Monday , December 10, 2018

An Integrated Payments Strategy Is Paying Off for TSYS

An integrated payments strategy appears to be paying off for processor Total System Services Inc. (TSYS). The Columbus, Ga.-based company says it signed 45 new integrated payments partners in the second quarter.

“Coupled with a strong pipeline of software providers across a diverse set of verticals, we believe this high-growth channel will continue to bolster the strong performance of the merchant segment as we continue to shift our business mix towards integrated payments,” M. Troy Woods, chairman, president, and chief executive, told analysts during an earnings call Tuesday.

That strategy got a big boost when TSYS purchased TransFirst Holdings Inc. for $2.35 billion in 2016 and with the acquisition earlier this year of Cayan LLC for $1.05 billion. Both companies had expertise in areas that TSYS sought to bolster within its product portfolio, such as health-care payments processing with TransFirst and Cayan’s Genius point-of-sale software. TSYS in June purchased iMobile3, a POS and digital-marketing provider for payments companies to market to merchants.

Woods says TSYS successfully converted the first Cayan portfolio to the TSYS platform in the quarter and it expects remaining Cayan integration work to be completed by year’s end.

As for health care and other merchant verticals, TSYS sees expansion opportunities. “The health-care vertical is one of the strongest and deepest that we have in our merchant segments,” Woods said. “And as I indicated in my prepared remarks, we set an all-time record in our volume in health-care volume for the second quarter. So yes, we’re going to put a lot of resources and stack resources in the most attractive verticals that we have, health care being one of them.”

In its Merchant Solutions business, which includes integrated payments and traditional payments services, TSYS had net revenue of $346.4 million, a 24.3% increase from $278.6 million in the 2017 second quarter.

“Our Merchant Solutions segment has made quantum leaps strategically with the Cayan acquisition, specifically, but also with smaller moves like the iMobile3 acquisition and others,” Paul M. Todd, TSYS senior executive vice president and chief financial officer, told analysts.

In its other businesses, TSYS said its Issuer Solutions segment, which provides card-processing services to issuers, had revenue of $421 million, a 7.2% increase from $392.8 million.

Its prepaid card services segment, which formerly was called Netspend in the financial reporting and now is called Consumer Solutions, revenue totaled $200.3 million, a 9.4% increase from $183.1 million.

Overall, TSYS had net income for the quarter of $142.4 million, a 22.2% increase from $116.5 million a year ago. For the first six months of 2018, its net income of $285.5 million is 27.7% higher than $223.6 million in 2017.

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