Incorporated: 2001
NAIC: 518210 Data Processing, Hosting, and Related Services; 517110 Wired Telecommunications Carriers
SIC: 7374 Data Processing & Preparation; 4813 Telephone Communications Except Radiotelephone; 4822 Telegraph & Other Communications
Global Payments Inc. provides electronic transaction-processing products and services to merchants, financial institutions, corporations, government agencies, independent sales organizations, and consumers. The company's processing solutions facilitate transactions completed with debit and credit cards, business-to-business purchasing cards, gift cards, and electronic check conversion. Global Payments also offers money-transfer services to consumers from the United States and Europe to destinations in Latin America, Morocco, and the Philippines. The company handles 2.7 billion transactions annually, serving more than one million merchant points of service worldwide. Global Payments' main office in Canada is located in Toronto, Ontario. Its European headquarters is located in Prague, Czech Republic. The company's primary office in Latin America is located in Mexico City, Mexico.
Origins
Global Payments originated within the folds of Atlanta, Georgia-based National Data Corporation, a pioneer in the electronic transaction-processing industry. National Data began its groundbreaking development of payment systems in 1967, a legacy Global Payments would inherit when it was formed nearly 30 years later. The company was formed under the name Global Payment Systems (GPS) in 1996, debuting as a joint venture launched by National Data and MasterCard International Inc. National Data and MasterCard joined forces to give their customers, banks, a greater presence in the competitive market of "bank card acquiring," a market in which companies vied for contracts to process and service the credit- and debit-card transactions of merchants. Although GPS technically was a joint venture, National Data bore much of the responsibility for the new enterprise, holding a 92.5 percent stake in GPS. The company, like National Data, was based in Atlanta and established as an independent, third-party processor with its own board of directors and management team. Robert A. Yellowlees, National Data's chairman and chief executive officer, was appointed as GPS's chairman and he assumed the duties of president and chief executive officer until a suitable executive was recruited.
Yellowlees could not be accused of underestimating the importance of GPS's formation. "This is the most significant announcement in the history of the payment-systems business," he declared in the April 1996 issue of America's Community Banker. "The creation of the new company was in direct response to demand from our customers." GPS, at its birth, ranked as one of the largest companies of its kind in the world, comprising National Data's payment-services and point-of-sale (POS) business and MasterCard's MAPP (MasterCard Automated Point-of-Sale Program) organization, which consisted of a terminal networking product that provided POS access to the MasterCard authorization network. Together, the businesses from the two companies were expected to generate $175 million in annual revenue from operations in Atlanta; Purchase, New York; St. Louis, Missouri; Dallas, Texas; Los Angeles, California; Toronto, Canada; and London, England. GPS's mission was to penetrate the international market for payment-systems transactions, which was recording explosive growth during the mid-1990s. Initially, the company's services included a full range of POS and back-office support for merchants, as well as electronic-funds transfer and financial and nonfinancial electronic data-exchange services.
Significant changes were afoot not long after GPS entered the processing fray. A permanent president and chief executive officer was recruited to replace Yellowlees, an executive named David K. Hunt, but Hunt left in 1999 when National Data's senior executives decided to combine two of the company's businesses. In June, GPS, functioning as the merchant-processing arm of National Data, was merged with Integrated Payment Systems, a National Data division that sold payment-processing services to merchants. The new entity was named NDC eCommerce, the direct predecessor to Global Payments. To lead the company, Yellowlees selected Paul R. Garcia, who was appointed chief executive officer the month NDC eCommerce was formed. Garcia had spent the previous years working for First Data Corporation, serving as group president of the company's First Data Issuing Services division. After leaving First Data, Garcia joined Productivity Point International, Inc., a provider of instructor-led information technology training to major corporate clients.
Plans for Independence: 1999
The new arrangement lasted a matter of months before National Data's senior management felt the need to make one more profound change. After six months, Yellowlees and his team decided to overhaul their entire company. National Data's business consisted of providing health-information services, a field the company had entered in 1977, and e-commerce payment systems, which was housed within NDC eCommerce. They decided the two businesses would realize their full potential as separate companies, prompting them to announce their intention to spin off NDC eCommerce as an independent company. Unlike the transition from GPS to NDC eCommerce, which led to the departure of the business's chief executive officer, the proposed spinoff did not augur the end of Garcia's relationship with the company. Garcia remained in charge and orchestrated two important acquisitions in the 14 months separating National Data's announcement of the spinoff and the actual date when the company began trading on its own on the New York Stock Exchange.
