Wachovia Corp. has awarded the processing business for its fledgling credit card operation to Total System Services Inc.
TSYS, of Columbus, Ga., announced the deal Thursday.
The Charlotte banking company had previously partnered with MBNA Corp. of Wilmington, Del., to offer cards. Mary Beth Navarro, a Wachovia spokeswoman, said that in January, when Bank of America Corp. bought MBNA, “we determined that issuing our own cards would be the best option.”
She said Wachovia has been issuing cards since January, and that the business is very small. “We’re building it from scratch.”
Ms. Navarro would not say how many cards MBNA had issued on Wachovia’s behalf. Wachovia is ending that partnership, and she would not say whether those accounts belong to her company or to MBNA. “There are contractual terms covering the unwinding of the agreement, and many parts of it are confidential,” she said.
Wachovia plans to begin issuing new card products this summer that will be serviced by TSYS. Philip W. Tomlinson, TSYS’ chairman and chief executive, said in an interview Thursday that the card business would contribute to his company’s revenue this year, though he would not say how much.
MBNA is currently servicing the cards that Wachovia has issued since January, and Mr. Tomlinson said TSYS would take over those accounts next February. He said the agreement “is a great endorsement of TSYS.”
“We have systems and capabilities that would allow them to push products to their customers that we believe would be helpful to the bank.”
He said that TSYS provided processing services for some specialized card products for First Union Corp., more than a decade ago. First Union acquired Wachovia in 2001 and took its name.
MBNA issued cards for many banking companies. Mr. Tomlinson would not say whether he hopes to win the processing business of any others that, like Wachovia, might take over their card-issuing operations, but said, “we’re always trying to talk to anybody, of any size.”
At a meeting with analysts in New York, TSYS also said Thursday that it expects significant growth in its international operations. They now produce 19% of its revenue but will produce at least 30% by 2011, it said.
Kelley Knutson, TSYS’ managing director for Europe, said it will focus there on the “Big Five” — the United Kingdom, France, Germany, Spain, and Italy — but “the growth in cards, the growth in processing, the growth in outsourcing will come from other markets as we chip away at the Big Five.”
In Asia, TSYS will begin processing for a large international company based in Japan later this year. TSYS executives also stressed the company’s plan to expand its 35% stake in China UnionPay Data Co. Ltd. to 45%. TSYS bought its initial stake in CUP Data, the payments processing unit of China UnionPay Co. Ltd., in December.
Domestically, TSYS said that data security rules, from the card companies and government agencies, could present a new sales opportunity.
Troy Woods, TSYS’ president and chief operating officer, said in response to an analyst’s question that data monitoring and analytics were possible markets where TSYS could offer its processing capabilities, but refused to give any additional details, for competitive reasons.
To get more processing relationships, TSYS plans to pitch its outsourcing capabilities to companies that now process their transactions in-house. Of the top 50 banks that issue MasterCard and Visa cards, TSYS estimates that by yearend, 47% will do their processing in-house and 45% will process with TSYS. In 2000, 36% processed in-house and 26% used TSYS.
