TSS Makes an Offer on Mobile Payments Firm Cayan

News recently emerged out of Total System Services (TSS), a global payments solution provider that made one doozy of a deal: it agreed to pick up Cayan, a company which handles payments technology, for $1.05 billion in cash. When a company’s willing to shell out that kind of money, it’s a big deal by anyone’s standards, but what got TSS so interested in Cayan to begin with?

The deal is expected to reach a conclusion in 2018’s earliest days—by the end of the first quarter—and management noted Cayan’s revenues were around $150 million. That’s about five percent of TSS’ revenues in the same measured period, which means a payback period of roughly 20 years at that rate.

However, this isn’t just about payback periods; this seems to be a lot more about complementary technologies than anything else. Reports from Mizuho Payments suggest that TSS will be using Cayan’s systems as a means to build on TSS’ own integrated options. What’s more, with Cayan’s systems in place, TSS will be able to put up more of a presence in several fronts: health and wellness—including salon operations—as well as specialty retail, among others.

What’s more, TSS will now be able to reach significantly larger ranges; Cayan currently serves around 70,000 merchants, which will bring the combined total to 730,000. That’s better than a 10 percent improvement, if not by much, and a 10 percent larger market that may have a clear interest in TSS hardware could represent some significant boosts in TSS’ own sales.

So while TSS likely would have made a good deal just buying Cayan straight up—though with a 20 year payback period off Cayan’s revenues, assuming they stayed static, TSS might have overpaid—TSS isn’t just buying a new revenue stream. TSS is buying access to a potential new market of complementary goods and services, complete with customers so interested that they’ve already bought Cayan materials. It stands to reason that TSS, a company that reached many more customers than Cayan did, should have a few things to interest Cayan customers.

The TSS / Cayan deal, therefore, is a smart deal all told, and one that will likely give the mobile payments cause a shot in the arm, particularly at the retailer level.