What FIS’s Latest Deal Says About Finding Synergies Across the Payments Value Chain

The recent flurry of activity announced by Fidelity National (FIS) and GlobalPayments is a major reshuffling of the payment processing industry forged in a spate of megadeals completed in 2019. As a part of these activities, FIS announced that it is selling its remaining stake in Worldpay, approximately 55% of the unit it once owned. FIS acquired Worldpay for $43 billion just six years ago, but in the unloading of its remaining shares to merchant acquirer and payment processor Global Payments, Worldpay’s value is now around $22 billion. 

Additionally, FIS is buying Global Payments’ Issuer Solutions business for $13.5 billion. Issuer Solutions was formerly known as Total System Solutions (TSYS), which Global Payments acquired in 2019 for $22 billion. Global Payments itself was created in 2018 through a merger of Vantiv, the former processing unit of Fifth Third Bank, and Global Payments that kept the Global Payments name. Two years before merging with Vantiv, Global Payments had also acquired Heartland Payment System. The two large deals in 2019—between FIS and Worldpay and Global Payments and TSYS—came around the same time as another payment megadeal with the acquisition of First Data by Fiserv for $22 billion. All of these massive acquisitions involving large payment processors were ostensibly to unlock synergies across the payments value chain. Announcements of the deals touted the combined companies’ large reach across merchants and consumers, but the valuations of the entities now suggest that such efficiencies never fully materialized. 

The entire saga illustrates the difficulty of finding synergies across the payments value chain. On the surface, owning both ends of the processing relationship—acquiring and issuing—seems like a surefire way to boost efficiencies. But the products, technology, and requirements associated with each line of business are very different. After more than half a decade spent trying to squeeze value out of the acquisition of Worldpay, FIS’s latest move marks a retreat from this strategy, as does the sale of TSYS by Global Payments. Sometimes, the combined entity isn’t worth more than the sum of its parts.

Companies Mentioned in this Tech & Infrastructure report:

Adyen, Block (fka Square), Chase Bank, Clover, Fidelity National Information Services (FIS), Fifth Third Bank, First Data, Fiserv, Global Payments, Heartland Payment System, Stripe, Total System Solutions (TSYS), Vantiv, Worldpay