment of a conservator or receiver for 
such institution.  Under this provision, HSB could be required to reimburse the 
FDIC for such losses resulting from the default of any other insured depository 
institution which is under common control with HSB (for example, Greenwood 
Trust Company, a Delaware state bank, and MountainWest, both of which are owned 
by DWD, the ultimate majority stockholder of HSB) and such reimbursement could 
be required even if it would cause the bank providing the reimbursement also to 
go into default. Such liability is subordinated in right of payment to deposit 
liabilities, secured creditors, other than obligations owned to any affiliate 
of the depository institution (with certain exceptions) and any obligations and 
any other general or senior liability, and any obligation subordinated to 
depositors or other general obligations to stockholders in such capacity.

Item 2.  PROPERTIES

   The Company's headquarters are located in Riverwoods, Illinois, where it 
leases approximately 97,400 square feet of office space from NCSI for a term 
expiring on January 31, 2000. The Company also conducts significantly all of 
its operations out of owned facilities located in Gray, Tennessee and Sioux 
Falls, South Dakota, and a leased facility in Layton, Utah.  The Gray, 

                                         -13-
<PAGE>
Tennessee facility contains approximately 131,000 square feet that, as of 
December 31, 1996, housed approximately 1,750 full-time equivalent Company 
employees involved in processing accounts for certain Managed and HSB Programs, 
administering TeleServices and providing certain data communications functions 
related to the Company's Network Transaction Services.  The Sioux Falls, South 
Dakota facility contains approximately 65,000 square feet that, as of December 
31, 1996, housed approximately 760 full-time equivalent Company employees 
involved in processing accounts for HSB Programs and providing TeleServices.  
HSB operates out of the Sioux Falls facility.  The Layton, Utah facility 
contains approximately 81,000 square feet that, as of  December 31, 1996, 
housed approximately 880 full-time equivalent Company employees involved in 
processing accounts for certain Managed and HSB Programs and providing 
TeleServices. The Layton, Utah facility is leased for a term expiring in June 
2001.

   The Company believes that its properties are adequate and suitable for its 
business as presently conducted.

Item 3.  LEGAL PROCEEDINGS

  In the normal course of business, the Company is involved in routine 
litigation incidental to the business.  The consequences of these matters are 
not presently determinable but, in the opinion of management after consultation 
with counsel, the ultimate liability, if any, will not have a material adverse 
effect on the consolidated results of operations or financial position of the 
Company.

  Some of these lawsuits and proceedings arise in jurisdictions such as Alabama 
that permit punitive damages disproportionate to the actual damages alleged.  
In light of the uncertainties inherent in any litigation, no assurances can be 
given as to the ultimate outcome of these lawsuits and proceedings.  However, 
the Company and its subsidiaries believe that there are meritorious defenses 
for all of these claims and are defending them vigorously.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   No matters were submitted to a vote of security holders during the fourth 
quarter of the fiscal year ended December 31, 1996.


                                        PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   The section entitled "Quarterly Information" appearing on page 39 of the 
Company's Annual Report to Stockholders to be mailed to stockholders on or 
about March 31, 1997 for the year ended December 31, 1996 (the "Annual Report") 
is incorporated herein by reference in response to information required by Item 
5.

   The fair market value of a share of Common Stock at the close of business on 
January 31, 1997, as reported in the Wall Street Journal, was $18.250.

   The Company has not paid any dividends on its Common Stock and anticipates 
retaining future operating cash flows for the foreseeable future to finance 
growth and business expansion rather than to pay dividends to its stockholders. 
Any future determination as to the payment of dividends will depend upon 
results of operations, capital requirements, the financial condition of the 
Company and such other factors as the Board of Directors of the Company in its 
discretion shall determine. Periodically, SPS and HSB have paid dividends to 
the Company. The amount of dividends that can be paid to the Company by HSB is 
restricted by applicable banking regulations.

Item 6.  SELECTED FINANCIAL DATA

   The section entitled "5-Year Selected Financial Data" appearing on page 39 
of the Annual Report is incorporated herein by reference in response to 
information required by Item 6.
                                         -14-
<PAGE>
Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND    
         RESULTS OF OPERATIONS

   The section entitled "Management's Discussion and Analysis of Financial 
Condition and Results of Operations" appearing on pages 16 through 23 of the 
Annual Report is incorporated herein by reference in response to information 
required by Item 7.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The sections entitled "Consolidated Balance Sheets" appearing on page 24 of 
the Annual Report, "Consolidated Statements of Income" appearing on page 25 of 
the Annual Report, "Consolidated Statements of Cash Flows" appearing on page 26 
of the Annual Report, "Consolidated Statements of Changes in Stockholders' 
Equity" appearing on page 27 of the Annual Report, "Notes to Consolidated 
Financial Statements" appearing on pages 28 through 35 of the Annual Report, 
"Independent Auditors' Report" appearing on page 38 of the Annual Report and 
"Quarterly Information" appearing on page 39 of the Annual Report are 
incorporated herein by reference in response to information required by Item 8.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND  
         FINANCIAL DISCLOSURE

   None.

                                 PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   The section entitled "Nominees for Election as Directors" appearing on pages 
2 and 3 of the Company's proxy statement to be mailed to stockholders on or 
about March 31, 1997 for the April 29, 1997 Annual Meeting of Stockholders (the 
"Proxy Statement") is incorporated herein by reference in response to 
information concerning directors required by Item 10.

   The information concerning executive officers required by Item 10 is set 
forth in Part I, Item I of this Annual Report on Form 10-K.

Item 11.  EXECUTIVE COMPENSATION

   The section entitled "Executive Compensation" appearing on pages 7 through 
12, and the section entitled "Performance Graph" appearing on page 13, of the 
Proxy Statement is incorporated herein by reference in response to information 
required by Item 11.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   The section entitled "Security Ownership of Directors and Officers" 
appearing on pages 5 and 6 of the Proxy Statement is incorporated herein by 
reference in response to information required by Item 12.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The section entitled "Certain Relationships" appearing on pages 14 through 
16 of the Proxy Statement is incorporated herein by reference in response to 
information required by Item 13.












