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An Expansion-Minded EVO Buys PowerPay And Looks to Europe With its Deutsche Bank Deal
December 6, 2012

It’s been a tad busy at EVO Payments International over the past week. On Thursday, the big independent sales organization disclosed it had bought another ISO, Portland, Maine-based PowerPay. On Nov. 29, EVO announced a deal with Deutsche Bank AG, Germany’s biggest bank by assets, under which it will buy the bank’s merchant-acquiring unit that operates in nearly 40 countries. And a day earlier EVO announced it had hired a new chief executive, James Kelly, formerly of Global Payments Inc., and changed its name to boot.

There’s more to come. “We are pursuing two other opportunities,” EVO president and co-founder Jeff Rosenblatt tells Digital Transactions News, adding that he can’t reveal details yet because of non-disclosure agreements.

The activity is all part of Melville, N.Y.-based EVO’s plan to gain scale and find new, profitable markets. Privately held EVO did not disclose terms of either the PowerPay or Deutsche Bank deals.

The PowerPay acquisition had its genesis in talks that began about a year ago between Rosenblatt and PowerPay’s founder and then chief executive Stephen Goodrich, whom Rosenblatt describes as a friend he’s known since the 1980s. PowerPay supports 55,000 merchants with total annual charge volume of $8 billion. The merchant count includes a strong contingent of e-commerce merchants and 15,000 value-added resellers such as software developers and point-of-sale service providers.

As companies, PowerPay and EVO were no strangers to each other because PowerPay was one of the 55 large feeder ISOs that routed its transactions to EVO, which has its own front-end and back-end processing platforms. “We thought there were some great synergies,” says Rosenblatt.

One of those so-called synergies is the adaptability of PowerPay’s e-commerce system to overseas markets, which will be an advantage now that many new international merchants will be coming under EVO’s wing through the Deutsche Bank deal, according to Rosenblatt. He notes that some of PowerPay’s merchants already do business abroad. “We think they [PowerPay] are a great platform for us internationally,” he says.

The Deutsche Bank deal, which needs regulatory approvals, involves the sale of the bank’s entire, wholly owned Deutsche Card Services subsidiary. Rosenblatt wouldn’t say how many merchant locations or how much charge volume the acquisition will add, but it will give EVO footholds in 39 countries, mostly in Europe. Besides Global Payments, other large U.S. acquirers operating in Europe include First Data Corp. and U.S. Bancorp’s Elavon subsidiary.

EVO is pursuing European opportunities because margins tend to be higher than in North America, according to Rosenblatt. “There is much less competition,” he says, adding that EVO also sees new opportunities to offer merchants cloud-based and other high-tech services that, while not unknown, are still fairly rare in some markets.

Here again, EVO and Deutsche Bank were no strangers to each other since the bank’s U.S. arm became EVO’s sponsor bank in July, replacing HSBC. As part of the sale, a division of Deutsche Bank and EVO entered into a long-term marketing agreement.

EVO has been self-funded since Rosenblatt and chairman and former chief executive Ray Sidhom founded it in 1988; the company became a payment processor in 1990. EVO currently services 275,000 mostly small and mid-sized merchants that it expects to generate more than $31 billion in charge volume this year.

Kelly, meanwhile, comes to EVO after 10 years with Atlanta-based Global Payments, where he had been president and chief operating officer and helped oversee its international expansion. “We see tremendous growth potential in our core United States and Canadian markets, as well as outside our North American borders,” Sidhom said in a news release announcing Kelly’s appointment. “With his vast experience in leading multinational companies in their expansion efforts, Jim will be instrumental in increasing our global presence.”

At the same time, EVO Merchant Services rebranded itself as EVO Payments International. Over at PowerPay, Goodrich has now left the company to pursue new opportunities. The 150-employee PowerPay will be led by its current president, Jim Raftice.

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