By Arjun Panchadar

(Reuters) - Payment technology company Global Payments Inc said on Tuesday it would buy peer Total System Services Inc (TSYS) for about $21.5 billion in stock, adding scale in a fiercely competitive and fast-growing industry.

The deal, Global Payments' biggest ever and the sector's third major acquisition this year, comes as payment technology companies consolidate to battle competition from banks making inroads into digital payments and fintech start-ups such as Adyen and Stripe chipping away market share.

The global payment market is set to reach $3 trillion a year in revenue by 2023 as customers increasingly shift to digital payments from cash, according to consulting firm McKinsey.

"We believe the deal marks a shift from (Global Payments') pursuit of software and differentiated assets into more of a scale play," Jefferies analysts wrote on a note on Sunday.

"We do not believe a deal would face antitrust considerations nor do we expect another offer although we note that several banks have mentioned renewed focus on payments."

After the deal Global Payments will process more than 50 billion transactions annually across the world, making it one of the biggest players in integrated payment technology, it said in a statement.

In March, Fidelity National Information Services Inc agreed to buy Worldpay for about $35 billion, months after Fiserv Inc announced a $22 billion takeover of First Data Corp.

Global Payments itself bought Heartland Payment Systems Inc in a $4.3 billion cash-and-stock deal in 2016.

The deal is expected to immediately add to Global Payments' adjusted profit by mid-single digits in 2020.

The combined company, which will take the name Global Payments and have dual headquarters in Atlanta and Columbus, Georgia, will be led by a 12-member board with six directors from each firm.

Global Payments Chief Executive Officer Jeff Sloan will become the CEO of the merged entity and TSYS CEO Troy Woods will become chairman. Global Payments shareholders will own 52% of the combined company, and TSYS shareholders will own 48% upon closing of the deal.

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The deal is expected to close in the fourth quarter, the company said.

Reuters had reported about the possible deal on Friday, citing a source familiar with the matter.

BofA Merrill Lynch and JP Morgan Securities LLC are financial advisers to Global Payments, while Wachtell, Lipton, Rosen & Katz is the legal adviser. Goldman Sachs and Greenhill are financial advisers to TSYS and King & Spalding LLP is the legal adviser.

(Reporting by Arjun Panchadar and Akanksha Rana in Bengaluru; Editing by Anil D'Silva)