In just eight years, Paul Garcia has grown Atlanta-based Global Payments into a $2.6 billion transaction processing company. How this former National Data exec is leading this "less exciting" spin-off into a multi-billion dollar market leader.

Economic Armageddon aside, it's no secret more consumers are using cards - credit, debit, gift - to pay for just about everything these days. So when you handle the bill for drinks at the Four Seasons, and the bartender swipes your card, where does this information go? Believe it or not, there's a 50 / 50 chance it ends up in a Glenlake office tower in North Atlanta, all thanks to Global Payments, a leading credit and debit card transaction processor that offers worldwide processing services through its high-speed electronic global information networks. These networks process billions of business and consumer payment card and money transfer transactions each year for customers in the United States, Canada, Europe and Latin America. And this segment of the financial industry - and this Atlanta-based company - is growing like gangbusters.

Here's how it works: Whenever you swipe a credit or debit card to make a purchase, this sets off a series of actions among various behind-the-scenes players. In industry jargon, the businesses where you purchase goods or services are collectively called merchants. They work with financial institutions or independent entities like Global Payments to handle the details of processing the transaction on the merchant's behalf. Of course, this all occurs in milliseconds.

The origins of Global Payments go back to the 1960s when its former parent, National Data Corp, pioneered electronic payment processing. Global Payments was spun off in 2001 as what Chairman, President and Chief Executive Officer  Paul Garcia calls "the less exciting piece of the company. But I thought it was a great business, which is why I was enticed to join the company."

When Garcia rang the bell on the floor of the New York Stock Exchange eight years ago, the market cap of Global Payments was in the $400 million range. Today, it's $2.6 billion - larger than General Motors. The company employs 5,000 people in 22 countries and generates about $1.5 billion in annual revenue. "We've obviously grown the company and seen some significant changes since we started," says Garcia.

Most recently, Global Payments reported revenue growth of 30 percent and diluted earnings per share growth of 25 percent during its fiscal second quarter, which ended on November 30, 2008. Remember: This performance occurred in the teeth of the global recession, and also reflected the unfavorable impact of foreign currency exchange rates during the period. On a constant currency basis, second quarter revenue grew 37 percent and diluted earnings per share 39 percent.

In fact, exposure to significant currency fluctuations is one of the biggest challenges facing a global company like Global Payments, Garcia says. "Think about it: If our revenue in the U.K. is growing at 20 percent but the British pound goes down in value against the U.S. dollar by 20 percent, we have zero growth in the U.K. on a constant currency basis. This isn't something we can hedge or control, so I'm not going to worry about it." The company added a Schedule 9 to its most recent quarterly filings to provide results on a constant currency basis for the quarter and for the remainder of its fiscal 2009 outlook.

Tracking Success
In a time when others are fighting for profitability, Garcia's company is enjoying the fruits of strong growth. And others have taken notice. With recognitions like the "Platinum 400 Best Big Companies in America," ranked by Forbes.com, Global Payments is quickly making a name among the powerful. So what's the secret? Garcia points to several key factors: His industry. The term "recession proof" is thrown around a lot in an economy like this. Garcia won't go quite this far when describing the electronic transaction processing industry, but he does say it is definitely "recession resistant."

"This is a great industry to be in right now - in fact, it's almost hard to mess it up," he says. "There are so many things going for us, even in this type of recession, primarily because people still use credit and debit cards, and even more frequently in some of our vertical markets like health care, government and education."

Industry analysts concede that the slowing economy is changing the credit and debit card landscape. As more consumers scale back their spending and try to adhere to a budget, they are increasingly favoring debit over credit cards. Debit card purchases were expected to rise 13 percent in 2008, compared to an increase of only 3 percent in credit card purchases, according to The Nilson Report. Debit card transaction fees are typically lower than credit card fees, "but if you're growing debit, then you'll make up the differential versus the decline in credit card fees," notes Nilson Report Publisher David Robertson.

"Obviously there is some direct sensitivity in this industry to consumer spending in the sense that it drives overall activity on credit and debit cards," says Franco Turrinelli, principal and senior analyst at William Blair & Company, who follows the transaction processing industry closely. "The general trend, however, is toward more use of electronic payment methods and away from traditional payment forms, especially checks."

Garcia explains that one of the keys to growth in his industry is gaining market share. "We can grow faster than Visa and MasterCard, which we're doing in every market we're in, by taking market share away from our competitors who aren't growing," he says. Turrinelli concurs: "A well-run business like Global Payments that has a good product at the right price can grow by gaining market share in this industry. They primarily go to market through partnerships with banks and independent sales organizations (ISOs), which has proven to be a successful model."

The mission and values. Garcia is passionate about instilling a strong sense of corporate values in the company. "It's one of the first things we did..." he says. "We wanted our mission and values to be straightforward and to stand the test of time, and I think they have. They aren't just words for us." Global Payments' five corporate values put a strong emphasis on a number of tenants, including the importance of having fun. "It's been proven that if you enjoy doing something, you'll probably do a better job at it," says Garcia. "We take our jobs very seriously, but we don't take ourselves too seriously. We're not perfect, but we try to live out our values. As a result, we have very low employee turnover."

The focus. Garcia's guiding business philosophy is crystal clear: Focus intently on what you do, do it well, and don't get distracted. "A lot of companies get in trouble when they don't define what they are - or worse, define it and then ignore it," he says.

