2. ● Purpose of presentation:
o Provide an introduction of Global Payments
o Explain how credit card processing works
o Give an overview of the company’s business model
o Compare business model to competitor
o Propose an innovation idea
Purpose
3. Introduction to Global Payments
● Incorporated on September 1, 2000
● Credit, debit and check processing for ISOs,
merchants, financial institutions, government
agencies, and multi-national corporations
● One of the leading processing intermediaries
for businesses all around the world
6. Value Proposition
Global Payments offers electronic
processing services for merchants such as
credit or check processing. We focus on
high quality and offering the newest
innovations so that our customers always
have the most up-to-date, safe and reliable
processing capabilities. We have been in
the business for over 40 years and with
that experience have been a leader in the
industry since the 1960’s.
7. Customer Segments
Two segments:
● North American Merchant Services
o U.S. and Canada
o 70.8% of revenues
● International Merchant Services
o Europe and the Asia-Pacific region
o 29.2% of revenues
8. Channels
Direct Sales Channel
● Mid-sized to large merchants
Independent Sales Organizations Channel
● Mid-sized to smaller merchants
Value-Added Reseller
● Products available to cater to contactless payment cards as well as
mobile payments markets
Electronic Channels are most effective
● Easiest to implement and maintain
10. Key Resources
● Human
o Sales representatives
o Engineers/Technical team that creates and monitors the services
o Marketing
o Management team
● Physical
o Buildings where operations/services/IT are run
o Warehouse where machines are kept then distributed
o Transportation/Vehicles
11. Key Partners
● Key Supplier Relationships
o Working with major credit and debit card companies
such as Visa and Mastercard to be accepted
payment on machines.
● Strategic Alliance
o Gaming/gambling industry
o Currency conversion
o Referral Partners
12. Key Activities
● Production
o Making of card machines
o Coding/Programming software
● Problem Solving
o Security
o Efficiency
o Cost management
● Platform/Network
o Website describing brand and company
o Software/Hardware
● Breakdown
o 30% Production
o 40% Problem Solving
o 30% Platform/Network
13. Cost Structure
● Cost-Driven
● Cost of service: salaries, wages, expenses
paid to operations and technology
● Operating expenses
14. Revenue Stream
● Leasing, renting, selling revenues from credit
card processing machines
● Revenue in 2014: $2,554,236,000
16. Model Comparison
● Cost Structure
o Value vs. Cost-Driven
● Customer
Relationships
o Technical Support
o Personal Assistance
17. Innovation
● Create an online forum
● Global payment professionals overseeing
the forum 24/7
● Forum will only be assigned in the US
● Increased customer retention
18. Innovation continued…
● Cost for labor: $123,000/year
● Forum cost: $100/year
● Average customer spends $600/year
● Retain 205 customers to pay back the expense
19. Summary
● Global Payments’ Value Proposition
● Key Business Model Blocks
● Business Model Comparison
● Innovation Proposal
20. Sources
Global Payments Review (Slides 9, 16 & 17): http://www.merchantmaverick.com/reviews/global-payments-
review/
Better Business Bureau (Slide 9): http://www.bbb.org/atlanta/business-reviews/financial-services/global-
payments-in-atlanta-ga-16002116
Complaints and ratings (Slide 9): http://www.cardpaymentoptions.com/credit-card-processors/global-payments-
inc-review-complaints-and-rating/
Stock market and financial information (Slide 13 & 14): http://www.marketwatch.com/investing/stock/gpn
Industry News/Global Payments buying gaming business (Slide 11):
http://www.bizjournals.com/atlanta/news/2014/09/30/global-payments-buys-fis-gaming-
business.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+vertical_42+(Internet+I
ndustry+News)
Gambling Kiosk Offerings (Slide 11): http://www.businesswire.com/news/home/20140929006004/en/Global-
Payments-Gaming-Service-Announces-Kiosk-Offerings#.VCw7UfldU7k
NAMS (slide 6): http://www.namerchantservices.com
Purpose of presentation:
Provide an introduction and a little background history of Global Payments
Briefly explain how our processing services work
Give an overview of Global Payment’s business model canvas
Compare our model to one of our main competitors
Based on our business model analysis we will propose an innovation idea to improve the company
Global Payments, officially known as Global Payments, Inc., is a public company that was incorporated on September 1, 2000. Their history in the payment processing industry though has spanned several decades when aligned with their previous parent company National Data Corporation- the pioneer of electronic payment processing.