                                         -15-
<PAGE>
                                    PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  Documents filed as part of this report:

1.   Financial Statements.  The following Consolidated Financial Statements of  
     SPS Transaction Services, Inc. are incorporated herein by reference from 
     the Annual Report:

                                                                  Annual Report
                                                                       Page
                                                                  -------------
     Consolidated Balance Sheets                                        24
     Consolidated Statements of Income                                  25
     Consolidated Statements of Cash Flows                              26
     Consolidated Statements of Changes in Stockholders' Equity         27
     Notes to Consolidated Financial Statements                         28
     Independent Auditors' Report                                       38

2.   Financial Statement Schedules.  The following Financial Statement     
     Schedules are incorporated herein by reference from the Annual Report:

     Quarterly Financial Information                                    39*

     Schedule III - Condensed Financial Statements of SPS Transaction
     Services, Inc. (Parent Company Only)                              S-1**

     Independent Auditors' Report                                      S-5**

------------------------

     * Refers to page number in Annual Report.
     ** Refers to page number in this Form 10-K.

     All other Financial Statement Schedules have been omitted since the 
     information is not applicable, is not required or is included in the 
     Consolidated Financial Statement or Notes to Consolidated Financial 
     Statement listed under section (a)1 above.

3.   Listing of Exhibits.  The following exhibits are incorporated by reference 
     or filed herewith:

3.1  Certificate of Incorporation of the Company (incorporated by reference  
     from Exhibit 3.1 of the Company's Registration Statement No. 33-44937 (the 
     "1992 Registration Statement")).

3.2  By-laws of the Company (incorporated by reference from Exhibit 3.2 of the 
     1992 Registration Statement).

4.1  Form of certificate representing shares of Common Stock of the Company 
     (incorporated by reference from Exhibit 4.1 of the 1992 Registration 
     Statement).

10.1  Services Agreement for Systems Operations Services dated September 17, 
      1993, between SPS and Advantis (portions of which have been granted 
      confidential treatment pursuant to an order of the Securities and Exchange
      Commission, which will remain in effect until December 31, 1998) 
      (incorporated by reference from Exhibit 10.1 of the Company's Annual 
      Report on Form 10-K for the fiscal year ended December 31, 1993 (the "1993
      Form 10-K")).







                                          -16-
<PAGE>
10.2  Service Agreement dated as of February 1, 1994, and Amendment to the 
      Service Agreement dated as of January 31, 1995, each between SPS and 
      MountainWest (incorporated by reference from Exhibit 10.2 of the Company's
      Annual Report on Form 10-K for the fiscal year ended December 31, 1994 
      (the "1994 Form 10-K")).

10.3  POS Debit Card Program Letter Agreement dated as of August 30, 1994, 
      between SPS and Discover Card Services, Inc. ("Discover Card") 
      (incorporated by reference from Exhibit 10.3 of the 1994 Form 10-K).

10.4  Management Services Agreement dated as of January 1, 1992, between the 
      Company and NCSI (incorporated by reference from Exhibit 10.2 of the 1992 
      Registration Statement).

10.5* Amendment to the Advantis/SPS Payment Systems, Inc. Master Agreement for 
      Systems Operations Services effective March 13, 1997, between Advantis 
      and SPS.

10.6  Third Amendment to Service Agreement made effective as of January 1, 
      1996, between SPS and MountainWest (incorporated by reference from 
      Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the 
      quarterly period ended September 30, 1996 (the "1996 Third Quarter Form 
      10-Q")).

10.7  Third-Party Processing and Cooperative Network Service Agreement made as 
      of September 28, 1992, between SPS and Discover Card (incorporated by 
      reference from Exhibit 10.7 of the Company's Annual Report on Form 10-K 
      for the fiscal year ended December 31, 1992 (the "1992 Form 10-K")). 

10.8  Terminal Service Agreement made as of January 1, 1992, between SPS and 
      Discover Card (incorporated by reference from Exhibit 10.6 of the 1992 
      Registration Statement).

10.9  Letter Agreement dated November 5, 1992, between SPS and Discover Card, 
      amending the Terminal Service Agreement made as of January 1, 1992 
      (incorporated by reference from Exhibit 10.9 of the 1992 Form 10-K).

10.10 Amended and Restated Marketing Services Agreement dated as of January 1, 
      1996, between SPS and NCSI (incorporated by reference from Exhibit 10.2 
      of the 1996 Third Quarter Form 10-Q).

10.11 System Access Agreement entered into August 1, 1992, between SPS and 
      Discover Card (incorporated by reference from Exhibit 10.11 of the 1992 
      Form 10-K).

10.12 Lease Agreement made February 1, 1993, between SPS and NCSI (incorporated 
      by reference from Exhibit 10.12 of the 1993 Form 10-K).

10.13 Assignment and Assumption of Lease dated as of December 31, 1993, between 
      SPS and NCSI, and Office Lease Agreement made and entered into October 1, 
      1990, between NCSI and Price Development Company (incorporated by 
      reference from Exhibit 10.13 of the 1993 Form 10-K).

10.14 Service Agreement dated as of January 1, 1988, between SPS and HSB 
      (incorporated by reference from Exhibit 10.12 of the 1992 Registration 
      Statement).

10.15 Service Agreement dated as of November 1, 1990, between SPS and 
      MountainWest (incorporated by reference from Exhibit 10.13 of the 1992 
      Registration Statement).

10.16 Registration Agreement made as of February 25, 1992, between the Company 
      and NCSI (incorporated by reference from Exhibit 10.16 of the 1993 Form 
      10-K).




                                          -17-
<PAGE>
10.17 Letter Agreement dated as of September 1, 1995, between SPS and NOVUS 
      Services, Inc. (successor in interest to Discover Card), amending the 
      System Access Agreement entered into August 1, 1992, the Terminal Service 
      Agreement made as of January 1, 1992, as amended, and the Third Party 
      Processing and Cooperative Network Service Agreement made as of September 
      28, 1992 (incorporated by reference from Exhibit 10.17 of the Company's 
      Annual Report on Form 10-K for the fiscal year ended December 31, 1995 
      (the "1995 Form 10-K")).