In 2000 he approached Canadian Imperial Bank of Commerce (CIBC), a Toronto-based bank, about buying its merchant acquiring business. He broached the same subject with National Bank of Canada, the country's sixth largest bank. Both banks agreed to Garcia's offer, setting the stage for the company's public debut. Before the deals closed, National Data set the date for NDC eCommerce's spinoff, announcing in December 2000 that the company would be set free at the end of January 2001 and begin trading on the New York Stock Exchange at the beginning of February 2001. Concurrent with National Data's announcement, NDC eCommerce changed its name to Global Payments Inc. and readied itself for life on its own.
Global Payments enjoyed a gratifying start to its existence as a publicly traded company. The company exceeded analysts' earnings estimates by 16 percent during the first quarter of 2001, a period that included the consummation of Garcia's deals in Canada. The completion of the CIBC acquisition, in particular, provided a substantial boost to Global Payments' stature and served as a template for Garcia's acquisitions in the future. CIBC gained a 26.25 percent stake in Global Payments as part of the deal, and Global Payments, in exchange, became the largest Visa and debit-card acquirer in Canada. Although the company ranked as one of the largest merchant-payment processors in the United States and depended on its domestic business as a primary source of revenue, Garcia paid particular attention to expanding in foreign markets, the original mission of the company when it was formed by National Data and MasterCard. In his search for overseas assets, Garcia used the acquisition that made Global Payments the largest publicly traded, independent processor in Canada as a guide for further acquisitions. "I'm looking for other CIBCs," he said in a March 18, 2002, interview with American Banker. "If I could find another one of those, I'd go to Timbuktu." Once Global Payments found its footing as an independent company, Garcia began scouring the world's markets for new additions, ensuring that Global Payments lived up to its name.
The company required little time to establish itself as an independent transaction processor, recording impressive progress in the wake of its spinoff. The same could not be said of National Data, which began to falter after the split. The company, which renamed itself NDCHealth, began to struggle financially and became the subject of a federal inquiry into its accounting practices. NDCHealth put itself up for sale in March 2005 and eventually was split up and acquired by Per Se Technologies Inc. and Dutch publishing company Wolters Kluwer N.V. Global Payments, in contrast, enjoyed its liberation, making great strides in its first year on its own. "We have had a strong year and we are proud to announce that our market capitalization has more than doubled over the previous 12 months, reaching a high of $1.365 billion from just over one-half billion prior to our first trade," Garcia announced in a statement quoted in the February 26, 2002, issue of Market News Publishing.
Garcia replaced Yellowlees as Global Payments' chairman at the end of 2002 and began exploring acquisition opportunities in earnest. One of his most important acquisitions was the November 2003 purchase of DolEx Dollar Express Inc., which served mostly Latino customers wishing to send money home to Mexico and other Latin American countries. The $190 million acquisition launched Global Payments' money-transfer business, which would be expanded under the Dollar Express banner through acquisitions in Europe. One month after the DolEx purchase, Garcia reached an agreement to acquire 52.6 percent of Czech processor MUZO, which became Global Payments' hub of operations in Europe. Owned by Komercni Banka S.A., MUZO ranked as the largest indirect processor in the Czech Republic, controlling roughly half the market. MUZO sold its services primarily to banks, processing 62 million automated teller machine (ATM) and 33 million POS transactions in 2002. "This is a Ferrari just waiting to be let go here," Garcia said of the $34.7 million acquisition in a December 26, 2003, interview with Cardline.
2004-06: Global Payments Goes Global
By the beginning of 2004, Global Payments ranked as the fourth largest processor in the United States and as the second largest processor in Canada. To maintain its double-digit growth, the company looked to foreign acquisitions, which occupied its attention as it neared the completion of its first decade in business. At the end of 2004, Garcia bolstered the company's money-transfer business by purchasing Madrid, Spain-based United Europhil SA, a consumer-to-consumer firm with 26 retail branches in Spain, Belgium, and the United Kingdom. The Europhil branches were renamed Dollar Express, joining a network of 660 branches operated by Global Payments.
Global Payments' expansion overseas promised to highlight its progress as the company entered its second decade of business. "The growth opportunities are greater outside the United States," Garcia said in an April 11, 2005, interview with Investor's Business Daily. "Forty percent of our business comes from outside the United States. In the foreseeable future it will be flipped so 60 percent comes from outside the United States." His commitment to international expansion was on display in September 2005, when Global Payments reached a joint-venture agreement with HSBC to purchase a 56 percent stake in Global Payments Asia Pacific Limited, a deal that marked Global Payments' entry into Asia. "We see this as a life-altering event for Global," the company's chief operating officer said in a November 17, 2005, interview with Investor's Business Daily. "When this deal closes, this will take us to being a really global company." Global Payments' investment brought it into ten Asian markets, Hong Kong and Taiwan ranking as the largest, where HSBC processed payments for merchants. The transaction closed in July 2006 after clearing regulatory hurdles in each of the markets, officially giving Global Payments a presence on three continents. In September 2006, Garcia signed another agreement, strengthening the company's presence in Europe. He agreed to purchase Diginet d.o.o., an ATM and merchant POS processor based in Bosnia and Herzegovina. Diginet, from its main offices in Sarajevo, worked with banks, not with merchants, operating as an indirect processor. The acquisitions in 2006 marked the tenth anniversary of Global Payments, setting the tone for the company's second decade, which was expected to include further acquisitions as Garcia continued his march overseas.