They provide credit, debit and check processing services for ISOs (independent sales organizations), merchants, government agencies, and multi-national institutions.
Global Payments is a Fortune 1000 company and one of the leading processing intermediaries for businesses located all around the world- North America (United States and China), Europe, and Asia (China).
Out of all of Global Payments’ services, card transaction processing is one of its largest. On this slide you can see a diagram of how the processing works, and I am going to briefly explain what our company’s role is so that you can better understand our business model operates.
First, you have the card holder who is making a purchase and then presents their card at the point of sale to be read by the merchant’s card reader which is provided by Global Payments.
After the information needed is captured by the device, the merchant’s terminal connects to our network which will provide authorization for the transaction to take place.
Then you can see the connections between the card network and the bank, as well as the connection of the card issuer here at the top right.
Now that we have explained what it is that we do, next we are going to explain how we do it by way of Global Payments’ Business Model Canvas.
Our condensed version of what we think Global Payments Value Proposition should be
NAMS: includes operations in U.S. and Canada. Represents 70.8% of total consolidated fiscal 2014 revenues
IMS: Includes operations in Europe and the Asia-Pacific region, with a concentration of 29.2% of total consolidated fiscal 2014 revenues
https://investors.globalpaymentsinc.com/annuals-proxies.cfm
The Direct Sales Channel targets mid-sized to large merchants that have an annual bankcard volume averaging above $300,000.
The Independent Sales Organizations Channel targets mid-sized to smaller merchants with an average bankcard of $150,000 or less a year.
Through GP’s VARs channels, several products have been created that support radio frequency identification for contactless payment cards, as well as near field communication enabled smartphones that contain mobile wallet software, which opens up GP to the mobile payments market.
Electronic channels: negate the cost of shipping/installation/physical products. GP can have support 24/7 all over the world and solve their problems immediately. Also, internet-based sales are rapidly becoming the majority and offer the most profit potential. These channels are easier to install/implement because there is no physical product. Also, it is easier to service/fix problems in a digital environment.
We gain new customers by having promotions at business fairs. We send out more information and schedule meetings to discuss opportunities. We retain our customers by our financial, social, customization and structural bonds. We have a bundle saving options and 24/7 customer support. As well as feedback reports on demographics. Global Payments grows existing customers by helping them extend their selling capabilities online. Global payments seems to be having a problem with customer retention since they talk about us having bad customer service due to the fact that we only have a help desk line. So we felt as though this was something we could work on as a company.
Human resources most important key resource, this involves things such as coding and programming the software necessary for the merchants to operate the card services at their business.
Sales reps also very important because they are a first point of contact for potential customers.
Physical is the other most important resources because the actual manufacturing and storing of the machine the merchants/customers use are a very important part of the brand. As well as the transportation needed to get the machines to the merchant and the storage centers.
Alliance
recent alliance with fidelity national information services, in becoming a more active part in the gaming industry (skill games, slots, etc)
new currency conversion in the hospitality industry used currently in canada powered by planet payment and GP homecurrencypay
Direct Sales. Our direct sales channel receives qualified leads from agent banks and trade association
referral partners for a variety of mid-sized to large merchants with annual bankcard volume averaging above
$300,000. Our merchant portfolio is also expanded through targeted campaigns and other lead-generating efforts
by our direct sales force. Our referral partners are paid referral fees.
