US global payment solutions provider Tsys has signed a US$1.4bn definitive agreement to acquire NetSpend, a provider of general purpose reloadable (GPR) prepaid debit cards. The deal is described as the first major consolidation in the prepaid sector, which is experiencing fast growth.
According to Tsys the deal will expand its offerings in the high-growth prepaid market, which is expected to double in size by 2017-18 becoming worth US$4bn. There are an estimated 68 million US consumers with limited access to traditional banking services at the moment who are being targeted by prepaid services, and there are many more ‘unbanked’ customers around the world who could benefit.
“The NetSpend acquisition is truly a transformational event for Tsys and consumers alike. It enables us to meet our strategic goals of diversifying our business, being a more innovative payment solutions provider and expanding our role within an area of payments that is expected to grow at a 20% annual rate over the next four years,” said Philip Tomlinson, chairman of the board and chief executive officer (CEO) of Tsys. “The acquisition also complements our already strong presence in the prepaid processing space.”
The transaction is expected to close in mid-2013, subject to regulatory approvals, approval by NetSpend shareholders and customary closing conditions.