Global Payments, Total System Services have held merger talks, sources say

Global Payments Inc. has held talks with Total System Services Inc. about a potential deal, according to people familiar with the matter, in what could be the third mega-merger in the payments industry this year.

The companies have held preliminary conversations that could lead to a tie-up, said the people, who asked not to be identified because the matter isn’t public. They have also discussed possible joint ventures and other ways to partner up that may not include a full-blown merger, one of the people said.

Talks are at an early stage and could fall apart, the people said.

A representative for Global Payments declined to comment, while Total System Services representative didn’t immediately respond to request for comment.

Shares of Global Payments are up 31% in the past year, giving the company a market value of about $23.3 billion. Total System Services is worth about $17.6 billion after climbing 16% since a year ago.

Market watchers have pegged Global Payments and Total System Services as potential takeover targets or merger partners in the wake of two jumbo payments deals. Fidelity National Services Inc. struck a $34 billion deal for Worldpay Inc. in March, two months after Fiserv Inc. agreed to buy First Data Corp. for $22 billion.

Payments firms are pairing up to diversify and grow as consumers increasingly shy away from using cash to make purchases. While this year’s merger wave in the payments industry might have exhausted the prospect for many more mega-deals, Total System Services and Global Payments could still be the exceptions, Bloomberg Intelligence analyst David Ritter has said.

Global Payments and Total System Services have complementary businesses, as they focus on different parts of the payments ecosystem.

Total System Services, based in Columbus, Georgia, is the largest third-party processor for credit-card issuers in the U.S., servicing about 40% of the domestic card accounts of both Visa Inc. and Mastercard Inc. last year, according to its annual report. Atlanta-based Global Payments is the fifth biggest merchant acquirer in the U.S..