Basics of Global Payments
Global Payments (GPN) is a provider of payment technology services that enable customers to accept many different payment types. Global Payments provides services in the United States and elsewhere. It offers services in 29 countries throughout North America, Europe, the Asia-Pacific region, and Brazil. The company structures its organization into two segments, namely North America and International. Global Payments is in the process of merging with Heartland (HPY), and this would help them build out their US presence.
Essentially, when a customer buys something at a retailer, the card issuer (think Visa or Mastercard) doesn’t deal directly with the merchant. Instead, a payments processor like Global Payments or Heartland facilitates the transaction processing.
Global Payments’ services allow its customers to accept card, electronic, check, and digital payments at the point of sale. The offerings include terminal sales and deployment, authorization processing, settlement and funding, customer support, help desk functions, chargeback resolution, and compliance. The company generally gets a percentage of the transaction amount as well as other fees, depending on the card type.
Global Payments generally has two models. One is sponsorship, and the other is direct membership. Under the sponsorship model (used by Visa and Mastercard), Global Payments routes transactions but doesn’t perform settlement services. Under the direct membership model, the company routes and clears transactions directly through the card brand’s network and isn’t restricted from performing funds settlement.
Merger arbitrage resources
Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL). For a primer on risk arbitrage investing, check out Merger arbitrage must-knows: A key guide for investors.
Investors who are interested in trading in the financial sector could look at the S&P SPDR Financial ETF (XLF).