TSYS Seeks to Capitalize on Debit Growth Despite Lack of EFT Network

Large transaction processors, except for Total System Services Inc. (TSYS), own their own electronic funds transfer networks to support the switching of PIN-based debit card transactions. TSYS has tried to acquire these networks but has been unsuccessful, making it the only major processor without its own EFT network. Despite this, TSYS is focusing on other areas of the debit market, such as loyalty programs and prepaid cards, to capitalize on the double-digit growth expected in the debit market. The company has recently acquired Clarity Payment Solutions to support prepaid debit card products and has developed a database to analyze customer payment profiles for "wallet coding segmentation." TSYS is also promoting its new debit card-related products to financial institutions, mainly focusing on cross-selling loyalty programs for both credit and debit cards issued by the same institution.

Key Takeaways:

• TSYS is the only major processor without its own electronic funds transfer (EFT) network.
• TSYS has tried to acquire EFT networks but has been unsuccessful.
• The company has acquired Clarity Payment Solutions to support prepaid debit card products.
• TSYS has developed a database to analyze customer payment profiles for "wallet coding segmentation."
• TSYS is focused on cross-selling loyalty programs for both credit and debit cards issued by the same institution.
• Prepaid cards are a growing area of interest, with financial institutions promoting nationally branded cards and instant-issue gift cards.
• Each prepaid card product has its own economic and pricing model, requiring constant evaluation.
• TSYS separates its prepaid card products from its signature-based debit and credit card processing platform.

Statistics:

• TSYS will have issued 10 million prepaid cards for financial institutions this year (Aggarwal).
• The prepaid debit card market is growing, with financial institutions promoting nationally branded cards and instant-issue gift cards.
• Prepaid cards have different economic models than traditional bank-issued debit cards.
• The double-digit growth rate in the debit market is expected to continue.
• TSYS processes transactions initiated with some instant-issue prepaid cards.

Sources:

• Waddell, K. (2004). TSYS Faces Long Haul to Catch Up in EFT Without Its Own Network. Card Forum.
• Aggarwal, A. (2004). TSYS Prepaid Inc. CEO. TSYS Prepaid Inc.
• D'Angelo, F. (2004). Executive Vice President. Metavante Corp.
• Piskos, R. (2004). Senior Vice President. National City Corp's Electronic Banking Services processing subsidiary.
• Thomson Media. (2004). Copyright 2004 Thomson Media Inc. All Rights Reserved.