Global Payments has agreed to purchase Worldpay in a deal worth over $22 billion.
FIS acquired Worldpay in 2019, but then sold roughly half of its stake to private equity firm GTCR four years later. Now, FIS and GTCR will divest themselves of Worldpay in a deal which will also see Global Payments selling its issuing segment—which has seen its share of struggles over the years—to FIS.
If approved, the merger would create a payments company with more than six million customers that would process roughly 94 billion transactions in more than 175 countries.
“Lots to talk about here, and let’s start off by saying that it’s not a given that this latest round of musical chairs will benefit any of the companies involved over the long term,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research.
“Durable profitability in merchant processing requires a balanced portfolio; you need enterprise merchants to deliver large volumes that drive the scale that lowers unit costs, and also a healthy small- to medium-sized business (SMB) channel that delivers higher margins based on those lower unit costs,” he said.
Capitalizing on Strengths
The deal could potentially fit both of these requirements. According to Reuters, the combined company would handle $37 billion in volume, and its portfolio could put both companies in a position to capitalize on each other’s strengths.
“Worldpay has been a leader in the enterprise segment and has the platform tech and innovative leadership to grow there,” Apgar said. “Where it’s lacking is exactly where Global Payments excels—the SMB segment. Worldpay has been working to boost their share in the SMB space by trying to grow key distribution channels.”
Striking a Balance
While Global Payments would solidify its position in the merchant services industry through this deal, it still faces a competitive landscape that includes offerings from Fiserv, PayPal, Stripe, and Block.
Increasing market share in this dynamic environment will likely require Global Payments to strike a balance with its new partner.
“Worldpay brought on PayFac legend Matt Downs to build it out for platforms, and seasoned leader Denise Tahali to resurrect the old Vantiv ISO program,” Apgar said. “Global would do well to integrate those areas with their legacy business lines and leave the Worldpay brand to grow in the enterprise merchant segment.”
“If Global has demonstrated one thing consistently it has been their inability to compete successfully in the enterprise merchant segment, and attempting to bring that business to the Global platform will bring that back to the forefront,” he said.
