Introduction to Gpn 10-08.ppt...
Transcript of Introduction to Gpn 10-08.ppt...
2
Topics
• Who we are
• Our business model
• Growth drivers
• North America merchant services
• International merchant services
• Strategy
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Global Payments Today
• Leading small and mid-market merchant acquirer/processor
– U.S.– Canada– Europe– Asia Pacific
• Money Transfer business– Focus on U.S. and Europe
to Latin America
• Headquartered in Atlanta, GA
• ~5,300 employees, living in more than 20 countries
Revenues >$1.6B
Based on FY 2009 est.
UnitedStates
Europe
Money Transfer
Canada
Asia-Pacific
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Business Highlights
Years of payment processing experience
Worldwide transactions processed annually
Merchants worldwide
Dollar volume moved annually
>40
>3.7B
~1M
>$295B
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A Truly Global Player
SlovakiaSlovakia
Atlanta
TorontoToronto
Owings MillsNilesNiles
LasVegasLas
Vegas
MaldivesSri
Lanka
IndiaIndia
ChinaChina
MacauMacau
HongKong
Taiwan
Malaysia
Singapore
Brunei
RussiaRussia
BIHBIH
Philippines
UkraineUkraine KazakhstanKazakhstanPolandPoland
CzechRep.
CzechRep.
UK
DallasDallas
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Strong Revenue and EPS Growth
$629
$784$908
$1,062
$1,274
04 05 06 07 08
19%CAGR
$0.87
$1.19
$1.54$1.77
$1.98
04 05 06 07 08
23%CAGR
Revenue ($M) EPS ($)
Note: Represents normalized results, which exclude divested businesses and non-recurring items. Please see our earnings press release (filed as exhibits to our Form 8-K) for more information. Reflects the retroactive effect of the company’s October 2005 two-for-one stock split. FY07 includes impact of FAS 123(R).
Fiscal Year Fiscal Year
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Characteristics of Merchant Services Model
• Merchants are end customer
• Provide full-service– Front-end processing– Back-end processing– Customer and other related services– Pricing based on mixture of volume,
transaction and fee based
• Multiple sales channels
• Leverageable infrastructure
• Represents majorityof revenue
• Financial institutions are end-customer
– Reselling our services to merchants
• À la carte service menu with pricing on a per item basis
• Longer sales cycle
• Leverageable infrastructure
Direct Indirect
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Card Issuer
Begins withConsumer
Merchant
A Typical Direct Merchant Transaction
$100purchase
$2.00chargedby GPN
$1.50fee to Issuer
$0.40fee to GPN
$0.10fee to Assoc.
Note: For illustration purposes only
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48%48%
U.S.
28%28%
Europe
12%12%Asia Pacific
7%7%Latin America
3%3%Canada
2%2%MEA
Positioned in a Large WorldwidePayments Market…
2007 Worldwide Credit and DebitPurchase Transactions = 64.5 B
Participate in 91% of worldwide transactions
Source: The Nilson Report – December 2007 Issue 893
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U.S.
Asia-Pacific
Latin America
Mid East/Africa
Worldwide Shift to Card Based Payments
Based on Purchase Transactions
2002 2012
Mid East/AfricaU.S.
42.7 B 133.1 B
Growing at 12% CAGR 2002-2012
Source: The Nilson Report – August 2007 Issue 885
Europe
Asia-Pacific
Canada
Latin America
Canada
Europe
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U.S. Visa and MasterCard Purchase Volume Growth(% Growth Year over Year)
A Resilient Business
Source: The Nilson Report
$B
$0
$1,000
$2,000
$3,000
$4,000
'84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06
22% 12% 16% 15% 15%15% 7% 13%27%21%
24% 18%17%
17%17%
15%11%
9%13%
RecessionRecession
RecessionRecession
16%
12%12%
9%
'11F’cast
15%CAGR
‘07
1414
2.3
3.7
1.3
0.6 0.50.10.2 0.2
2.5
U.K. HongKong
U.S. CentralEurope
Asia-PacificJV Regions
RussiaChina IndiaCanada
0.1
Malaysia
Opportunity for Convergence toWestern Card Levels
Source: The Nilson Report – December 2007 Issue 893 (includes all VISA/MC credit and debit cards) and CIA, The World Factbook.
