Total System Services Inc. said it is processing the prepaid card Wal-Mart Stores Inc. introduced with great fanfare this year.
The Wal-Mart MoneyCard, which is issued by General Electric Co. and reloaded by Green Dot Corp., was tested in November and will be available in 2,600 stores by the end of this month. Related Links
"The launch of this product could change the face of the prepaid industry — it is a huge event," Philip W. Tomlinson, TSYS' chairman and chief executive, said on the Columbus, Ga., company's second-quarter earnings call Tuesday. "There's been a lot of speculation about who processes that, and that is processed by TSYS."
His company also said it has been getting more business lately from Bank of America Corp., a major client that took a lot of business away from it last year by bringing its consumer card processing in-house. In January, TSYS began producing debit and commercial cards for the Charlotte company.
"This deal shows that even after the loss of the consumer portfolio in 2006, Bank of America continues to have strong confidence in TSYS," Mr. Tomlinson said.
His company's second-quarter revenue rose 7.2% from a year earlier, to $460.2 million. Net income rose 14.4%, to $65.7 million, or 33 cents a share, a penny higher the average analyst estimate.
"These numbers are rather amazing when you consider the trauma" of the lost business from B of A and other clients "and what we've had to do to be able to get to where we are today," Mr. Tomlinson said.
By midday Tuesday shares of TSYS had dropped 0.85%, to $29.11.
TSYS also sees promise in prepaid cards, which appeal to underbanked consumers, he said.
"It is a great way to get the consumer back in these stores and it certainly will help folks feel like they have a regular Visa or MasterCard," he said. "It is a business whose time has come. … It is a profitable business. It is a business that we can make a lot of money in."
Synovus Financial Corp., which owns 80.8% of TSYS, said Tuesday that it is taking steps toward a spinoff of TSYS — a move analysts have long expected — though no solid plans have been formed yet.
Richard E. Anthony, Synovus' chief executive, said in a press release that he would ask the board to appoint a committee to make a recommendation on how to proceed in this area. (See
Analysts have said Synovus' majority ownership has made it tougher for TSYS to expand by acquisition and has dissuaded some investors, because so much of the stock belongs to Synovus.
TSYS
Mr. Tomlinson refused to take questions on the matter during the conference call.
Jefferson Harralson, an analyst with KBW Inc.'s Keefe, Bruyette & Woods Inc., wrote in a research note published Tuesday that TSYS' net income was "an outstanding result, in our view," given the lost business.
