It’s Logical, Captain. Barclays buys TLG

The Logic Group (TLG) is the go-to brand for payments for Tier 1 retail and is well respected for its technical expertise. Customers include Tesco, Primark, WH Smith’s and many others. But turnover has been stuck c. £18m for years and the business has never been profitable. Indeed, it’s made an operating loss most years. Barclays hasn’t bought the business for the cash. It’s the capability that counts. Barclays is ambitious in payments and wants to be able to offer a full service to its customers. Right now, it’s too reliant on partners for delivery of many products. TLG brings it most of the capability it will need to succeed.

  • PSP and terminal management capability – Barclays and many other acquirers are worrying reliant on 3rd parties to manage their large estate of payment terminals. TLG gives Barclays what it needs to take control of its own business. Moreover, connecting the card machines through TLG’s payment gateway makes it much easier to integrate additional 3rd party services – China Union Pay cards, gift cards or loyalty schemes for example.
  • EPOS integration – a major gap in Barclays capability was that (until now) was that couldn’t connect a payment terminal to a till. This is a standard requirement for many retailers.
  • Online payment gateway – Its customers increasingly want to take money online but Barclays has only been able to offer a white label solution from Ogone (for SMEs) and a partner arrangement with Adeyn for larger ones. TLG brings a scalable, robust online payment gateway (albeit weak on alternative payments types) which allows Barclays to insource this critical capability.
  • Omni-channel – TLG have probably the most mature Omni-channel payment service available in the UK with a single MI portal and a single tokenisation engine. This will play very well with Barclay’s large customers.
  • Loyalty and insight – Barclays has made a big play around loyalty – Bespoke Offers – but also in its ability to derive insight from payment data. TLG brings it an experienced team that knows what retailers want.

TLG will remain independent, trading under its own brand and continuing to be acquirer agnostic. However, the deal does give Barclays a strong competitive differentiator with its larger customers. TLG conforms to the latest PCI standards (P2PE) and many retailers will find the proposition of encryption all the way from card machine to acquirer a very attractive one. It’s also unique in the market. WorldPay bought YESpay last year for similar reasons but don’t yet have the P2PE certification What could go wrong? Well, not too much. This is a low risk purchase. TLG is an established business and shouldn’t have too much difficulty fitting in culturally.

One observation, though. The announcement indicates that the deal probably includes an earn-out. In my experience, having been on the wrong end of a couple of these, this is will cause unnecessary delay. Large companies that acquire small ones for the capability are best served by integrating the business from day one. Whether TLG makes money next year or not is tangential to delivering the much larger strategy of which it is surely part of.

UPDATE: I understand that there is no earn-out on this deal. Smart move.

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