With its acquisition of Axia Technologies Inc., also known as AxiaMed, Bank of America Corp. took a big step toward rebuilding its merchant-acquiring business. AxiaMed provides financial services and payments technology to health-care providers. Terms of the deal were not disclosed.
The acquisition, announced Friday, gives Bank of America a ready-made provider of integrated payment solutions for doctors and allied providers, a merchant segment the big bank is prioritizing.
“Health care is a large segment of the economy and generates a high volume of payments,” says Mark Monaco, head of enterprise payments at BofA. “Our goal is to give all our [merchant] clients best-in-class solutions on the payments side, and the acquisition of AxiaMed accelerates our strategy in this vertical.”
In addition to supporting traditional payments at the physical point of sale, AxiaMed supports online payments, payments made via QR codes, and text payments.
The company introduced its Text&Pay service last year. The Web-based service automatically notifies patients via text and email when their bill is ready and accepts payment through those channels. Once a payment is made, Text&Pay automatically updates the provider’s billing system.
“AxiaMed is an omnichannel platform with a gateway built to accommodate the needs of health-care providers. Its integrations are centered around the patient receivable to existing health-care provider systems,” says Monaco. “That kind of omnichannel integration is important” to health-care providers and merchants in general, he adds.
AxiaMed was founded and is headed by Randal Clark, who also founded Axia Payments and then sold it after 17 years to i3 Verticals in 2016.
BofA’s acquisition of AxiaMed is part of a broader trend among banks to maintain, and build, a presence in merchant acquiring. “In the last 18 months, we have seen a number of acquisitions by banks of integrated payment providers as banks are facing stronger competition from financial-technology providers in the acquiring market,” says Jared Drieling, senior director of market intelligence for the Strawhecker Group. “Merchants want integrated payment solutions across multiple channels, and the more solutions an acquirer or processor can provide, the harder it is for a merchant to break that relationship.”
BofA has been rebuilding its merchant-services business since its partnership with First Data Corp. was officially dissolved last year. The beginning of the end for that partnership started in 2019 when First Data was acquired by Fiserv Inc. for $22 billion.
At the time of that acquisition, Bank of America Merchant Services (BAMS) and First Data agreed to honor the contract between then until June 2020. Since the dissolution of that partnership, both parties have pursued separate merchant-services strategies. BofA continues to operate BAMS as a wholly owned entity.
“The loss of the First Data partnership left BofA with a need to build its acquiring business,” says Drieling. “Without that relationship, where do they go? Acquisitions give banks like BofA the software capability needed to compete in merchant acquiring and keep them from getting shut out by fintechs.”
BofA’s Monaco agrees, saying that the acquisition of AxiaMed demonstrates to merchants BofA’s commitment to the acquiring business.