3 cos vie for Axis Bank’s swipe biz Global Biggies Eye 1,200Cr Network Amid Rising Card Use

Mumbai: Three global payment processing giants, Global Payments, WorldPay and Total System Services (TSYS), are bidding for Axis Bank's network of more than two lakh credit and debit card swipe machines business valued at Rs 1,200 core, or $200million, banking sources familiar with the matter said. 

    Two largest US processors – Global Payments Inc and TSYS – as well as UKbased WorldPay have valued the Axis Bank network slightly below the asking price. WorldPay, formerly a unit of Royal Bank of Scotland, is now majority owned by private equity giants Advent International and Bain Capital. 
    Axis Bank declined to comment on speculation, when contacted. 
    This could be one of the largest M&A deals in India's booming electronic payment industry. 
    ICICI Bank sold its network of swipe machines to First Data Corporation for $90 million in 2009. Japanese giant Hitachi acquired Prism Payments, a Mumbaibased manager of ATM and swipe machines, for $220 million last month. 
    Top three private banks account for 75% of the installed swipe machines or electronic point of sale (POS) terminals as they are known in the payment industry. ICICI Bank has the largest network of 2.57 lakh swipe machines followed by HDFC Bank with 2.4 lakh. 
    Axis Bank, the country's third largest private lender, also ranks number three in POS terminals with 2.27 lakh machines. These terminals facilitate cashless shopping transactions by swiping credit or debit cards, helping merchants to reduce risks and costs in handling cash. 
    Domestic card payments are reporting explosive growth with the Reserve Bank of India (RBI) asking banks to issue debit cards to all account holders and increase their network of merchants accepting the cards. For instance, there are 36 crore debit cards compared to 1.84 crore credit cards in the country currently. 
    State Bank of India (SBI) is making a big push to expand its POS terminals even as it said that 36% of its overall financial transactions were done through alternative channels like swipe and ATM machines, internet and mobile banking. SBI, which has 20 crore customers, has issued over 14 crore debit cards. 
    Debit card holders are increasingly opting for cashless shopping, unlike in the past when the cards were used mostly for cash withdrawals from ATM machines. In industry parlance, the banks that install the swipe machines are called the 'acquiring bank'. 
    Merchants retain a commission for every cashless transaction while bulk of the transaction fees goes to the banks, which also bags the current account of the shopping outlets.