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In an effort to tap the booming merchant acquiring business, Georgia-based Total System Services, Inc. (TSS - Analyst Report) has entered into a joint venture with Central Payment Co., LLC. The company said that it holds a 60% stake in the joint venture. This undertaking will be temporarily supervised by a Board of executives of both the companies for a brief tenure.
Per the contract, Central Payment will operate as a unit of Total System and will retain its identity going forward. Both the companies have shared a long-standing business relationship where Total System provided its technology to Central Payment for processing payments.
The co-venturers are expected to mutually benefit each other in numerous ways. While Total System will benefit from Central Payment’s excellent distribution network that comprises over 700 active-and-independent agents, the latter will capitalize on Total System’s reputation and knowledge regarding the payments service industry.
Lately, Total System has been focusing on fortifying its existing relationships with various institutions. Last month, it further consolidated its year-long business ties with Bank of America Corporation (BAC - Analyst Report) by signing an agreement to provide its consumers processing services related to its credit card portfolio in the U.S. for the next six years.
The global payments industry is intensely competitive and Total System faces tough competition from data processing, bankcard computer service firms and third-party software vendors within the U.S. as well as from international processors and third-party software vendors. We believe that by undertaking these initiatives, the company is bracing itself for a neck-to-neck fight with its competitors like First Data Resources LLC, Visa Inc.(V - Analyst Report), Mastercard Incorporated (MA - Analyst Report) and Discover Financial Services (DFS - Analyst Report).
Visa entered into an agreement with disbursement and bulk payment solutions provider, Obopay Disbursements to pay out electronic funds to a prepaid card. Soon after, the company joined Air Canada to facilitate its Canadian customers with Visa debit card to purchase Air Canada tickets using their debit cards.
Mastercard also joined forces with Rearden Commerce, provider of various business and customer solutions, to offer a brand new personalized website by deploying the latter’s Deem commerce platform. The newly launched website dubbed “MasterCard Business Network” will enable the smooth facilitation of operations by small and medium-sized businesses as well as aid them to streamline their expenses.
Total System currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.