In the past decade or so, payment processors have turned themselves into more diverse technology providers rather than allow themselves to become the "plumbing" of payments. But to do so meant forging new partnerships with companies that might have previously been seen as competitors.
The Columbus, Ga.-based payment processor Total System Services Inc. (TSYS) hasn't been connected to the merchant acquiring business quite as long as some other processors, but it still sees a need to transform itself.
"We don't miss one area of opportunity within the ISO world to provide a level of service, to where we have to say 'no we can't do that,'" said Mike Peters, president of commercial services for TSYS' business solutions segment.
If a processor can't deliver a service that a merchant is seeking, that merchant may seek out a new processor, said merchant acquirer consultant and industry researcher Paul Martaus, of Martaus & Associates. "They can decide to go with a new processor, which means their whole core processing alternative is gone, or they will find some small shop that provides exactly what they need and just do business with them."
It's an important aspect of the payments industry, considering so many merchants are seeking, or at least are curious about, new payments and security technologies. "These processors are all developing relationships that will allow them to provide services on an outgoing or third-party basis," Martaus said.
TSYS has expanded its relationships with ISOs or entered into joint ventures, like its current one with super ISO Central Payment in which, for the past five years, TSYS has been gradually increasing its stakeholder share.
Central Payment operates independently under the brand name of
It represents a no-muss, no-fuss situation for both TSYS and Central Payment, yet also keeps the TSYS brand in play. The same type of scenario unfolded for TSYS when it
"We have enjoyed a significant rise in opportunity on this side of the commercial services segment, and it's across all channels in the ISO and agent community that I oversee," Peters said. "And it's because of the TSYS brand. It has dramatically given us the opportunity to put our services and people in front of opportunities we did not necessarily have before."
It's a competitive game for processors as First Data, Vantiv, Chase Paymentech and Global Payments, among others, have also turned to acquisitions and partnerships to bolster technology at the point of sale, while processing transactions at rates that merchants can accept.
The effects could get even stronger as TSYS advances further into the merchant services business, said Brian Riley, director of card services for Mercator Advisory Group.
"As it relates to the ISOs in this world, TSYS has entered the merchant business aggressively and went from nowhere on the map to being in the top 10," Riley said. "You had a consumer-focused business now making that expansion, and they need to tie it all together with a nice bow."
