How Payment Processors Are Muscling up on the Partnership Front




In the rapidly expanding online arena, payment processors (DIA) are introducing new technology to cater to the global demand. Visa (V) is leading the pack by deploying resources to incorporate new technologies in the payments space. The company has innovation centers in various locations including San Francisco, Singapore, Miami, London, Dubai, and Bangalore.

In particular, Visa is investing in e-commerce and wearable technology based payment solutions, while American Express (AXP) is investing its operating cash flows on new partnerships, technological advancements, and inorganic expansions.

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Global play

In 3Q16, Visa signed a multiyear debit agreement with Lloyds Banking Group and RBS. The company also entered into a multiyear credit and debit agreements with Nationwide and Barclays. Notably, Visa ended 3Q16 with 15 million customers in 21 countries. The company’s Visa Checkout program has seen participation from 1,400 financial institutions with $162 billion in volumes. It also announced new advertising solutions in an effort to help merchants understand the needs of new and existing customers.

By comparison, MasterCard (MA) expanded its existing partnerships with US Bank and Regions Bank. The company also renewed its consumer credit co-branding with PayPal (PYPL). It is also expected to get more business from China, which is expected to open its market for global payment processors.

MasterCard has already made some progress in China by signing new agreements with banks, including HSBC Bank, China Construction Bank, ICBC (Industrial and Commercial Bank of China), and Postal Savings Bank of China.

In the next part of this series, we’ll take a closer look at what earnings could be like for payment processors in 2017.


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