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Global Payments Continues Card Processing for Wells Fargo

Zacks Equity Research
·4 min read

Global Payments Inc.’s GPN unit Total System Services (TSYS), which is its Issuer Solutions business, has renewed its agreement with Wells Fargo, the fourth largest bank in the United States.

TSYS will continue to provide a range of processing and support services for the bank’s commercial card portfolio. Notably, Wells Fargo has been utilizing TSYS’ payments processing platform since 1995.

Last month TSYS signed a multi-year payments pact with TD Bank Group including TD Bank, Canada and TD Bank, in the United States. TD is the sixth largest bank in North America, serving more than 26 million customers and ranks as one of the world’s leading online financial services firms with more than 14 million active digital customers.

In May, Truist Financial Corporation (TFC) chose TSYS for the credit card processing services of its combined businesses including its consumer, commercial and small business credit card portfolios. The bank is expected to begin conversion-related activities in late 2021 to start using Total System’s issuer processing services in 2022.

These contract wins will aid the segment’s revenues, which accounted for 27% of the company’s consolidated revenues in the first six months of 2020. Starting mid-March, the segment experienced revenue declines as a result of lower transaction volumes, particularly related to the processing of commercial cards as a result of COVID-19. The segment, however, witnessed improvement in its financial results during May and June as the US state and local governments and those abroad began to ease restrictions.

TSYS was integrated into Global Payments last September when the former was acquired by the latter. The deal positioned Global Payments as a leading pure play payments technology company, providing innovative payments and software solutions to 3.5 million merchant locations and above 1,300 financial institutions across more than 100 countries throughout North America, Europe, the Asia Pacific and Latin America.

Through its Issuer Solutions segment, the company provides solutions that enable financial institutions and other financial service providers to manage their card portfolios, reduce technical complexity and overhead and offer a seamless experience for cardholders on a single platform. In addition, the segment provides flexible commercial payments and ePayables solutions that support business-to-business payment processes for businesses and governments.

Recently, Global Payments partnered with Aamzon Web Services (AWS), which will allow it to create a cloud-based processing platform for the card issuers. It will provide contactless payment options and improved digital banking experiences for large financial institutions. The AWS deal is likely to expand the company’s addressable market size by more than triple in the space of issuer solutions.

Another company that provides card processing services similar to TSYS’ Issuer Solutions is Fiserv Inc. FISV.

Shares of Global Payments have lost 1.6% year to date against the industry’s increase of 9.2%.  

Global Payments carries a Zacks Rank #3 (Hold), currently. Some better-ranked stocks in the same space are Envestnet Inc. ENV and Evertec Inc. EVTC. While Envestnet sports a Zacks Rank #1 (Strong Buy), Evertec currently holds a Zacks Rank #2 (Buy) at present.   You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings of Envestnet and Evertec beat estimates in the last reported quarter by 25.53% and 18.75%, respectively.  

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