Bank technology provider Fidelity National Information Services is reviving its payments segment, including the sale of Visa and Mastercard products and processing, following the completion of its Worldpay spin-off earlier this year, FIS CEO Stephanie Ferris told analysts on an earnings call.

”In terms of the payments business, we're just starting to get our mojo back there,” Ferris said during the call Tuesday to discuss the company’s second-quarter earnings. “That was one of the growth verticals for us, and we got a little distracted, I would say, as the company really focused on Worldpay.”

The payments division is part of FIS’s banking solutions business, one of two segments at the company in the wake of the completion of its sale of the Worldpay unit to Chicago private equity firm GTCR in February. Its other, smaller segment is the capital market solutions business.

Second-quarter net earnings from continuing operations nearly tripled to $242 million as operating revenue for the period rose 3% to $2.43 billion, according to a press release Tuesday from the Jacksonville, Florida-based company.

In response to analyst questions on the call, Ferris emphasized that the company doesn’t expect its payments business to suffer if consumers begin to feel the impact of higher inflation or a slower economy. That’s partly because a debit business is less sensitive to such changes than a credit business, but also because what FIS earns from consumer transactions is limited relative to its other income flows, she said.

“It's just not material to the overall revenue impact because of how much revenue really comes from core and digital, and the other pieces of the payments business,” Ferris explained to analysts. “We don't have a big impact from consumer spend in the payments business and banking.”

On the contrary, FIS is counting on the payments business to bolster growth in sales to bank clients, which include global financial institutions, community and regional banks and credit unions, as well as government entities. In particular, the company is targeting digital services sales and cross-selling opportunities with Worldpay, which is still partially owned by FIS.

“We're starting to see early wins and sales,” Ferris told analysts, with respect to the card products. “They're very competitive products, and they're highly integrated with the core.”

The economic environment may be a plus in another respect for the company, as it seeks potential acquisitions to boost its financial results. FIS didn’t close any deals in the second quarter, but Ferris said the pipeline for possible acquisitions is “very good.”

“We like the economic environment as it sits right now,” Ferris said. “High interest rates and lots of macro pressure into potential M&A candidates makes them much more willing to sell, makes them much more willing to sell at the right price.”

By Lynne Marek on Aug 6, 2024
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