Global Payments reported strong merchant revenue growth in Europe during 2023 following the acquisition of EVO Payments at the beginning of the year.
Global’s European merchant solutions revenue grew 42% to $1.023bn. The acquisition of EVO’s businesses in Poland, Spain, Germany, UK, Ireland, Greece and Czech Republic likely added roughly $200m sales. This means the organic revenue growth was around 14%, roughly in line with numbers from other long-established merchant acquirers.
Cameron Bready, CEO, is positive about Europe saying “We continue to see good trends across our businesses in Spain and central Europe, each of which delivered high teens growth, and key new European markets entered with EVO, including Poland and Greece, and also achieved double-digit growth.“
Global Payments now employs almost 6,000 people in Europe with the continent accounting for 14% of the company’s global $9.7bn merchant revenue.
EVO adds to Global Payment’s existing strong footprint in the UK (where it inherited a decent merchant portfolio from its 2009 acquisition of HSBC merchant services), Spain (a JV with Caixa Bank called Commercia) and Czech Republic (partnering with Erste Bank). EVO brings joint-ventures with another two local banks – PKO BP in Poland and National Bank of Greece.
The ongoing weakness in the UK economy is still causing concern but management remains positive and is investing in new products. Bready explained that “we are … seeing things stabilize in that market, which gives us a little bit more optimism about where we can go over the longer term in the U.K. We’ve talked about bringing our GP POS solution to the U.K. market, which we think will give us a very competitive point-of-sale to market.”
Management is rumoured to be considering buying Takepayments, a leading UK ISO aligned with Barclaycard, for over $250m. Takepayments is a healthy business. Most recent accounts show it making £5m operating profit on £52m revenues.
Spain is clearly a key focus area for Global Payments and will now report separately to the US from the remainder of its European businesses. This reflects the growing importance of its JV with Caixa.
In 2021, Global bought Bankia’s merchant business for €277m through this JV and has recently folded in Universal Payments, EVO’s Spanish business. Caixa Bank, 20% stakeholder in the JV, paid Global $26.2m for its share of Universal Payments, valuing the business at $131m.
Global Payments is positive about its ability to deliver $135m of worldwide annual cost synergies from the EVO acquisition. Management says revenue synergies will take longer to arrive, with groundwork in 2024 delivering in 2025. The first example is the JV with Commerzbank announced earlier this year for which the“acquisition of EVO helped provide a foundation with its existing physical presence and merchant portfolio in Germany.” Commerzbank refers sales leads to Worldline’s PayOne team today.
Bready said the JV, called Commerz GlobalPay, “is expected to launch in the first half of 2024 and will deliver a comprehensive suite of innovative omnichannel payments and software offerings, including our GP point-of-sale software solutions and our GP touch on mobile technology .” Payment partnerships with German banks are difficult to execute. Fiserv’s JV with Deutsche Bank, launched in 2022, is reportedly struggling to make much impact in the market.
Although Global Payments has spent heavily in the US on buying vertically focused ISVs, most of these businesses do not actively market their products in Europe. However, Global Payments did buy a UK software business called Bleep for a bargain price of £12m in early 2020. Bleep provides an ePOS solution for high-capacity retail such as stadiums and recorded a small loss in 2022 on sales of £5m, Bleep has since been rebranded as Global Payments and seems to be winning regular new business such as the SSE Arena in Belfast.
Global Payments worldwide revenue from sales through or in partnership with ISVs, known as “tech enabled distribution” were up 13% at $3.4bn in 2023, Surprisingly, old-school relationship distribution revenues (direct sales, bank referrals and ISOs) grew more quickly, increasing 17% to $3.7bn. With the acquisition of EVO, the new JV with Commerzbank and the proposed purchase of Takepayments, Global Payments management clearly believes there’s life in relationships yet.
