HSBC and Global Payments form UK card processing JV

HSBC is transferring its card merchant acquiring business in the UK to a joint venture company formed with US transaction processor Global Payments.

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HSBC and Global Payments form UK card processing JV

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The new JV will provide payment processing services to clients in the UK and to Internet merchants globally.

Under the terms of the agreement - expected to be completed within two months - Global Payments will pay HSBC $439 million in cash to acquire a 51% majority stake in the JV, which will be called HSBC Merchant Services. Global Payments will have three seats on the joint venture's board of directors with HSBC holding two.

HSBC will control the remaining 49% and contribute its existing merchant acquiring business in the UK to the joint venture, including the unit's 400 employees. The division provides payment card processing services to over 135,000 merchant outlets in the UK. Global Payments estimates the HSBC unit has a market share of about 15% and generated around $229 million in revenue in 2007.

Global Payments says the JV will implement initiatives to drive sales, including the targeting of specific merchant segments, improved staff training and the introduction of additional sales force automation tools. The venture will also target Internet business and - due to HSBC's extensive worldwide footprint -will have the capability to provide Internet-based merchant acquiring services in at least 37 countries and 35 currencies, says Global Payments.

In the longer term, the new JV will look to take advantage of the single euro payments area (Sepa) and target European business.

"We expect to focus on growing the customer base by providing an expansive range of card payment solutions. Longer-term, with the adoption of the single euro payments area initiatives, we expect to be in an excellent position to provide seamless acquiring services to merchants throughout Europe," says Paul Garcia, chairman, president, and CEO, Global Payments.

HSBC has also agreed to a ten-year marketing alliance and will refer merchant customers to the JV for payment processing services.

Global Payments and HSBC already work together in North America and Asia. In 2005 Global Payments paid the bank $67.2 million in cash for a 56% interest in a payments processing joint venture covering 10 countries and territories in Asia.

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