10.18 Third Amended and Restated Master Receivables Purchase Agreement dated as 
      of July 19, 1995, and First Amendment to the Third Amended and Restated 
      Master Receivables Purchase Agreement dated as of December 15, 1995, each 
      among HSB, SPS, DWD, RCC and Bank of America National Trust and Savings 
      Association (incorporated by reference from Exhibit 10.18 of the 1995 
      Form 10-K). 

10.19 Assignment and Assumption Agreement dated as of July 19, 1995, among HSB, 
      SPS, DWD, RPC, RCC and Bank of America National Trust and Savings 
      Association (incorporated by reference from Exhibit 10.19 of the 1995 
      Form 10-K).

10.20 Credit Card Receivables Purchase Agreement dated as of December 30, 1992,
      among HSB, the Company, SPS, DWD, BCC and Westpac Banking Corporation 
      (incorporated by reference from Exhibit 10.21 of the 1992 Form 10-K).

10.21 First Amendment to the Credit Card Receivables Purchase Agreement dated 
      as of December 29, 1995, among HSB, the Company, SPS, DWD, BCC and 
      Societe Generale (successor in interest to Westpac Banking Corporation) 
      (incorporated by reference from Exhibit 10.21 of the 1995 Form 10-K).

10.22 Merchant Services Agreement made as of February 19, 1987, between HSB and 
      Goodyear (incorporated by reference from Exhibit 10.17 of the 1992 
      Registration Statement).

10.23 Amendment to the Terminal Service Agreement dated as of July 1, 1993, 
      between SPS and Discover Card (incorporated by reference from Exhibit    
      10.25 of the 1993 Form 10-K).

10.24 Form of Interest Rate and Currency Exchange Agreement between the Company 
      and DWD or NCSI (incorporated by reference from Exhibit 10.26 of the 1993 
      Form 10-K).

10.25*Second Amendment to Credit Card Receivables Purchase Agreement dated as 
      of December 18, 1996, among BCC, Societe Generale, HSB, the Company, DWD 
      and SPS.

10.26 First Amendment to Service Agreement made as of January 1, 1993, between 
      SPS and MountainWest (incorporated by reference from Exhibit 10.28 of the 
      1992 Form 10-K).

10.27 Form of Cardholder Agreement (incorporated by reference from Exhibit 10.29
      of the 1993 Form 10-K).

10.28 Amendment to the Merchant Services Agreement dated as of April 27, 1993, 
      between HSB and Goodyear (portions of which have been granted confidential
      treatment pursuant to an order of the Securities and Exchange Commission 
      which will remain in effect until June 14, 1999) (incorporated by 
      reference from Exhibit 10.31 of the 1993 Form 10-K).

10.29#	Dean Witter, Discover & Co. Omnibus Equity Incentive Plan (incorporated
      by reference from Exhibit 4.1 of the DWD Registration Statement No. 
      33-63024 on Form S-8).

10.30#	Dean Witter, Discover & Co. 1994 Omnibus Equity Plan (incorporated by 
      reference from Exhibit 10.52 of the DWD Annual Report on Form 10-K for the
      fiscal year ended December 31, 1993).


                                          -18-
<PAGE>
10.31#	Dean Witter, Discover & Co. Employees Replacement Stock Plan (incorpora-
      ted by reference from Exhibit 4.2 of the DWD Registration Statement No.
      33-63024 on Form S-8).

10.32#	First Amendment to the Dean Witter, Discover & Co. Employees Replacement 
      Stock Plan (adopted June 18, 1993)(incorporated by reference from Exhibit 
      10.1 of the DWD Current Report on Form 8-K dated November 18, 1993).

10.33 Form of Amended and Restated Borrowing Agreement between the Company and 
      DWD (incorporated by reference from Exhibit 10.1 of the Company's 
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      1995 (the "1995 Third Quarter Form 10-Q")).

10.34 Amendment to the Facility Fee Letter Agreement dated as of May 3, 1996, 
      between the Company and DWD (incorporated by reference from Exhibit 10.2 
      of the Company's Quarterly Report on Form 10-Q for the quarterly period 
      ended March 31, 1996 (the "1996 First Quarter Form 10-Q")).

10.35 Facility Fee Letter Agreement between the Company and DWD (incorporated by
      reference from Exhibit 10.3 of the 1995 Third Quarter Form 10-Q).

10.36#SPS Transaction Services, Inc. Employee Stock Purchase Plan (amended and 
      restated as of January 1, 1996) (incorporated by reference from Exhibit 
      10.36 of the 1995 Form 10-K).

10.37#	SPS Transaction Services, Inc. Amended and Restated Formula Plan for Non-
      Affiliate Directors (incorporated by reference from Exhibit 10.38 of the
      1992 Form 10-K).

10.38#	SPS Transaction Services, Inc. Amended and Restated 1992 Employees Stock 
      Plan (incorporated by reference from Exhibit 10.39 of the 1992 Form 10-K).

10.39#	SPS Transaction Services, Inc. 1995 Omnibus Equity Plan (incorporated by 
      reference from Exhibit 10.40 of the 1994 Form 10-K).

10.40#	SPS Transaction Services, Inc. Amended and Restated Tax Deferred Equity 
      Participation Plan (incorporated by reference from Exhibit 4.3 of the 
      Company's Registration Statement No. 333-412 on Form S-8). 

10.41#	NOVUS Credit Services Inc. Supplemental Retirement Income Plan, formerly 
      known as the Sears Consumer Financial Corporation Supplemental Retirement
      Income Plan, effective as of January 1, 1989 (incorporated by reference 
      from Exhibit 10.36 of the DWD Registration Statement No. 33-56104 on Form
      S-1).

