(Reuters) - Fidelity National Information Services Inc (FIS) said on Monday it has agreed to buy Worldpay for about $35 billion, with the U.S. financial services provider striking the biggest deal to date in the fast-growing electronic payments industry.

The financial technology sector is consolidating fast, with global payments set to reach $3 trillion a year in revenue by 2023 as more people switch from cash to digital payments for online and high street sales, consulting firm McKinsey predicts.

“Scale matters in our rapidly changing industry,” said FIS Chief Executive Gary Norcross, who will lead the combined powerhouse in banking and payments infrastructure.

Growth in payment systems has kept deals rolling even as merger moves in other sectors have stalled on concerns about trade tensions and a global economic slowdown.

The FIS deal, valuing Worldpay at about $43 billion including debt, comes a little more than a year after U.S. firm Vantiv paid $10.63 billion for the payments firm, which was set up in Britain and spun off from Royal Bank of Scotland in 2010.

And in January, U.S.-based Fiserv Inc bought payment processor First Data Corp for $22 billion, while Italy’s Nexi plans to list in what could be one of Europe’s biggest initial public offerings (IPOs) this year.

FIS and Worldpay combined will have annual revenue of about $12 billion and adjusted core earnings of about $5 billion.

“Vantiv had yet to realize all the synergies from the Worldpay merger but FIS’s offer was too good to be refused,” a source close to the deal said.

Shares in Worldpay, which has provided payment processing services for more than 40 years, closed 9.9 percent higher and Fidelity’s edged down 0.7 percent.

“Parking the two companies together gives the enlarged business a very strong position by which to play the structural growth in digital payments. They will be able to provide clients a wider portfolio of services,” Russ Mould, investment director at AJ Bell, said.

Worldpay is a major player in card payments, particularly in Britain, while FIS, produces software for banks and asset managers as well as its financial services outsourcing business.

“FIS should accelerate its revenue growth, significantly expand its position in the merchant acquiring space and generate many synergies,” Worldpay shareholder Michael Schaefer, portfolio manager at Union Investment, said.

“DIVERSIFICATION PLAY”

Worldpay shareholders will receive 0.9287 FIS shares and $11 in cash for each share held, valuing the company at $112.12 per share, a premium of about 14 percent on its Friday close.

FIS shareholders will own about 53 percent in the combined firm and Worldpay’s about 47 percent, with Worldpay Chief Executive Charles Drucker becoming executive vice-chairman.

“This is a fast-changing industry and FIS was under pressure after Fiserv bought First Data in January,” another source close to the matter said, adding that Worldpay’s Drucker, who had come from Vantiv, was the driving force behind the deal.

“For FIS buying Worldpay means expanding beyond the world of financial outsourcing and tapping into payment processing and e-commerce, the source said, adding that it was a “diversification play” giving FIS access to the high-growth payments sector.

FILE PHOTO: A waitress issues a receipt at a cafe in Athens, Greece, June 25, 2015. REUTERS/Alkis Konstantinidis

The companies said the deal would result in an organic revenue growth outlook of 6 to 9 percent through 2021, and $700 million of total core earnings savings over three years. They expect $500 million of revenue savings and are aiming to deliver nearly $4.5 billion of free cash flow in three years.

“The deal will lead to modest EPS accretion by 2020”, Norcross said in a conference call with analysts.

FIS, which has grown through acquisitions in the past 15 years, offers software and outsourcing services to banks, asset managers and insurers and in 2015 completed its buy of financial software company SunGard for $9.1 billion.

It had bought Metavante, which provides payment processing services to financial firms, for about $2.9 billion in 2009.

“FIS’ experience and expertise in getting cost to revenue synergies should give (the) market confidence that the targets announced around this deal are very doable,” Stephen’s analyst Brett Huff said in a note, adding that FIS could see increased revenue as companies step up outsourcing.

Centerview Partners and Goldman Sachs were financial advisers to FIS, while Willkie Farr & Gallagher LLP served as legal advisers to FIS on the deal. Credit Suisse and Skadden, Arps, Slate, Meagher & Flom LLP served as financial and legal advisers respectively to Worldpay.