Payment processor TSYS
has gone global in a big way, diversifying its income streams in
the face of new regulations, rising consumer defaults and declining
credit card-based spending. Charles Davis reports on the firm’s
recent expansion into Europe, Latin America and
Asia.
Go deeper with GlobalData
Credit card processor TSYS
has continued with its plan to diversify into merchant acquisition
and the community bank market, with plenty of cash on hand if the
right deal comes along.
Its US prospects may be
dimmed somewhat by the new reforms and the recession, but TSYS is
enjoying robust growth abroad.
International plays in
Brazil, Japan, Germany and the Netherlands are producing strong
growth. And it is signing new agreements seemingly weekly,
providing a counterweight to its US woes.
This year alone TSYS has
entered into agreements with Permanent TSB, an Ireland-based retail
bank that became TSYS’s first European debit client; signed a
multiyear contract with Bank of Montreal to provide account
processing; and announced an agreement with Swisscard AECS AG. The
latter was a joint venture of Credit Suisse AG and American Express
to use the TSYS TS2 processing platform to manage its 1.2m Visa,
MasterCard and American Express cards.
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By GlobalData
European
focus
The international market is
no new strategy for TSYS, which established a European presence in
1999, opening its first office in London. The company has since
devoted significant attention to the European market.
Today, TSYS is a leading
player in the European payment processing business, providing
support across eight European locations from its continental data
centre, purpose built in 2004. In 2006, TSYS acquired Card Tech
Limited, a global provider of licensed PRIME card management
software, and gained a company with a European track record dating
back to the early 1990s.
Now, as its US cornerstone
sputters in the wake of the recession, TSYS International is
positioning itself as a truly global processing company, with deep
roots in the European, Asian and Latin American markets. Kelley
Knutson, executive vice-president of TSYS International, took
EPI on a world tour, highlighting the opportunities to
date and presaging future growth. Knutson said that TSYS sees
Europe, especially Germany, and Latin America, particularly Brazil,
as the linchpins of its international expansion strategy based on
the deals it already has made in those markets.
In Brazil TSYS has landed
what may well be the most important client in the market, the
retailer and financial services titan Carrefour, and is in the
final stage of its conversion. In doing so, Knutson said that TSYS
has made available to the whole Brazilian market a completely new
server-based outsourced card processing system.
“It’s a rather sophisticated
market from a payment perspective, and it’s competitive, but we
have implemented the Carrefour processing system now, and we feel
that this will help open additional opportunities and help us
introduce new products and services not only to our client there
but other regional prospects as well,” he said.
Brazil, the world’s fourth
largest card market, is enjoying strong growth as an increasing
segment of the society grows affluent enough to access credit
products. TSYS also sees prepaid as a huge opportunity to expand
beyond credit. Brazil is predicted to be the second largest prepaid
market in the world, growing at a 20% rate over the next ten
years.
“The two markets that in the
short term we see the most potential immediately are Brazil and the
European market,” Knutson said. “We see tremendous opportunity not
only in outsourced processing, but also on the licensed product
side and in acquiring in these markets.”
In Europe, the growth in 2010
has been impressive throughout the continent. In the UK, TSYS won
the Tesco retail business – the sixth largest credit card provider
in the UK with over 2m accounts in circulation.
TSYS also announced a
contract renewal with the Bank of Ireland for its consumer and
commercial card portfolios. In Italy, TSYS has signed Cedacri, an
aggregator providing a host of payment-related services to Italian
banks and retailers.
“Europe is still the
cornerstone of our international business,” Knutson said. “We’ve
been fortunate to gain a real hold in Germany, with five clients
there and a new one set to join us, and we have used it to branch
out across the EU.”
Opportunities in
Asia
Knutson said that China also
offer great potential, as does India, although both markets are
somewhat unsettled as the nations’ governments have some say in
what payments structures emerge.
In China, TSYS has a strong
position, with a 45% stake in China UnionPay Data, which will have
a major say in whatever forms of payment dominate the world’s
largest potential market.
“We see significant growth in
debit, credit, and a real opportunity for growth in prepaid in
China,” Knutson said. “We have a real opportunity in working
through banks, thanks to China UnionPay. One or two
government-sponsored organisations will drive payments, and we are
well positioned there in terms of getting scale and rolling things
out quickly.”
Likewise in India, TSYS is
hedging its bets, working on a wide variety of businesses and
partners, from Union Bank of India to third-party outsourced
processing for Barclays Bank of India and a licensing agreement
with ICICI Bank.
“India moves quickly and the
economics are about scale,” Knutson said. “The numbers are huge but
we have to think about what kind of money we can make there, and
with what level of investment. One has to be mindful of the
financial commitment.”
Credibility
All over the world, as TSYS
sets out to build new business, Knutson said he is finding the
reception grows warmer.
“The timing has been good,
and we have a differentiated, partner-oriented offering,” he said.
“We have finally earned credibility as a legitimate international
processor. We can’t be everywhere, but we know that the US can’t
sustain us alone. For us to be successful, we need scale, and
geographic diversity.”