10.42#	Dean Witter, Discover & Co. Tax Deferred Equity Participation Plan 
      (amended and restated October 21, 1994) (incorporated by reference from 
      Exhibit 4.1 of the Post-Effective Amendment No. 1 to the DWD Registration
      Statement No. 33-82240 on Form S-8).

10.43 Sales Lead Letter Agreement dated January 26, 1995, between SPS and 
      Discover Card (incorporated by reference from Exhibit 10.47 of the 1994 
      Form 10-K).

10.44 Amended and Restated Merchant Services Agreement made as of December 29, 
      1994, between HSB and Tandy (incorporated by reference from Exhibit 10.48
      of the 1994 Form 10-K).

10.45 Purchase Agreement made as of December 30, 1994, among Tandy National 
      Bank, Tandy Credit Corporation and HSB (incorporated by reference from 
      Exhibit 2.1 of the Company's Current Report on Form 8-K dated December 30,
      1994).

10.46 Acquisition Agreement dated as of January 18, 1995, as amended, among HSB,
      Tandy National Bank and Tandy Credit Corporation (incorporated by   
      reference from Exhibit 2.1 of the Company's Current Report on Form 8-K 
      dated March 30, 1995).

                                          -19-
<PAGE>
10.47 Agreement and Plan of Merger dated as of March 30, 1995, among HSB, Hurley
      Receivables Corporation, Tandy and Tandy Credit Corporation (incorporated
      by reference from Exhibit 2.2 of the Company's Current Report on Form 8-K
      dated March 30, 1995).

10.48 Assignment and Assumption Agreement dated as of March 30, 1995, between 
      SPS Newco, Inc. and Tandy Receivables Corporation (incorporated by 
      reference from Exhibit 2.3 of the Company's Current Report on Form 8-K 
      dated March 	30, 1995).

10.49*Letter Amendment to Third Amended and Restated Master Receivables 
      Purchase Agreement dated as of December 6, 1996 among HSB, SPS, DWD, RCC
      and Bank of America National Trust and Savings Association.

10.50 Addendum to the Merchant Services Agreement dated as of April 1, 1994, 
      between HSB and Goodyear (incorporated by reference from Exhibit 10.52 of
      the 1994 Form 10-K).

10.51 First Amendment to the Amended and Restated Borrowing Agreement dated as
      of May 3, 1996, between the Company and DWD (incorporated by reference 
      from Exhibit 10.1 of the 1996 First Quarter Form 10-Q).

10.52 Second Amendment to the Amended and Restated Borrowing Agreement dated as
      of September 30, 1996, between the Company and DWD (incorporated by 
      reference from Exhibit 10.6 of the 1996 Third Quarter Form 10-Q).

10.53 Service Agreement dated as of September 1, 1996, between SPS and NOVUS 
      Services, Inc. (incorporated by reference from Exhibit 10.3 of the 1996 
      Third Quarter Form 10-Q).

10.54*First Amendment to the Lease Agreement made on March 20, 1997, between 
      NCSI and SPS.

10.55*Lease Agreement made as of January 1, 1997, between NCSI and SPS.

10.56#First Amendment to the NOVUS Credit Services Inc. Supplemental Retirement
      Income Plan (adopted December 8, 1992) (incorporated by reference from 
      Exhibit 10.41 of the DWD Annual Report on Form 10-K for the fiscal year 
      ended December 31, 1993).

10.57#Second Amendment to the NOVUS Credit Services Inc. Supplemental Retirement
      Income Plan (adopted June 15, 1993) (incorporated by reference from 
      Exhibit 10.42 of the DWD Annual Report on Form 10-K for the fiscal year 
      ended December 31, 1993).

10.58#Third Amendment to the NOVUS Credit Services Inc. Supplemental Retirement 
      Income Plan (adopted February 13, 1995) (incorporated by reference from 
      Exhibit 10.27 of the DWD Annual Report on Form 10-K for the fiscal year 
      ended December 31, 1994).

13.1* Annual Report to Stockholders.  Except for those portions expressly 
      incorporated by reference herein, the 1996 Annual Report is furnished for
      the information of the Commission and is not deemed "filed" as part of 
      this Annual Report on Form 10-K.

21.1  Subsidiaries of the Company (incorporated by reference from Exhibit 22.1 
      of the 1992 Form 10-K).

23.1* Independent Auditors' Consent.

24.1* Powers of Attorney.

27.0* Financial Data Schedule.

* Filed herewith.
# Management contract or compensatory plan or arrangement.


                                        -20-
<PAGE>
(b)  Current Reports on Form 8-K 

   A Current Report on Form 8-K dated January 12, 1997 was filed with the 
Securities and Exchange Commission reporting Item 7 relating to the Company's 
fourth quarter earnings release.

   A Current Report on Form 8-K dated December 30, 1996 was filed with the 
Securities and Exchange Commission reporting Item 7 relating to Tandy 
Corporation.

   A Current Report on Form 8-K dated November 11, 1996 was filed with the 
Securities and Exchange Commission reporting Item 7 relating to the Company's 
1996 Third Quarter Report to Stockholders.

   A Current Report on Form 8-K dated October 15, 1996 was filed with the 
Securities and Exchange Commission reporting Item 7 relating to the Company's 
third quarter earnings release.



















































                                          -21-
<PAGE>
                                 SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) 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 on March 26, 1997.

