Tuesday , July 5, 2022

With TSYS Now Under Its Wing, Global Payments Expands in Canada With Desjardins Acquisition

Total System Services Inc. (TSYS) officially became part of Global Payments Inc. only on Sept. 18, but the massive task of stitching two large payment processors together didn’t stop Global from buying yet another financial institution’s merchant portfolio. Global announced Thursday that it will acquire the entire 40,000-merchant file of Quebec’s Desjardins Group for an undisclosed price.

Canada is an important market for Atlanta-based Global Payments, and Desjardins will expand it by more than 25%. Cameron M. Bready, Global’s president and chief operating officer, says he expects the Desjardins file to generate about $70 million in revenue next year, including network fees. Canada currently produces just over $300 million in annualized revenues for Global.

Based in Levis, near Quebec City, Desjardins Group is a co-operative that ranks as Canada’s sixth-largest financial institution by deposits, with approximately 1,000 branches and more than 7 million members and clients, according to Global Payments. Under a pending 10-year marketing agreement, Desjardins will refer business customers to Global for payments and related services.

“It’s a nice addition, nice bolt-on to our overall Canadian business, and obviously I think opens up new avenues for growth in that market for us going forward,” Bready said Thursday morning on Global’s third-quarter earnings conference call.

Neither Global Payments nor Desjardins disclosed the portfolio’s annualized payment volume, but a Desjardins spokesperson tells Digital Transactions News the file generated 892 million transactions in 2018. Desjardins’ merchant business operates under the Monetico brand. Beginning in March, Desjardins point-of-sale hardware will be replaced with Global Payments equipment.

Global Payments also noted that it is Citigroup Inc.’s processor partner for a new consumer-payment service for Citi’s institutional clients dubbed Spring by Citi. 

Meanwhile, Bready and Global Payments chief executive Jeffrey S. Sloan said the integration of their company with TSYS is going smoothly, and that they expect $100 million in “expense synergies” from the merger next year. As they noted after the merger announcement, they plan to cross-sell their largely complementary merchant-acquiring and software businesses as well as pursue new opportunities produced by TSYS’s large issuer-processing operation. That includes cross-selling TSYS issuing services to Global’s merchant clients in markets such as Canada and Europe where Global has a large presence. 

“By marrying issuer processing with our acquiring capabilities, we can emulate many of the aspects of a virtual closed loop as well provide strong customer authentication internally, which is now the law of the land across Europe,” Sloan noted, referencing new European rules for cardholder verification.

Global Payments reported third-quarter net income of $95 million, down 46% from $176.4 million a year earlier, on revenues of $1.11 billion, up 29% from $857.7 million in 2018’s third quarter.

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