HSBC Holdings PLC has struck another deal to turn over merchant acquiring to a specialist in the field rather than handle the work itself.
The London company said Tuesday that it would sell a 51% stake in its U.K. merchant acquiring business to Global Payments Inc. of Atlanta, a longtime partner. In addition to processing card payments for HSBC's merchant customers in the United Kingdom, the resulting joint venture would also serve Internet merchants around the world.
HSBC and Global Payments formed a similar venture in Asia two years ago and have marketing agreements in Canada and the United States. HSBC says it can expand its roster of merchants more rapidly by working with a partner.
"It's about speed to market," said John Casey, the chief operating officer of commercial banking for the HSBC Bank PLC unit. "We could have invested more in our existing business, but it would have taken us much longer."
With a 15% market share and 135,000 merchant outlets, HSBC is the third-largest merchant acquirer in the United Kingdom, behind Royal Bank of Scotland Group PLC and Barclays PLC.
Last year, HSBC said, its British merchant acquiring business generated revenue of about $229 million.
"As a third-place provider in the marketplace, we're keen to grow that a bit faster," Mr. Casey said. Forming a joint venture "gives us … critical mass in terms of the merchants we can get access to in a relatively short period of time" — and "the business will still be run under the HSBC brand."
Global Payments has "the platform, the people, and the technology to drive forward the business faster" than HSBC could on its own, Mr. Casey said.
The sale of the stake, for which Global Payments would pay $439 million in cash, is expected to close by mid-August.
As part of the deal, HSBC would market the venture's services for 10 years.
Mr. Casey said the venture would "absolutely" be a precursor to future partnerships across Europe and in other expanding markets.
Financial companies in Europe were required to have systems in place at the start of this year supporting the Single Euro Payments Area, a Continent-wide payments system that replaced the individual systems that had been in place in each country.
"We see the potential from a U.K. perspective to spread into Europe," Mr. Casey said, especially as the Single Euro Payments Area "opens up lots of opportunities" for cross-border payments.
Paul R. Garcia, the chairman, president, and chief executive officer of Global Payments, said HSBC has "an extensive branch network, a world-class name and a brand recognition. … We're fully able to take advantage of their brand cachet."
Observers said more banks outside the United States would be likely to outsource their merchant acquiring businesses to specialists as payments volumes grow in a post-SEPA Europe and other developing markets.
"As there's more and more spending on cards at the point of sale, merchant acquiring becomes a more important activity, and banks are waking up to the fact that there are specialist acquirers and processors out there that can do a better job than they can," said Olann Kerrison, the head of publishing for the London consulting firm Lafferty Group.
JPMorgan Chase & Co.'s recent decision to break up Chase Paymentech LLC, its joint venture with First Data Corp., reflected different circumstances, he said. As Chase Paymentech expanded in Europe, it "would have been competing with First Data," Mr. Kerrison said. "I think that provides an example of how complicated it would have been for Chase Paymentech to compete with one of its shareholders."
There are still parts of the world where Global Payments is not involved in HSBC's processing operations. Mr. Garcia said taking over those relationships is "always a possibility" for Global Payments, but he could not elaborate.
Adil Moussa, an analyst at the market research and consulting firm Aite Group LLC in Boston, said Global Payments' close relationship with a large, international banking company would create easy opportunities for further expansion.
"You want somebody who has presence there already and local knowledge," he said. "If you're going to … [expand] internationally, then obviously it's better to do it with a bank that's in a lot of different markets."
Global Payments plans to keep the 400 employees of the U.K. business after taking control, Mr. Garcia said.