                                    SPS TRANSACTION SERVICES, INC.
                                    ------------------------------
                                           (Registrant)

                                    By: ROBERT L. WIESENECK  
                                        ------------------------------
                                        Robert L. Wieseneck, President


   Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed on March 26, 1997, by the following persons on behalf of 
the Registrant and in the capacities indicated:


           Signature                               Capacity
----------------------------------      --------------------------------------

PHILIP J. PURCELL*
---------------------------------
Philip J. Purcell                       Chairman of the Board and Director

ROBERT L. WIESENECK
---------------------------------
Robert L. Wieseneck                     President, Chief Executive Officer and
                                        Director(Principal Executive Officer)
RUSSELL J. BONAGUIDI*
---------------------------------
Russell J. Bonaguidi                    Vice President and Controller 
                                        (Principal Accounting Officer)
THOMAS R. BUTLER*
---------------------------------
Thomas R. Butler                        Director

FRANK T. CARY*
---------------------------------
Frank T. Cary                           Director

MITCHELL M. MERIN*
---------------------------------
Mitchell M. Merin                       Director

CHARLES F. MORAN*
---------------------------------
Charles F. Moran                        Director

THOMAS C. SCHNEIDER*
---------------------------------
Thomas C. Schneider                     Chief Financial Officer and Director
                                        (Principal Financial Officer)
DENNIE M. WELSH*
---------------------------------
Dennie M. Welsh                         Director

*ROBERT L. WIESENECK
---------------------------------
By Robert L. Wieseneck, 
Attorney-in-fact





                                        -22-
<PAGE>
SCHEDULE III


SPS TRANSACTION SERVICES, INC.
(Parent Company Only)


CONDENSED BALANCE SHEETS
-----------------------------------------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
                                                         December 31,
                                                 ----------------------------
                                                     1996             1995   
                                                 -----------      -----------
<S>                                              <C>              <C>
Assets:
   Investments in consolidated subsidiaries      $   191,597      $   143,831
   Advances to subsidiaries                           40,553           62,854
   Due from an affiliated company                      2,148              573
   Other assets                                          282              243
                                                 -----------      -----------
Total Assets                                     $   234,580      $   207,501
                                                 ===========      ===========

Liabilities and Stockholders' Equity:
   Payables to subsidiaries                      $     6,130      $     4,418
   Due to affiliated companies                         3,520            3,176
   Other liabilities                                     538              697
                                                 -----------      -----------
     Total liabilities                                10,188            8,291
   Total stockholders' equity                        224,392          199,210
                                                 -----------      -----------
Total Liabilities and Stockholders' Equity      $    234,580      $   207,501
                                                 ===========      ===========

<FN>
See notes to condensed financial statements.
</TABLE>





























                                          S-1
<PAGE>
SCHEDULE III


SPS TRANSACTION SERVICES, INC.
(Parent Company Only)

CONDENSED STATEMENTS OF INCOME  
-------------------------------------------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
                                                        December 31,
                                             ----------------------------------
                                               1996         1995         1994
                                             --------     --------     --------
<S>                                          <C>          <C>          <C>
Dividends received from subsidiaries         $     --     $ 15,000     $ 14,800
Interest revenue from subsidiaries             44,375       23,526        4,965
Other revenues                                  2,258          573           --
                                             --------     --------     --------
   Total revenues                              46,633       39,099       19,765
                                             --------     --------     --------


Interest expense                               42,661       18,169          480
Other expenses                                    180          192          232
                                             --------     --------     --------
   Total expenses                              42,841       18,361          712
                                             --------     --------     --------

Income before income taxes and equity    
   in undistributed net earnings of 
   subsidiaries                                 3,792       20,738       19,053
Income tax expense                              1,416        2,258        1,693
                                             --------     --------     --------
Income before equity in undistributed  
   net earnings of subsidiaries                 2,376       18,480       17,360
Equity in undistributed net earnings 
   of subsidiaries                             20,870       24,993       20,375
                                             --------     --------     --------
Net income                                   $ 23,246     $ 43,473     $ 37,735
                                             ========     ========     ========


<FN>
See notes to condensed financial statements.
</TABLE>






















                                          S-2

SCHEDULE III

SPS TRANSACTION SERVICES, INC.
(Parent Company Only)

CONDENSED STATEMENTS OF CASH FLOWS
------------------------------------------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                           -----------------------------------

                                              1996         1995         1994  
                                           ---------    ---------    ---------
<S>                                        <C>          <C>          <C>
Cash Flows From Operating Activities:
Net income                                 $  23,246    $  43,473    $  37,735
Adjustments to reconcile net income to 
  net cash flows from operating activities:
   Equity in undistributed net earnings      
    of subsidiaries                          (20,870)     (24,993)     (20,375)
   (Increase) decrease in operating assets:
     Due from an affiliated company           (1,575)        (573)          --
     Other assets                                (39)        (243)          --
    Increase (decrease) in operating  
     liabilities:
     Due to an affiliated company              1,013        4,473          984
     Other liabilities                          (159)          50           86
                                           ---------    ---------    ---------
       Net cash from operating activities      1,616       22,187       18,430
                                           ---------    ---------    ---------

Cash Flows From Investing Activities:
Investments in and advances to 
  subsidiaries, net                           (2,883)     (17,822)     (21,883)


Cash Flows From Financing Activities:
Due to an affiliated company                      --       (3,073)       3,073
Proceeds from exercise of stock options          622          665          380
Changes in treasury stock, net                   645       (1,957)          --
                                           ---------    ---------    ---------
       Net cash from financing activities      1,267        4,365        3,453
                                           ---------    ---------    ---------

Cash                                               0            0            0
Cash, Beginning of Year                           --           --           --
                                           ---------    ---------    ---------
Cash, End of Year                          $       0    $       0    $       0
                                           =========    =========    =========

Supplemental Disclosures of Cash Flow 
  Information:
Cash paid for interest                     $  42,316    $  15,021    $     505
                                           =========    =========    =========
Cash paid for income taxes                 $   1,641    $   2,406    $   1,423
                                           =========    =========    =========

Supplemental Schedule of Noncash Investing 
  and Financing Activities:
Employee compensation and benefit plan     
  transactions                             $     669    $   1,325    $   1,008
                                           =========    =========    =========
<FN>
See notes to condensed financial statements.
</TABLE>
                                          

                                          S-3
<PAGE>
SCHEDULE III


SPS TRANSACTION SERVICES, INC.
(Parent Company Only)


NOTES TO CONDENSED FINANCIAL INFORMATION



1. Introduction and Basis of Presentation

   The condensed financial statements of SPS Transaction Services, Inc. (the 
"Parent Company") should be read in conjunction with the consolidated financial 
statements of SPS Transaction Services, Inc. and subsidiaries (the "Company") 
and notes thereto found in pages 24-35 of the Company's 1996 Annual Report to 
Stockholders (the "Annual Report") and incorporated by reference.

