The payments industry has seen two mega mergers so far in the year of 2019 and to complete the trifecta it was announced on Tuesday that Global Payments finalized the acquisition of Total System Services for a $21.5 Billion all stock deal. This acquisition follows Fiserv buying out First Data for $22 billion USD in January and Fidelity National Services acquiring WorldPay for $35 Billion USD in March.

Global Payments Chief Financial Officer Cameron Bready recently said in an interview “We’re in a scale business, and scale is always helpful… what’s nice about bringing our two companies together is it’s the right kind of scale. Unlike other deals that have been done in our space, we are pure-play payments.” He went on to say that with the finalization of the deal it has put both companies in “better positions both of us to be able to compete with the ever-changing landscape around payments. We gain exposure to over 900 premiere financial institutions globally, with whom we can now partner… In addition, Tsys today has good exposure in digital P2P payments, as well as B2B payments through their NetSpend business.”

However one analyst who specializes in payments and online payment facilities does not share the positive outlook for the merger. Dan Dolev executive director of Nomura Instinet has hit out at the deal saying that the move from Global Payments is a much more defensive move than an offensive one. He recently published a report saying that strategically the merger does not make sense, and he views this as an increasing worry by the big payments industry who are ‘running scared’ from Square Payments, the online merchant, which recently has been taking the merchanting market share by storm.

Dolev has been religiously tracking the downloads of Square’s Cash App and comparing those with the likes of PayPal’s Venmo, and the analyst has mentioned that the Cash Apps gains are not a good sign for Tsys, this based on the fact that Tsys’ Netspend service targets the underbanked, which is the same demographic that Cash App services with the release of their new Debit Card. Dolev concluded in his statement that the merger between Global Payments and Tsys “reinforces the Square superiority, because it’s all happening as a result of the disruption that’s caused by Square—both on the merchant acquiring side, where Square is going after retail and restaurants, and gobbling up share, but also on the prepaid Netspend angle, where the Cash App is gaining a lot of traction and is going after this. So I think Jack Dorsey should be happy.”


Harold Zhao – IEC International