Total System Services Inc. doesn’t want to be a wallflower in this year’s series of mega-mergers.
The Columbus, Ga.-based processor has held M&A talks with
The rumored discussions with Atlanta-based Global Payments are likely to be preliminary and a potential deal could still fizzle. But based on recent signals, TSYS is growing restless for its own acquisition, joint venture or partnership in the wake of the $34 billion
TSYS—known for its stability and deep list of merchant processing clients—has been working in recent years to overhaul its legacy systems to compete with nimbler startups and fintechs.
Global Payments is mentioned as a versatile partner for any payments operator because of its merchant acquiring muscle.
Global Payments is the third largest merchant acquirer in the U.S. and is valued at about $23 billion, while TSYS, the No. 3 credit card processor in the U.S. by volume, is worth about $18 billion, according to analysts.
TSYS and Global Payments did not comment on merger speculation. But earlier this month two top TSYS execs acknowledged the buzz about the need to
The company has been watching for opportunities, said Allen Pettis, executive vice president and chief customer officer at TSYS.
“We’re continuously looking at whether an acquisition works or not,” Pettis said in an interview this week. “We’re not threatened by what FIS is doing—we pay attention to it and we’ve competed with all those guys for many years and they’re going to be a formidable competitor.”
Global Payments and TSYS could realize some mutual advantages by combining their acquiring and processing businesses. They could also help one another advance globally. Global Payments derives about 25% of revenues from outside the U.S., and TSYS has healthy global operations it’s looking to expand.
TSYS works with several clients with strong operations in North America and European markets, including Barclays, Capital One and Bank of America, Pettis said.
TSYS needs a partner to help it compete on the jumbo scale of its peers, but the company—whose roots in processing go back 60 years—could be a tough fit for some buyers.
The momentum in this year's deal-making has been about catching up with fast-moving rivals by
TSYS has been on its own acquisition spree in the past few years, and integrating those units has posed some challenges, though the outcome has been positive, according to execs.
TSYS also recently brought its North American and global product development into a single channel.
“We used to take a bit of a black eye from customers when we released something in North America but not internationally or vice versa. Or when we developed a product for the consumer side that wasn’t available for commercial customers. Clients would ask why they couldn’t all have access to that,” Pettis said.
Over the last two years TSYS unified its processes so European customers could benefit from North American technology advancements, while operators in Canada, the U.S. and South America can benefit from solutions TSYS develops for European regulations including PSD2 and GDPR.
“Many of our customers are typically running global businesses, and they want products to work in the same way in all markets,” Pettis said.