   The Company is a 73.6% majority owned subsidiary of NOVUS Credit Services, 
Inc. ("NCSI"), which in turn is a wholly owned, direct subsidiary of Dean 
Witter, Discover & Co. ("DWD"). On March 1, 1993, DWD completed an initial 
public offering of 19.9% of its common stock reducing Sears, Roebuck and Co. 
("Sears") ownership in DWD to 80.1%.  On June 30, 1993, Sears divested its 
remaining ownership of DWD's common stock by means of a special dividend to 
Sears shareholders.

2. Dividends Received from Subsidiaries

   No dividends were received by the Company from its consolidated subsidiaries 
for the year ended December 31, 1996, however, the Company did receive 
dividends from its consolidated subsidiaries totaling $15.0 million and $14.8 
million for the years ended December 31, 1995 and 1994, respectively.

3. Payment of Dividends

   The Company has not paid any dividends on its Common Stock and anticipates 
retaining future operating cash flows for the foreseeable future to finance 
growth and business expansion rather than to pay dividends to its stockholders. 
Any future determination as to the payment of dividends will depend upon 
results of operations, capital requirements, financial condition of the Company 
and such other factors as the Board of Directors of the Company in its 
discretion shall determine.

























                                           S-4
<PAGE>
INDEPENDENT AUDITORS' REPORT

Stockholders and Board of Directors
SPS Transaction Services, Inc.

We have audited the consolidated financial statements of SPS Transaction 
Services, Inc. and subsidiaries as of December 31, 1996 and 1995, and for each 
of the three years in the period ended December 31, 1996, and have issued our 
report thereon dated February 18, 1997; such financial statements and report 
are included in your 1996 Annual Report to Stockholders and are incorporated 
herein by reference. Our audits also included Schedule III listed in Item 14. 
This financial statement schedule is the responsibility of the Company's 
management. Our responsibility is to express an opinion based on our audits. In 
our opinion, such financial statement schedule, when considered in relation to 
the basic financial statements taken as a whole, presents fairly in all 
material respects the information set forth therein.




Deloitte & Touche LLP
Chicago, Illinois
February 18, 1997













































                                          S-5
<PAGE>
Sequential
                                                                      Page
Exhibit       Description                                            Number 
-------       -----------------------------------------------      ----------
<PAGE>
3.          Listing of Exhibits.  The following exhibits 
            are incorporated by reference or filed herewith:

3.1         Certificate of Incorporation of the Company 
            (incorporated by reference from Exhibit 3.1 of 
            the Company's Registration Statement No. 33-44937 
            (the "1992 Registration Statement")).

3.2         By-laws of the Company (incorporated by reference 
            from Exhibit 3.2 of the 1992 Registration Statement).

4.1         Form of certificate representing shares of Common 
            Stock of the Company (incorporated by reference from 
            Exhibit 4.1 of the 1992 Registration Statement).

10.1        Services Agreement for Systems Operations Services 
            dated September 17, 1993, between SPS and Advantis 
            (portions of which have been granted confidential 
            treatment pursuant to an order of the Securities and 
            Exchange Commission, which will remain in effect until 
            December 31, 1998) (incorporated by reference from 
            Exhibit 10.1 of the Company's Annual Report on Form 
            10-K for the fiscal year ended December 31, 1993 
            (the "1993 Form 10-K")).

10.2        Service Agreement dated as of February 1, 1994, and 
            Amendment to the Service Agreement dated as of 
            January 31, 1995, each between SPS and MountainWest 
            (incorporated by reference from Exhibit 10.2 of the 
            Company's Annual Report on Form 10-K for the fiscal 
            year ended December 31, 1994 (the "1994 Form 10-K")).

10.3        POS Debit Card Program Letter Agreement dated as of 
            August 30, 1994, between SPS and Discover Card Services,
            Inc. ("Discover Card") (incorporated by reference from 
            Exhibit 10.3 of the 1994 Form 10-K).

10.4        Management Services Agreement dated as of January 1, 1992, 
            between the Company and NCSI (incorporated by reference 
            from Exhibit 10.2 of the 1992 Registration Statement).

10.5*       Amendment to the Advantis/SPS Payment Systems, Inc. 
            Master Agreement for Systems Operations Services 
            effective March 13, 1997, between Advantis and SPS.

10.6        Third Amendment to Service Agreement made effective 
            as of January 1, 1996, between SPS and MountainWest 
            (incorporated by reference from Exhibit 10.1 of the 
            Company's Quarterly Report on Form 10-Q for the 
            quarterly period ended September 30, 1996 (the 
            "1996 Third Quarter Form 10-Q")).

10.7        Third-Party Processing and Cooperative Network 
            Service Agreement made as of September 28, 1992,
            between SPS and Discover Card (incorporated by 
            reference from Exhibit 10.7 of the Company's 
            Annual Report on Form 10-K for the fiscal year ended 
            December 31, 1992 (the "1992 Form 10-K")). 

10.8        Terminal Service Agreement made as of January 1, 1992,
            between SPS and Discover Card (incorporated by reference 
            from Exhibit 10.6 of the 1992 Registration Statement).
<PAGE>
10.9        Letter Agreement dated November 5, 1992, between 
            SPS and Discover Card, amending the Terminal Service 
            Agreement made as of January 1, 1992 (incorporated 
            by reference from Exhibit 10.9 of the 1992 Form 10-K).

10.10       Amended and Restated Marketing Services Agreement 
            dated as of January 1, 1996, between SPS and NCSI 
            (incorporated by reference from Exhibit 10.2 of the 
            1996 Third Quarter Form 10-Q).

10.11       System Access Agreement entered into August 1, 1992, 
            between SPS and Discover Card (incorporated by reference 
            from Exhibit 10.11 of the 1992 Form 10-K).

10.12       Lease Agreement made February 1, 1993, between SPS 
            and NCSI (incorporated by reference from Exhibit 
            10.12 of the 1993 Form 10-K).

