Magazine article American Banker

Fidelity National Starts Processing Venture in Brazil

Magazine article American Banker

Fidelity National Starts Processing Venture in Brazil

Article excerpt

Fidelity National Information Services Inc. has formed a joint venture that it says will make it the largest third-party transaction processor in Brazil.

The Jacksonville, Fla., unit of Fidelity National Financial Inc. said Tuesday that it formed the venture, Fidelity Processadora e Servicios SA, with two major Brazilian banks, Banco Bradesco SA and Banco ABN Amro Real, a unit of ABN Amro Holding NV.

The venture is expected to handle more than 20 million cards in Brazil and more than 63 million cards worldwide, and to generate $2 billion of revenue during the 12-year term of the contract, Fidelity National said.

"We got an entire market with one transaction," said Michael Sanchez, the chairman of the international division of Fidelity National Information Services. "This makes us an instant large player."

It would have been much harder to enter the market without this type of arrangement, Mr. Sanchez said. Brazil is "a hard market to get into as an American company," and banks there are "very much into the joint-venture structure."

Fidelity Processadora will provide outsourced credit and prepaid card processing services to Brazilian issuers. Fidelity National Information will provide support services such as call center management, back-office support, risk management, and collection.

The Brazilian card portfolios will include a substantial number of prepaid cards, Mr. Sanchez said, because many companies there provide them as benefits to employees. For example, many companies offer free lunches, which are paid through a prepaid card account.

Fidelity National Information, which will own 51% of the venture, expects to invest $100 million in it over the next three years, including about $25 million this year. The two banking companies will own the rest. Their card portfolios are expected to be fully converted to Fidelity Processadora by the end of 2008. …

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