Principal Subsidiaries
DolEx Belgium, S.P.R.L.; DolEx CE, LP; DolEx Dollar Express, Inc.; DoleEx Envios, S.A. de C.V. (Mexico); DolEx Europe, S.L. (Spain); Global Payment Holding Company; Global Payment Systems LLC; Global Payment Systems of Canada, Ltd.; Global Payments Acquisition Corp. 1 B.V. (Netherlands); Global Payments Acquisition Corp. 2 B.V. (Netherlands); Global Payments Acquisition Corp. 3 B.V. (Netherlands); Global Payments Acquisition PS 1 C.V. (Netherlands); Global Payments PS 2 C.V. (Netherlands); Global Payments Asia Pacific Processing Company Limited (Hong Kong); Global Payments Asia-Pacific (Hong Kong Holding) Limited; Global Payments Asia-Pacific (Hong Kong) Limited; Global Payments Asia-Pacific (India) Private Limited; Global Payments Asia-Pacific (Shanghai) Limited (China); Global Payments Asia-Pacific Lanka (Private) Limited (Sri Lanka); Global Payments Asia-Pacific Limited (Hong Kong); Global Payments Canada GP; Global Payments Canada Inc.; Global Payments Card Processing Malaysia Sdn. Bhd.; Global Payments Check Recovery Services, Inc.; Global Payments Check Services, Inc.; Global Payments Comerica Alliance, LLC; Global Payments Credit Services, LLC (Russia); Global Payments Direct, Inc.; Global Payments Europe d.o.o. Sarajevo (Bosnia and Herzegovina); Global Payments Europe, s.r.o. (Czech Republic); Global Payments Gaming International, Inc.; Global Payments Gaming Services, Inc.; Global Payments LightSpeed UK, Ltd.; GP Finance, Inc.; GPS Holding Limited Partnership; Latin America Money Services, LLC; Magesa, LLC; Merchant Services U.S.A., Inc.; Modular Data, Inc.; NDC Holdings (UK) Ltd.; NDPS Holdings, Inc.; United Europhil UK, Ltd.; United Europhil, S.A. (Spain).
Principal Competitors
Chase Paymentech Solutions LLC; Fiserv, Inc.; Total System Services, Inc.; First Data Corporation.
Further Reading
Alva, Marilyn, "Global Payments Inc. Atlanta, Georgia; It Cashes in on the Trend Toward Cashless Transactions," Investor's Business Daily, April 11, 2005, p. A8.
Breitkopf, David, "Assessing Impact of Deals in the Processing Industry," American Banker, December 27, 2006, p. 10.
------, "Global Payments Combining Its Platforms," American Banker, November 8, 2006, p. 6.
------, "Global Payments to Buy Processor in Eastern Europe," American Banker, September 14, 2006, p. 11.
------, "Many Hurdles for Global Payments' Venture in Asia," American Banker, July 31, 2006, p. 5.
"Global Payments Buying Controlling Interest in Czech Processor," Cardline, December 26, 2003, p. 1.
"Global Payments Buys Spanish Money-Transfer Company," Cardline, December 24, 2004, p. 1.
"Global Payments Inc. Celebrates 'One Year Strong' Anniversary," Market News Publishing, February 26, 2002.
Keenan, Charles, "Payment Processor to Merge Divisions in Electronic Commerce Push," American Banker, April 1, 1999, p. 14.
Kuykendall, Lavonne, "Global Payments Eyeing Foreign Growth," American Banker, February 13, 2004, p. 5.
------, "Global Wants to Buy Itself Some First-Birthday Gifts," American Banker, March 18, 2002, p. 8.
------, "In Processing, a Dispute over Who's No. 2," American Banker, December 15, 2000, p. 1.
"MasterCard, National Data Corp. Create Processing Company," America's Community Banker, April 1996, p. 43.
Roth, Andrew, "Global Payments Tops Estimates As Stand-Alone," American Banker, March 26, 2001, p. 14.
Watkins, Steve, "Global Payments Inc. Atlanta, Georgia; Industry Trends, New Markets Drive Growth at Payments Processor," Investor's Business Daily, November 17, 2005, p. A5.
— Jeffrey L. Covell
