UniCredit SpA is seeking to renegotiate its processing deal with payments company Nexi SpA, in a further sign of how Chief Executive Officer Andrea Orcel is working to reshape Italy’s second-largest lender.
The bank wants better terms and service under an accord for processing on credit cards, ATMs and POS machines in Italy that it renewed in 2021 with SIA, which has since been absorbed into Nexi, according to people with knowledge of the matter.
UniCredit has now asked Nexi to improve the partnership by investing in innovation and renegotiating financial terms, said the people, asking not to be named because the matter is private.
Formal talks are ongoing as the bank is reviewing possible legal action if a solution to improve the partnership can’t be worked out, the people said.
Representatives for UniCredit and Nexi each declined to comment.
Milan-based UniCredit in 2016 sold its own processing services to SIA for €500 million ($534 million), agreeing to a multi-year partnership for processing on transactions using debit, credit and prepaid cards, and for the management of POS and ATM terminals.
UniCredit in February 2021 signed on for an extension of the deal with SIA until 2036, before the closing of the merger between the two payments companies. Orcel took over at UniCredit just a few months later, and has since been reviewing a number of the lender’s contracts.
As CEO, Orcel has shaken up outsourcing deals and partnerships in businesses from payments, to asset management, to insurance, in a bid to boost efficiency by internalizing some businesses, reducing the bank’s number of partners, and improving terms of existing accords.
Orcel is weighing strategic options for the bank’s payment arm to boost services and increase the division’s revenue, Bloomberg reported earlier this year. As part of this process the lender in May said it had expanded its partnership with Mastercard, putting in place a single-card, multi-market strategy in Europe.
UniCredit is the only major lender in the country with an in-house merchant acquiring business, relying on an outsourcing contract only for processing activities. Most of its Italian rivals have accords with Nexi or other payments firms to manage their entire merchant businesses.
Payments companies in Europe are under pressure as investors are worried about lofty valuations and a broader slowdown in consumer spending. Worldline SA sent a fresh shockwave through Europe’s fintech sector last month, cutting its sales outlook and warning of economic challenges. Nexi, which will release earnings later this week, is at the center of speculation about possible interest from CVC Capital Partners and other funds to take over the firm.