"Some of our competitors are major financial institutions that do lots of things other than transaction processing," he continues. "However, processing merchant transactions is almost exclusively our focus, so we put a huge emphasis on it. I believe that if you do one thing, and think just about that one thing and focus an entire company on it, at the end of the day you'll be in a better competitive position than a company that does a lot of other things."

"Paul is as knowledgeable about this business as anyone on the planet," says Robertson, who closely follows the payments industry. "He knows how to grow with the industry in terms of deploying technology, and he understands which way the wind is blowing with regard to industry trends. He's not investing in any enterprise that isn't going to provide steady returns over time."

The opportunities. Garcia believes that during these extraordinary times in which we now live, there are and will continue to be extraordinary opportunities.

"We have a great balance sheet and strong organic growth, so it would be easy for us to sit back and be comfortable," he says. "But this isn't the time to be comfortable - it's the time to seek out opportunities. Due to the economy, there are opportunities to expand throughout the globe at advantageous prices. I believe companies that can take advantage of these opportunities should; otherwise, they'll look back in a couple of years and wonder why they didn't."

Robertson agrees, noting that Global Payments is "better positioned than a number of its competitors to handle the business of multi-national corporations. They can search for opportunities and ways to work with their ISO clients to put together deals to bring business into the Global Payments family. A company like Global Payments that has a good mix of relationships with ISOs could come out on top in an environment of industry consolidation."

Garcia has been aggressive in growing the company through acquisitions, with no fewer than seven portfolio acquisitions and alliances since 2001. These include National Bank of Canada, CIBC, DolEx, Imperial Bank, MUZO, Europhil and Diginet. In addition, a joint venture with HSBC has allowed Global Payments to provide processing services to Asia-Pacific and the United Kingdom.

Having grown Global Payments so rapidly over the past eight years, Garcia doesn't plan on slowing down anytime soon. "We're growing at a rate that suggests we'll be significantly bigger in the future," he says. "Right now, we're far ahead of where I thought we'd be, and we'll hopefully be even farther ahead 10 years from now."

The company is closing an acquisition in Russia that will make it the largest merchant processor in that country, and expansion in South America is a primary future goal. This will give Global Payments a presence in all four of the fast-growing BRIC economies: Brazil, Russia, India and China.

As a globe-trotting executive, Garcia adds that there's no other city he'd rather be headquartered in than Atlanta. "This is a great city from which to do business internationally. I fly non-stop to the Ukraine, Moscow, Shanghai, Hong Kong, Kiev - there's no other city in the country, except for maybe New York, where you can do this."

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Moving Forward
Growth is good, but sustaining that growth is the tricky part, especially with the trauma in the world economy. Here are the four significant challenges facing Global Payments and - in many respects - thousands of other companies across the country.

Weathering The Storm
Despite the company's strong financial performance, Global Payments' stock has suffered along with the market as a whole, says Franco Turrinelli, principal and senior analyst at William Blair & Company. "However, it has outperformed nicely relative to the broad market. It's down about 5 percent on a year-to-year basis, while the broad market indices are all down about 35 percent.

"We continue to rate the stock 'outperform,' which is our highest rating," he continues. "We believe the company is well positioned with strong opportunities domestically and internationally."

Leading A Global Workforce
Global Payments' employees are spread across 22 countries from North America to Europe to Asia Pacific. "We need leadership in each of these countries that understands what we're trying to do," says Garcia. He believes that spreading the company's values across such a widely diverse workforce will be a big challenge. "For example, we have 300 employees in Prague, but 'Have fun' doesn't really translate well in that culture. Putting up posters in the workplace was a throwback to the Soviet Union days - so I said by all means, don't put up posters!"

With the recession spreading worldwide, Garcia says a big part of his job is to "keep everybody feeling positive and not fearful about the economy or losing their jobs. You can't deny that these are extraordinary times, but I believe prosperity will return - it always has and it always will."

Maintaining Security
While there's certainly a lot of technology and complexity involved in electronic transaction processing, at its core, "it's an old-fashioned business that relies on relationships with merchants and helping them make it easier to accept card payments," says Robertson. And this, Garcia stresses, comes down to a simple matter of trust. "We're building a trusted brand," he says. "Our customers have to be assured that we'll send card information where it needs to go in a way that it won't be stolen. There are a lot of bad cyberpeople out there who can cause serious damage to a company like ours. If our customers lose faith in the payment vehicle, then our business plan doesn't work."

Growing The Domestic Market
Global Payments has leading market share in Canada, Asia, and eastern and central Europe and is a significant processor in the U.K. through a joint venture with international bank HSBC. But the U.S. is the company's smallest market in terms of actual market share. Turrinelli explains that the U.S. market is large - it accounts for about 45 percent of all credit and debit transactions worldwide - but it's also very fragmented, with hundreds of different providers. "The U.S. market is more mature from a competitive point of view, with multiple providers having largely equivalent product offerings," says Turrinelli. "Success comes down to how well your sales force and referral partnerships are executing."

Looking ahead, he believes that high single-digit to low double-digit U.S. growth rates will remain possible for Global Payments this year. "We think they're well positioned to achieve this, but the U.S. will be the toughest market for them. There's a lot of disarray in the U.S. bank market right now that may create opportunities for acquisitions or to take market share."