Global Payments Opens Its Wallet for More Deals As Its Amazon And Google Ties Develop

The big processor Global Payments Inc. announced early Tuesday it will acquire Zego Inc., a payments and technology provider for managers of residential real estate, in a deal valued at approximately $830 million. The company also announced an agreement to buy the PayOne acquiring business in Austria belonging to the French processor Worldline S.A. The two deals together will total about $1 billion, company officials said.

Jeff Sloan, Global Payments’ chief executive, told equity analysts Tuesday the Zego deal should close later this quarter, while the PayOne acquisition will close in the second half of the year. “With Zego, we will enter one of the most attractive vertical markets in the world, real estate,” Sloan said. 

Kansas City, Mo.-based Zego processes $30 billion in payments annually for 7,300 clients managing 11 million residential units. The PayOne acquisition comes shortly after Worldline’s massive $8.6-billion acquisition of Ingenico Group S.A., a French maker of payment terminals and other transaction technology. “We initiated a greenfield acquiring business in Austria 18 months ago. The PayOne acquisition lets us grow that faster,” said Global Payments president Cameron Bready during the call with analysts.

The addition of Zego and PayOne will come as Global Payments’ cloud deals with Google Inc. and Amazon.com Inc. head toward full rollout. In the former arrangement, Global announced in February it would move its acquiring technology to Google Cloud and serve as global merchant acquirer for Google. “We expect to board Google in Asia in the third quarter, and in the United States thereafter,” Sloan said during a call to discuss the company’s first-quarter results.

As for the Amazon arrangement, “We couldn’t be more pleased,” Sloan said, referring to an agreement reached in August to develop cloud-based issuer services through Amazon Web Services. He said the number of letters of intent from clients to enter the arrangement has tripled, though he didn’t cite a number. “We’re firing on all cylinders,” Sloan said about the connection. With full realization of the Google and Amazon deals, Sloan said the company is expecting what it defines as the “tech-enabled” part of its revenue to exceed 70%, up from 60% currently.

Sloan said the gains Global Payments and other payments processors have seen in digital payments during the pandemic will continue as the world recovers. “I don’t think consumers are going backwards. There is no bull market in cash. I don’t see the trends for safer commerce moving backwards,” he said. 

Consumers have adopted—or used more frequently—such technologies as contactless payments and e-commerce to avoid the Covid-19 virus. Bready said Global’s e-commerce volume was up 303% in the quarter year-over-year. “A very positive sign,” he said, adding, “Consumers are well-positioned to spend as the recovery continues.”

But Bready dismissed one trend that has lately captured the imagination of a number of payment providers and observers, including major players like Mastercard Inc., PayPal Holdings Inc., and Square Inc. “There’s really zero demand among our merchants to accept crypto,” he said, referring to recent publicity for Bitcoin and other digital currencies as a medium of exchange. “Crypto is really not a currency for commerce. It’s a security.”

For the quarter, Global Payments recorded $1.99 billion in revenue, up more than 4% compared to a first quarter in 2020 that did not begin to feel the effects of the pandemic until mid-March. Operating income totaled $275.3 million, up almost 13%.