TSYS Strikes Deal with China UnionPay (TSS)

Total System Services (ticker: TSS) which provides electronic payment processing and related services to financial and nonfinancial institutions worldwide announced an agreement yesterday to acquire a 34% equity stake in China UnionPay Data Company, the payments-processing subsidiary of China UnionPay. TSYS President M. Troy Woods was quoted as saying: "This relationship brings together the largest bankcard processor in China and the world's largest credit-card processor. TSYS' global leadership in the cards industry, combined with CUP Data's market knowledge and outstanding reputation, creates a partnership that will benefit card issuers with market leading technology and service delivery. Jointly we will implement innovative solutions that will make the Chinese cards market one of the most dynamic in the world."

Surely TSYS CEO Phil Tomlinson is most satisfied that this deal finally came to fruition. Here is what he said during TSYS' Q3 2005 earnings results conference call:

I thought we had been on the cusp of great things in China now for a year. I still believe that. I think we're getting closer and closer, and as I have said on several occasions prior that we have long ago made a decision that we would not go to China di novo, hat we felt like in order to be successful in China with all of our research, and we have been thinking hard about China for about 10 years now -- that we really felt like we needed a politically correct, politically connected partner in China. And so that's what we're working on. That's way we want to do it. Our competitors have chosen to do it different ways and we think that long-term, that will allow us to be more successful.

One thing we have learned about China is a lot of the laws are being written as we go and they're great people. We have some wonderful relationships there, we're excited about it. But you do it on their schedule, and their schedule is not as quick as we would have hoped but we are feeling good about our prospects in China.

(Quotes are from the CCBN StreetEvents transcript.)

Comment: China UnionPay is not only a major presence in China but is also expected to venture abroad. IPO-bound Mastercard (proposed ticker: MA) cited the Chinese company as a possible competitor in its recent S-1 filing. You can read the relevant extract here.

TSS chart.