Visa and MasterCard Credit and DebitPayment Cards per Person
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North America Growth Drivers
• Strong ISO position continues to drive U.S. growth
• U.S. market position levers referral partner status
• Card association rate changes benefits pricing
• Value-added Resellers (VARs)
• Niche products and services in certain vertical markets – Gaming suite of products– Canadian mid-sized gas station product– Chinese sales, service, and statements
offered and supportedU.S.U.S.
• Visa and MC purchase volume: $2.1T
• Growth: 8-12%
CanadaCanada• Visa and MC purchase
volume: C$214B
• Growth: 3-5%
Source: The Nilson Report
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Well-Positioned in North America
Multiple distribution channels…
• ISO Channel• Direct• Value-added Resellers• Gaming• Check• Trade Associations• Financial Institutions• Telesales
…Strong market share
U.S.12-15%
U.S.12-15%
Canada30%
Canada30%
Note: Revenue share based on outside consultant and company estimates.
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Our Competitive Advantage
Relationships2Broad product sets3
Quality Services1
Our Value Proposition
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Small MerchantsSmall Merchants
NationalNational>$10 Million
Average$100,000
Targeted Merchant Market – U.S.
Average$300,000
Size(Annual bankcard volume)
Mid-sizedMerchantsMid-sizedMerchants
Competitors
and Alliances
and Alliances
and Alliances
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A Leading Presence in Canada
• 1,500 CIBC and National Bank (NBC) referral branches
• Direct sales
• Merchant Associations
• Third party sales forces– ESA– ISO
• Targeted average merchant size: $300K
Note 1: Canadian Payments Association (net retail volume) reported 2006 Visa and MasterCard volume. Market Share based on Global Payments estimatesSource: Canadian Payments Association (net retail volume) and Global Payments estimates.
A C$214 Billion Market(Total Credit Sales Volume1)
Competitive positions based on volume
Other
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Leads to Diversified Portfolios
U.S. Direct Channel Canada
Average annual bankcard volume of $300K
ApparelBusiness Services
Direct MarketingEducation
Florists
General Retail
Government
Grocery
Healthcare
Professional Services
Wholesalers, Distributors & Manufacturers
Utilities
Transportation
T&ESpecialty Retail
Restaurants
Wholesalers, Distributors & Manufacturers
ApparelBusiness Services
Direct Marketing
Education
Florists
General Retail
Government
GroceryHealthcare
Professional Services
Restaurants
Specialty Retail
T&E
Transportation
Utilities
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Key Milestones:Building the International Merchant Business
FY 2006-07• Acquired Diginet (The Balkans)• Entered Ukraine• Acquired 56% ownership of HSBC Asia Pacific
merchants in 10 countries and territories• Entered Kazhakstan• Servicing Hong Kong and Macau merchants out of Toronto
FY 2004-05• Acquired MUZO in Czech Republic• Entered Russia• Entered Poland
FY 2008-09• Acquired 51% HSBC UK portfolio• Acquired 56% ownership of HSBC’s Merchant
portfolio in Philippines• Announced acquisition of United Card Service—
direct merchant acquiring in Russia
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A Leading International Player
LOCAL REGIONAL
LARGE REGIONAL
INTERNATIONAL
Bank of East Asia
Singularly focused on merchant acquiring in a highly fragmented market
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International Competitive Advantages
Strong referral partners
Strong reputation with our international clients
Singular focus on merchant payment processing
Full suite of service offerings
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Entered Western Europe via Joint Venture with HSBC
• Formed a direct merchant acquiring JV with HSBC Bank plcin the United Kingdom
• Global paid $439M cash for 51% ownership
