Total System Services Inc. said an unusual multicurrency product has helped it get a foot in the door of the Japanese processing market.
The Columbus, Ga., processor, which is majority owned by Synovus Financial Corp., said Wednesday that it has signed a deal to handle transactions for a new cobranded Visa debit card from Toyota Finance Corp. and Nikko Cordial Securities, one of Japan's largest brokerage companies.
TSYS said the processing deal is its first in the notoriously hard-to-penetrate market.
The card, issued by the Toyota Motor Corp. unit, will let Nikko customers access accounts in both Japanese yen and U.S. dollars. Customers will be able to use the card to make debit purchases all over the world and to withdraw cash from automated teller machines in Japan.
"This is the first multicurrency debit card available in Japan," Eric Bruner, a TSYS spokesman, said in an interview Wednesday. Many Nikko customers have accounts in multiple currencies, and the card would let them to settle Japanese transactions in yen and foreign ones in dollars, he said.
Toyota Finance has issued about 5.4 million Visa credit cards, according to Mr. Bruner. He said that he did not know what company processes payments made with them, but that there are no plans for TSYS to take on that work.
Analysts said the new card will have a limited appeal but could lead to further deals in Japan for TSYS.
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said the Japanese payments market is more difficult than most to enter, "unless you've got insider ties with the Japanese companies or you've got something that stands out."
TSYS has something that stands out, Mr. Schatt said. The card "is somewhat unique right now," not just in Japan but worldwide, and the deal with Toyota and Nikko "is a great foothold into something more, particularly offering up more processing."
Mr. Bruner said that because of the time difference, executives at Toyota and Nikko were unavailable for comment Wednesday.
In a press release, Yoshio Inagaki, the president of Toyota Finance, said that the "multicurrency and multifunction support" was "the critical factor for us to select TSYS as a processor for the first product of this kind in Japan."
At an analyst meeting in May, TSYS executives hinted that this deal was in the works, saying that they expected to begin processing for a large international company based in Japan this year
Though TSYS has no other processing contracts in Japan, it has a 51% stake in GP Network Corp., a Tokyo acquiring organization with 120,000 merchant and 70 acquirer clients.
The processor has been expanding elsewhere in Asia. In December it bought a 35% equity interest in China UnionPay Data Co. Ltd., the credit card processing unit of China's only card network, China UnionPay Ltd. This month TSYS announced that it had increased that stake to 44.5%.
Mr. Bruner said that Asia offers significant opportunities for TSYS. From 1999 to 2004 the Asia-Pacific region's payment card business posted the world's second-fastest growth rate, behind Eastern Europe, he said. In 2004, 32% of all card transactions were made in the Asia-Pacific region, and that figure is expected to reach 53% by 2009.
At the end of last year there were 273 million credit cards in Japan, he said.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said that for a U.S. processor, "if you are able to get deals in Japan, it's a great achievement, because it's a tough market to crack."
The multicurrency capability is likely why Toyota and Nikko chose TSYS, he said. "It's probably difficult for a Japanese processor to do the same, because you need to have access to U.S. dollars."
The demand for foreign-currency transactions is likely small, but "it's probably something that very few processors around the world can do," Mr. Bezard said.
This is not to say the multicurrency card will not be used much, he said. "In Japan, you have a greater usage at the ATM than you do in the U.S. Cash is a larger share of retail payments … people can easily withdraw the equivalent of a few thousand dollars in yen, which is unseen in the U.S."
