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In an effort to expand its merchant acquiring services, Total System Services Inc. (TSS - Analyst Report) announced a long-term contract with Alaska-based MLS Direct Network. However, the details of the contract remain undisclosed.

Accordingly, Total System will now be the primary payment processing service provider for MLS Direct Network. The company shall take care of the latter’s risk management and technical issues, while offering chargeback processing services.

Adding MLS Direct network further enhances Total System’s position in the US and accentuates its operating and competitive leverage. As a result, the company has been witnessing improvement in its financials over the past few quarters based on its steady fundamental growth initiatives, primarily in the merchant acquiring space.

Additionally, the company is making efforts to tap opportunities in the recovering markets through high-grade technology. This is reflected in the improved transaction volumes and higher accounts on file along with lower-than-expected margin decline since the formation of TSYS Merchant Solutions (TMS) and increased client activity. Such growth-driving factors encouraged management to produce an optimistic guidance for 2013.

Meanwhile, Total System is exploring international markets via strategic alliances. Last week, the company attained the worthy contract from UK’s primary automated teller machine (ATM) network – LINK. Accordingly, Total System will be the Certified Service Bureau for LINK, which comprises more than 35 member institutions.

This enables the company to process all of the payment transactions for over 64,000 ATMs connected to LINK across the UK. LINK doles out about £10 billion of cash withdrawals per month. We believe the new contract with LINK should further help perk up international growth of the company.

Currently, Total System carries a Zacks Rank #2 (Buy). Some more stocks in the same financial services sector carrying the same Zacks Rank include Visa Inc. (V - Analyst Report), Fiserv Inc. (FISV - Analyst Report) and Global Payments Inc. (GPN - Snapshot Report).

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