10.13       Assignment and Assumption of Lease dated as of 
            December 31, 1993, between SPS and NCSI, and Office 
            Lease Agreement made and entered into October 1, 1990, 
            between NCSI and Price Development Company (incorporated 
            by reference from Exhibit 10.13 of the 1993 Form 10-K).

10.14       Service Agreement dated as of January 1, 1988, between 
            SPS and HSB (incorporated by reference from Exhibit 
            10.12 of the 1992 Registration Statement).

10.15       Service Agreement dated as of November 1, 1990, between 
            SPS and MountainWest (incorporated by reference from 
            Exhibit 10.13 of the 1992 Registration Statement).

10.16       Registration Agreement made as of February 25, 1992, 
            between the Company and NCSI (incorporated by reference 
            from Exhibit 10.16 of the 1993 Form 10-K).

10.17       Letter Agreement dated as of September 1, 1995, between 
            SPS and NOVUS Services, Inc. (successor in interest to 
            Discover Card), amending the System Access Agreement 
            entered into August 1, 1992, the Terminal Service 
            Agreement made as of January 1, 1992, as amended, and the 
            Third Party Processing and Cooperative Network Service 
            Agreement made as of September 28, 1992 (incorporated 
            by reference from Exhibit 10.17 of the Company's Annual 
            Report on Form 10-K for the fiscal year ended 
            December 31, 1995 (the "1995 Form 10-K")).

10.18       Third Amended and Restated Master Receivables 
            Purchase Agreement dated as of July 19, 1995, and 
            First Amendment to the Third Amended and Restated Master  
            Receivables Purchase Agreement dated as of December 
            15, 1995, each among HSB, SPS, DWD, RCC and Bank 
            of America National Trust and Savings Association 
            (incorporated by reference from Exhibit 10.18 of the 
            1995 Form 10-K). 

10.19       Assignment and Assumption Agreement dated as of 
            July 19, 1995, among HSB, SPS, DWD, RPC, RCC and 
            Bank of America National Trust and Savings Association  
            (incorporated by reference from Exhibit 10.19 of 
            the 1995 Form 10-K).

10.20       Credit Card Receivables Purchase Agreement dated 
            as of December 30, 1992, among HSB, the Company, 
            SPS, DWD, BCC and Westpac Banking Corporation 
            (incorporated by reference from Exhibit 10.21 of 
            the 1992 Form 10-K).
<PAGE>
10.21       First Amendment to the Credit Card Receivables 
            Purchase Agreement dated as of December 29, 1995, 
            among HSB, the Company, SPS, DWD, BCC and Societe 
            Generale (successor in interest to Westpac 
            Banking Corporation) (incorporated by reference 
            from Exhibit 10.21 of the 1995 Form 10-K).

10.22       Merchant Services Agreement made as of February 19, 1987, 
            between HSB and Goodyear (incorporated by reference 
            from Exhibit 10.17 of the 1992 Registration Statement).

10.23       Amendment to the Terminal Service Agreement dated 
            as of July 1, 1993, between SPS and Discover Card 
            (incorporated by reference from Exhibit 10.25 of the 
            1993 Form 10-K).

10.24       Form of Interest Rate and Currency Exchange Agreement 
            between the Company and DWD or NCSI (incorporated by 
            reference from Exhibit 10.26 of the 1993 Form 10-K).

10.25*      Second Amendment to Credit Card Receivables 
            Purchase Agreement dated as of December 18, 1996,
            among BCC, Societe Generale, HSB, the Company, DWD 
            and SPS.

10.26       First Amendment to Service Agreement made as of 
            January 1, 1993, between SPS and MountainWest 
            (incorporated by reference from Exhibit 10.28 of 
            the 1992 Form 10-K).

10.27        Form of Cardholder Agreement (incorporated by 
             reference from Exhibit 10.29 of the 1993 Form 10-K).

10.28        Amendment to the Merchant Services Agreement 
             dated as of April 27, 1993, between HSB and 
             Goodyear (portions of which have been granted 
             confidential treatment pursuant to an order 
             of the Securities and Exchange Commission which 
             will remain in effect until June 14, 1999) 
             (incorporated by reference from Exhibit 10.31 
             of the 1993 Form 10-K).

10.29#       Dean Witter, Discover & Co. Omnibus Equity 
             Incentive Plan (incorporated by reference from 
             Exhibit 4.1 of the DWD Registration Statement 
             No. 33-63024 on Form S-8).

10.30#       Dean Witter, Discover & Co. 1994 Omnibus Equity 
             Plan (incorporated by reference from Exhibit 10.52 
             of the DWD Annual Report on Form 10-K for the fiscal 
             year ended December 31, 1993).

10.31#       Dean Witter, Discover & Co. Employees Replacement 
             Stock Plan (incorporated by reference from Exhibit 
             4.2 of the DWD Registration Statement No. 33-63024 
             on Form S-8).

10.32#	       First Amendment to the Dean Witter, Discover & Co.
             Employees Replacement Stock Plan (adopted June 18,    
             1993)(incorporated by reference from Exhibit 
             10.1 of the DWD Current Report on Form 8-K dated 
             November 18, 1993).

10.33        Form of Amended and Restated Borrowing Agreement 
             between the Company and DWD (incorporated by 
             reference from Exhibit 10.1 of the Company's  Quarterly 
             Report on Form 10-Q for the quarterly period ended 
             September 30, 1995 (the "1995 Third Quarter Form 10-Q")).
<PAGE>
10.34        Amendment to the Facility Fee Letter Agreement 
             dated as of May 3, 1996, between the Company 
             and DWD (incorporated by reference from Exhibit 10.2 
             of the Company's Quarterly Report on Form 10-Q 
             for the quarterly period ended March 31, 1996 
             (the "1996 First Quarter Form 10-Q")).

10.35         Facility Fee Letter Agreement between the Company 
              and DWD (incorporated by reference from Exhibit 
              10.3 of the 1995 Third Quarter Form 10-Q).

