Digital Transactions Authoritative, insightful and timely information for payments professionals
By Jim Daly
MasterCard Inc. announced Thursday that it has a deal to buy gateway businesses from TNS Inc. that will expand the global footprint of its DataCash e-commerce subsidiary.
Terms of the deal, which is expected to close by year’s end, were not disclosed. The sale includes two units of the TNSPay gateway business—TNSPay ECommerce, which operates in Asia, the Americas, and Europe and the United Kingdom, and TNSPay Retail, which operates in the U.K. and Ireland. MasterCard will be buying technology that supports both card-not-present and card-present transactions.
“There are hundreds of customers on it,” Mike Keegan, co-chief executive of Reston, Va.-based TNS, tells Digital Transactions News. “It’s a diversified platform across the three geographies.” Customers include American Express Co., which launched its TNS-powered white-labeled American Express Payment Gateway in 2012.
MasterCard said it is buying the TNS businesses to enhance the product offerings and reach of DataCash, a British e-commerce and fraud-control services company that it bought in 2010 for $534 million. In particular, MasterCard is looking to expand its support for online and mobile payments in North America and Latin America.
“Digital commerce continues to be a key focus for MasterCard and the industry as a whole,” DataCash president Andrea Scerch said in a news release. “The acquisition…reflects a continued enhancement of our capabilities to support our partners as they establish and solidify their presence in both the digital and physical worlds today and into the future.” MasterCard did not respond to requests for comment from Digital Transactions News.
MasterCard actually approached TNS about buying the gateway services to augment DataCash, according to Keegan. The two companies were familiar with each other because a MasterCard gateway called MiGS that serves Asia uses TNS software. “They wanted to enhance the feature-functionality of the MasterCard Payment Gateway” in addition to its geographical reach, says Keegan. “They really wanted the team of individuals that we had to build and enhance their functionality. They knew us very well.”
Formerly known as Transaction Network Services, TNS made a name for itself as the leading provider of critical dial-up telecommunication services between point-of-sale terminals and payment processors. As the dial-up market matured, TNS expanded into Internet Protocol communications and e-commerce services such as gateways that link online merchants to payment services providers and provide merchants with multiple currency options. An investor group led by New York City-based Siris Capital Group LLC bought TNS in early 2013 for $862 million.
TNS would not say how much revenue its gateway business brings in, but its other services in payments, telecommunications, and financial-services support will generate “half a billion in revenue after the [MasterCard] transaction,” Keegan said.
The gateway business is “a value-added service that TNS built to expand beyond its core while leveraging its strengths,” e-commerce payments researcher Rick Oglesby, senior analyst at Centennial, Colo.-based Double Diamond Payments Research, says by email. “It will add card-present capabilities to DataCash’s portfolio, rounding out MasterCard’s gateway offerings while providing some scale benefits as well.”
Having a card-present offering that supports Europay-MasterCard-Visa (EMV) chip card transactions “will be much more important for gateways and [merchant] acquirers in the coming 36 months due to the U.S. EMV migration,” Oglesby says. “At the same time, an increase in the number of multichannel merchants makes it more important for gateways to support card-present channels.”