• 10-year marketing alliance and merchant referral agreement– HSBC contributed its merchant business and will retain 49% ownership
in the joint venture
• Acquisition closed on June 30, 2008
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HSBC Merchant Services – A Strong Platform
• A leading direct merchant and global e-commerce acquiring presence– Joint venture with HSBC
• 1,668 bank referral branches
• >135,000 merchant outlets
• $219M in fiscal 2007 revenue
• 450 employees in the UK
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Global Payments Central Europe/Russia Today
• Largest indirect payment processor in Czech Republic– Headquartered in Prague
• 38,000 POS Terminals and 2,350 ATMs
• EMV chip card compliant technology
• 300 employees
• Recently announced agreement to enter the direct acquiring market in Russia – United Card Service
Key Markets
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Global Payments Asia Pacific Joint Venture Today
• Leading Asia-Pacific direct merchant acquirer– Presence in 11 countries/territories;
including recently added Philippines– > 68,000 merchant outlets
• Joint venture with HSBC– GPN owns 56%– 10-year marketing alliance
• Represents approximately 6% of total GPN revenue
• 434 employees
“JV Regions” represents Brunei, the Hong Kong SAR, India, the Macau SAR, mainland China, Malaysia, Maldives, Philippines, Singapore, Sri Lanka, and Taiwan.
India
Sri LankaMaldives
Singapore
Malaysia Brunei
Macau
Hong Kong
Taiwan
China
Philippines
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International Growth Strategy
Acquire merchantportfolios
Roll out new productand services
Leverage infrastructure
Expand existingchannels
3232
Consistent Strategy Drives Future Growth
11Maximizelong-term
returns
22Invest in
technologyand people
33Expand corebusinesses
globally
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Customer Service
Front- and Back-End Defined Today
Settlement&
File Delivery
Internal ReportsGA@
Merchant’sBank
Merchant Associations
Real-Time&
Batch ProcessingDial
DSL
FrameRelay
Front EndEast/Central
Front-End Back-End
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Investing and Leveraging Front-End System
Czech Rep.
Atlanta
Toronto
Charlotte
Maldives Sri Lanka
India
China
Macau
Hong KongTaiwan
Malaysia
Singapore
Brunei
Russia
Philippines
Front End platform
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1 Macau and Hong Kong2 US3 HKRCC (Sri Lanka, Philippines, Singapore, Brunei, Maldives)4a Canada4b Malaysia, China, India, and Taiwan5 UK (Domestic platform, International Acquiring)6 MUZO--TBD7 UCS--TBD
1
2
4a4b
5HKRCC
UK
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Consolidating Our Back-End System
Charlotte
Maldives Sri Lanka
India
China
Macau
Hong Kong
Taiwan
Malaysia
Brunei
Singapore
Philippines
1 Macau completed2 Hong Kong completed3 HKRCC (Sri Lanka, Philippines, Singapore, Brunei, Maldives)4 Malaysia, China, India, and Taiwan5 UK (Domestic platform, International Acquiring)6 MUZO--TBD7 UCS--TBD
Back End platform
Primary Back End platform (MAS)
1
2
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5
HKRCC
Czech Rep.
RussiaUK
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Providelong-term
revenue growthand earnings
accretion
Providelong-term
revenue growthand earnings
accretion
Focused Acquisition Strategy
High profit, high growthsegments
International and Domestic
Companies with strong market presence and management team
Leverage:– management experience– infrastructure– balance sheet– distribution channels
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Geographic Area Type of Acquisition
Target Markets
• Focusing on direct merchant acquiring• Countries surrounding Russia
• SEPA 2008—Banks are rationalizing – Non-JV countries– JV countries
• Other HSBC relationships– Other bank portfolio acquisitions
• Bank Portfolios – Non-JV countries– JV countries
• Other HSBC relationships– Other bank portfolio acquisitions
WesternEurope
EasternEurope
AsiaPacific
• Technology companies– Integrated solutions
• Bank alliances
NorthAmerica