Shares of Total System Services Inc. (TSS) inched up about 0.5% to $31.14 as of Nov 22, following the announcement of its extended alliance with FirstBank Puerto Rico (FirstBank) — a subsidiary of First Bancorp last week. However, the details of the alliance remain undisclosed.
FirstBank is armed with 152 branches, separate offices and service centers across Puerto Rico, the Virgin Islands and Florida. Through these locations, the bank also offers services related to small loans, mortgage origination, insurance and asset management, apart from standard banking services.
Recently, FirstBank repurchased its consumer credit card portfolio from FIA Card Services, which highlights the role of Total System to process this card portfolio. Meanwhile, the company had already converted the bank’s card portfolios to TS2 platform in Sep 2013.
Hence, Total System will now continue to process FirstBank’s debit and credit card portfolios through the same TS2 platform and issue new credit cards in the future, overall strengthening the payment processing network.
The over two-decade old alliance has been further strengthened as Total System will now deploy its fraud detection machinery for FirstBank. Subsequently, the company will not only identify sham transactions but also rectify the doubtful actions, thereby aiding smooth payment processes.
The alliance blends well with Total System’s integrated merchant acquiring platform that offers high-class customer experience through its upgraded technology and point-of-sale authorization capacities. Moreover, the renewed contract will continue to enhance Total System’s payment volumes and number of processed transactions, thereby supporting its financials.
Overall, we believe such strategic alliances, acquisitions and technical competence are expected to consistently drive long-term growth for Total System. Moreover, a healthy impact of the U.S. regulations regarding the credit card industry should help recover client accounts and augment long-term contracts, instilling shareholder confidence.
Total System presently carries a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same sector include Xoom Corp. (XOOM), Higher One Holdings Inc. (ONE) and Global Payments Inc. (GPN). All these stocks hold a Zacks Rank #2 (Buy).
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