Breakdown
Production 30 because it is important to our business because this is what the customers are buying and is our main product
Problem solving 40 because with the technology that continues to change there is always a way to be more secure, more efficient, and help ourselves and customers manage cost
Platform/Network 30 because in a sense it is what puts all of the pieces together but, it is also one of the pieces that needs the most help/work in serving the customers better and building brand trust/loyalty
Cost driven due to the competitive nature, most services are very similar and cost is the main differentiator. Some of the operating expenses we have are cost of service, sales expenses and processing system intrusion. Cost of service has increased 10.5% during fiscal 2014 compared to the prior year due to the increase in the variable costs associated with our acquisition of APT and PayPros. We rely on various financial institutions to provide clearing services.
Majority of merchant services revenue is generated on services priced as a percentage of transaction value or specified fee per transaction, depending on the card type such as cancellation fees. We also charge other fees based on specific services that are unrelated to the number or value of transactions. revenues increased 7.8% to $2,375.9 million compared to the prior year. This growth was primarily driven by our U.S. ISO channel, growth from our direct sales channels and gaming business, and growth in Europe; partially offset by market-based pricing compression in Canada.
Here is the competitor business model that we developed for First Data. We used this model to compare it to our own model with Global Payments and identify areas of improvement for our company.
We identified our main competitor in the U.S. markets to be First Data. They are one of the largest processing services in the world with over 6 million customers, whereas Global Payments has about ¼ of that at 1.5 million merchants that we work with.
The two main areas that we identified differences in were Cost Structure and Customer Relationships:
With cost structure, First Data has some of the highest rates in the industry and compete with a value-driven cost structure. They tend to appeal to larger-sized companies than Global Payments because this focus on value over cost allows them offer more customization and specific services. Global Payments on the other hand competes with a cost-driven cost structure. Global Payments competes by keeping our costs down and by maintaining more competitive rates in the industry.
Customer relationships: First Data is well-known for having excellent customer support whereas that is actually the #1 complaint of Global Payments’ customers. Like First Data we currently offer 24/7 support; however customers complain that our support is not as reliable. Their reasoning for this is that they are not always able to reach a customer support representative, and when they do, they do not receive the answers that they need quickly and accurately. First Data also offers more personal assistance with a Live Chat feature, whereas we do not.
From analyzing the customer relationships block between First Data and ourselves, we have determined that this is an area that we should really work to improve upon, which led us to our proposed innovation.
For our innovation we found that the biggest area to improve was customer service. We found that our customer service was very poor, and our innovation was to create an online forum that customers are able to share their experiences with each other and ask questions.
We will have two full time employees that will monitor the forum to make sure that customers have accurate information and that all customer questions are being answered.
The forum will only be available for the U.S. market to start. The reason for this is to see how well the forum does first, before entering into foreign markets.
With our innovation we will see an increase in customer retention, by showing great customer service will allow customers to get answers to questions quickly.
The cost of the labor will be four employees that will work 6 hours a day seven days a week. The cost for the employees will be about 123,000/year including extra training for the associates to run the forum.
The average forum cost is $100/year.
We found that the average customer spends about $50 a month which is $600/year.
To pay back the expenses we need to retain or gain about 205 customers to break even.
To wrap everything up, I am going to give a quick summary of what we have presented today:
First, we explained Global Payments’ value proposition and how it is important to our company to focus on always providing quality service to our customers.
Next, we gave a brief overview of our company’s 9 business model blocks and then offered a comparison to the business blocks of our competitor First Data.
In our comparison to First Data we identified that one area that could be improved by innovation is Customer Relationships via our customer support service.
With our innovation we proposed that Global Payments create an online forum for customers to go 24/7 and communicate with each other as well as designated employees from Global Payments to address their questions and concerns about our service. We believe that this has the potential to improve our customer relationships, increase customer retention rates, and as a result increase the revenue of our company.
