The payments market is becoming increasingly complex. Alternative payment tools are proliferating, and geographic markets are developing their own unique regulatory environments and unique mixes of payment tools to match the needs of consumers. Consumers can now buy online from anywhere using any number of tools, depending on where they are located and where they are buying from. As a result of this complexity, payment processors and acquirers are consolidating their market position to achieve the scale necessary to serve the ever-expanding needs of a global merchant client base.

Global Payments’ $22bn merger with TSYS marks the third mega-deal in the payments industry since the beginning of 2019. This move is part of a recent trend by merchant acquirers to increase globalisation of their services in order to better compete in the omnichannel, e-commerce, and digital payment spaces. Payments were previously driven primarily by cards, but globalisation in consumer payments (especially online) means alternative tools are seeing increased usage. Indeed, GlobalData’s Online Consumer Payments Analytics shows that since 2011, card-based online payments have been declining in terms of their share of online payments in favor of alternative tools, which exceeded a 50% share of the e-commerce market in 2018.

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As a result of these changes, payment processors and acquirers need to support payment transactions wherever in the world they take place, using whatever payment tools the customer wants to use. In order to do that, many merchant acquirers and processors are entering into mergers that will allow them to offer truly end-to-end global payment acceptance services to their clients.

In January 2019, Fiserv bought First Data for $23bn. 10 weeks later, FIS acquired Worldpay for $43bn. Now, the merger of Global Payments and TSYS makes the trend of consolidation among the top tier US acquirers and processors clear. All of these companies have come to the conclusion that in the increasingly globalised world of payments, consolidating will help them gain a competitive advantage to provide better e-commerce solutions to merchants.

Global Payments and TSYS as a combined company makes strategic sense. It will be able to provide merchants with fully end-to-end payment acceptance services, as well as offering merchant services at a larger global scale. Consumers will benefit from these consolidation deals by being provided more choice at checkout, as the new giants of processing leverage their global scale to enable merchants to accept a wider range of payment tools. We can expect these new giants to start pushing smaller players out of the global payment acceptance market – and as globalisation filters down to smaller merchants, out of domestic markets too. This will not be the last merger we see in this space.