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Global Payments to buy Zego in a land grab for real-estate payments – PaymentsSource

Global Payments has extended its technology and processing capabilities into the real estate vertical, agreeing to acquire Zego from Vista Equity Partners.

The $925 million deal would bring Zego’s real estate management and payments software to Atlanta-based Global Payments, which views real estate as a $6.5 billion target with ongoing payments and software needs.

“With our agreement to acquire Zego, we enter one of the largest and most attractive vertical markets worldwide,” Global Payments CEO Jeff Sloan said Tuesday during an earnings call. “Real estate is the quintessence of the type of market that we seek — sizable, global in scope, fragmented and ripe for further software, digital commerce and payments penetration.”

Zego offers a cloud native software-as-a-service platform for property management, resident engagement and payments. The company has 7,300 property management customers representing more than 11 million residential units in the U.S.

Zego software supports property managers and residents throughout the real estate life cycle, from leasing and onboarding to one-time and recurring payments, work orders, utility management, resident communications, renewals and offboarding.

“Through its integrated payments offering, Zego processes approximately $30 billion in payments annually, in a market with a volume opportunity that exceeds $1 trillion,” Sloan said.

When Global Payments leverages its scale and digital expertise to bring payments further into Zego’s base, it will also generate incremental property and software partner referrals to the company’s more than 3,500 sales and tech professionals, Sloan noted.

In addition to the Zego acquisition, Global Payments also has agreed to acquire the Austria merchant acquiring business of Worldline’s PayOne for a reported $75 million.

“We have further widened our competitive moat,” Sloan said of the acquisitions. “With Zego we underscore our distinctive focus on software driven solutions with an emphasis on commerce enablement. With Worldline’s PayOne Austrian acquiring business, we deepen our presence in the most attractive markets worldwide.”

Global Payments had entered the Austrian merchant acquiring market more than a year ago with other partners, and the PayOne acquisition strengthens that commitment, said Cameron Bready, president and chief operating officer at Global Payments.

Bready also sees significant potential for Global Payments in obtaining Zego, which still has payments delivery as the key driver of its business, but has a growing software-as-a-service element as well.

“Zego started as a payments business, but moved into software over time,” Bready said. “It’s about $30 billion of payment volume, a very healthy portfolio from a payments standpoint. The software elements of the business are growing more rapidly, and I suspect over time that will flip and become the majority of the business long-term.”

The biggest opportunity for Global Payments is to co-sell its payments software into the Zego customer base while also advancing software developments to clients, Bready added.

Global Payments expects to close the Zego deal by the end of the second quarter and to acquire the Wordline Austrian business in the second half of the year.

Global Payments cited a “return to growth” in all sectors of its operations in reporting $1.99 billion in first-quarter revenue, nearly identical to the year prior. Adjusted net revenues increased 5% to $1.82 billion from a year earlier.

Net income rose 14% from the year-earlier quarter to $541 million.

On the issuing side of the business, Global Payments also announced it has renewed its agreement with Barclays U.S. Consumer Bank, a unit of the U.K.-based worldwide financial services provider Barclays.

Through its TSYS Issuer Solutions segment, Global Payments would continue to provide processing and support services for Barclays’ consumer and commercial credit card portfolios. Additionally, Barclays will utilize the TSYS machine-learning powered fraud solution.

The Barclays extension further justified Global’s merger with TSYS in 2019 as a way to obtain more global markets for e-commerce and cross-border payments growth, while also adding scale to the company to compete with the likes of Stripe and Square in those markets.

Sloan also acknowledged that the company’s arrangement with Google, established earlier this year to shift merchant acquiring technology to Google Cloud is also paying off.

“We made considerable progress on the partnership with Google,” he said. “We expect to use Google as a merchant customer (acquirer) in select Asian markets in the third quarter, with North America to follow shortly thereafter.”

Global Payments has initiated a co-sell program with Google and is already seeing referrals from Google for enterprise-class clients and expects to deliver business growth products that integrate Google technology on the Global Payments platform by the end of 2021, Sloan noted.

With merchant payment processing recovering from COVID-19 levels, Global Payments foresees many of the consumer payments habits with e-commerce and omnichannel services built during the pandemic to stay in place — and grow — as the pandemic subsides.

“Consumers are not going to go backward, people are not going to say they want to spend more time in lines (at the POS) or go find the ATM for cash,” Sloan said. “We have seen the pandemic accelerate about three to five years of behavioral change on the consumer side.”

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