10.36#        SPS Transaction Services, Inc. Employee Stock 
              Purchase Plan (amended and restated as of 
              January 1, 1996) (incorporated by reference 
              from Exhibit 10.36 of the 1995 Form 10-K).

10.37#	        SPS Transaction Services, Inc. Amended and 
              Restated Formula Plan for Non-Affiliate Directors 
              (incorporated by reference from Exhibit 10.38 
              of the 1992 Form 10-K).

10.38#	        SPS Transaction Services, Inc. Amended and 
              Restated 1992 Employees Stock Plan (incorporated 
              by reference from Exhibit 10.39 of the 1992 Form 10-K).

10.39#        SPS Transaction Services, Inc. 1995 Omnibus Equity 
              Plan (incorporated by reference from Exhibit 10.40 
              of the 1994 Form 10-K).

10.40#        SPS Transaction Services, Inc. Amended and 
              Restated Tax Deferred Equity Participation Plan 
              (incorporated by reference from Exhibit 4.3 of the 
              Company's Registration Statement No. 333-412 on 
              Form S-8). 

10.41#	        NOVUS Credit Services Inc. Supplemental Retirement 
              Income Plan, formerly known as the Sears Consumer 
              Financial Corporation Supplemental Retirement Income 
              Plan, effective as of January 1, 1989 (incorporated 
              by reference from Exhibit 10.36 of the DWD 
              Registration Statement No. 33-56104 on Form S-1).

10.42#        Dean Witter, Discover & Co. Tax Deferred Equity 
              Participation Plan (amended and restated 
              October 21, 1994) (incorporated by reference from 
              Exhibit 4.1 of the Post-Effective Amendment No. 1
              to the DWD Registration Statement No. 33-82240 on 
              Form S-8).

10.43         Sales Lead Letter Agreement dated January 26, 1995, 
              between SPS and Discover Card (incorporated by 
              reference from Exhibit 10.47 of the 1994 Form 10-K).

10.44         Amended and Restated Merchant Services Agreement 
              made as of December 29, 1994, between HSB and Tandy 
              (incorporated by reference from Exhibit 10.48 of 
              the 1994 Form 10-K).

10.45         Purchase Agreement made as of December 30, 1994, 
              among Tandy National Bank, Tandy Credit Corporation 
              and HSB (incorporated by reference from Exhibit 2.1 
              of the Company's Current Report on Form 8-K dated 
              December 30, 1994).
<PAGE>
10.46         Acquisition Agreement dated as of January 18, 1995, 
              as amended, among HSB, Tandy National Bank and 
              Tandy Credit Corporation (incorporated by reference 
              from Exhibit 2.1 of the Company's Current Report 
              on Form 8-K dated March 30, 1995).

10.47         Agreement and Plan of Merger dated as of 
              March 30, 1995, among HSB, Hurley Receivables 
              Corporation, Tandy and Tandy Credit Corporation 
              (incorporated by reference from Exhibit 2.2 of 
              the Company's Current Report on Form 8-K dated 
              March 30, 1995).

10.48         Assignment and Assumption Agreement dated as of 
              March 30, 1995, between SPS Newco, Inc. and 
              Tandy Receivables Corporation (incorporated by 
              reference from Exhibit 2.3 of the Company's 
              Current Report on Form 8-K dated March 30, 1995).

10.49*       Letter Amendment to Third Amended and Restated 
             Master Receivables Purchase Agreement dated as 
             of December 6, 1996 among HSB, SPS, DWD, RCC  
             and Bank of America National Trust and Savings 
             Association.

10.50        Addendum to the Merchant Services Agreement dated 
             as of April 1, 1994, between HSB and Goodyear 
             (incorporated by reference from Exhibit 10.52 of 
             the 1994 Form 10-K).

10.51        First Amendment to the Amended and Restated 
             Borrowing Agreement dated as of May 3, 1996,
             between the Company and DWD (incorporated by 
             reference from Exhibit 10.1 of the 1996 First 
             Quarter Form 10-Q).

10.52        Second Amendment to the Amended and Restated 
             Borrowing Agreement dated as of September 30, 1996, 
             between the Company and DWD (incorporated by 
             reference from Exhibit 10.6 of the 1996 Third 
             Quarter Form 10-Q).

10.53        Service Agreement dated as of September 1, 1996, 
             between SPS and NOVUS Services, Inc. 
             (incorporated by reference from Exhibit 10.3 
             of the 1996 Third Quarter Form 10-Q).

10.54*       First Amendment to the Lease Agreement made 
             on March 20, 1997, between NCSI and SPS.

10.55*       Lease Agreement made as of January 1, 1997, 
             between NCSI and SPS.

10.56#       First Amendment to the NOVUS Credit Services Inc.
             Supplemental Retirement Income Plan (adopted 
             December 8, 1992)(incorporated by reference from 
             Exhibit 10.41 of the DWD Annual Report on Form 10-K 
             for the fiscal year ended December 31, 1993).

10.57#       Second Amendment to the NOVUS Credit Services 
             Inc. Supplemental Retirement Income Plan 
             (adopted June 15, 1993) (incorporated by reference 
             from Exhibit 10.42 of the DWD Annual Report on 
             Form 10-K for the fiscal year ended 
             December 31, 1993).

<PAGE>
10.58#       Third Amendment to the NOVUS Credit Services Inc. 
             Supplemental Retirement Income Plan (adopted 
             February 13, 1995) (incorporated by reference 
             from Exhibit 10.27 of the DWD Annual Report on 
             Form 10-K for the fiscal year ended December 31, 1994).

13.1*        Annual Report to Stockholders. Except for those 
             portions expressly incorporated by reference herein,
             the 1996 Annual Report is furnished for the 
             information of the Commission and is not deemed 
             "filed" as part of this Annual Report on Form 10-K.

21.1         Subsidiaries of the Company (incorporated by 
             reference from Exhibit 22.1 of the 1992 Form 10-K).

23.1*        Independent Auditors' Consent.

24.1*        Powers of Attorney.

27.0*        Financial Data Schedule.

* Filed herewith.
# Management contract or compensatory plan or arrangement.