TSYS may lose Bank of America contract

TSYS may lose Bank of America contract

US-based TSYS has disclosed that it could lose a lucrative payments processing deal with Bank of America following the bank's acquisition of credit card company MBNA.

In its third quarter financial results statement, Philip Tomlinson, CEO, TSYS, says: "Bank of America is currently evaluating the various consumer credit card processing alternatives available to it and MBNA, and we are in discussions with Bank of America to determine our future role in providing consumer credit card processing to it.

"We cannot predict the outcome of our discussions with Bank of America or of the evaluation process it is conducting."

But Tomlinson adds that TSYS would receive a fee if Bank of America terminated its processing agreement.

MBNA currently processes card payments using an in-house system and it is thought that Bank of America could decide to consolidate its card processing onto the MBNA platform.

TSYS says the loss of the Bank of America contract will have a material adverse effect on it financial position, results of operations and cash flows.

But for now the payment processor is reporting a 23% rise in third quarter net income to $48.1 million, compared to $39.1 million last year, due to strong growth in accounts on file and better than expected growth in value added services. Total revenue was up 38% to $422 million.

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