(Reuters) -German lender Commerzbank (ETR:CBKG) and Global Payments (NYSE:GPN) on Thursday said they were setting up a joint venture controlled by the U.S. payments firm to serve small retailers in the euro zone's biggest economy.
Atlanta-based Global Payments already partners with Spain's CaixaBank and Austria's Erste Group Bank in Europe.
Global Payments will own 51% of the Commerz Globalpay GmbH joint venture (JV), which will launch by mid-2024. Commerzbank will own the remaining 49%.
The two companies said in a statement Global Payments would provide payments solutions and Commerzbank customer relationships.
Commerz Globalpay will provide digital payment services such as a mobile payment app allowing shop owners to accept phone payments without a separate card reader, as well as card terminals. It will also provide side services such as cloud-based point-of-sale software and customer analytics, they said.
Jefferies analysts said in a note the deal increased competitive pressure in a market where players also face extra regulatory scrutiny following the collapse of Wirecard.
France's Worldline and Italy's Nexi (BIT:NEXII), Europe's top two payments companies, are both commercial partners of Commerzbank and Germany is an important market for both, the analysts said.
Germany is Europe's second largest market for consumer spending, with non-cash payments trailing the European average of 83% at 65% of the total.
Worldline operates in Germany through its PayOne JV, while Nexi owns local business Concardis.
"We believe the new JV will add pressure to Worldline's turnaround at its PayOne JV," Jefferies analysts said.
German financial regulator BaFin in September restricted PayOne's business after an audit found shortfalls in anti-money laundering checks.
Jefferies estimated that Worldline's decision to drop riskier customers following the BaFin investigation cut Germany's contribution to 15-20% of the group's merchant services revenues last year, down from around a quarter in 2022.
For Nexi, Germany likely made up around 10% of revenues in the third quarter.