Century Payments Forms to Pursue Opportunities in Acquiring

Some experts have predicted that the recession would create opportunities in the merchant-acquiring businesses, especially if independent sales organizations or other merchant processors decide to sell their portfolios or seek well-capitalized partners. Those opportunities seem to be just what venture-capital firm Austin Ventures is pursuing with the creation of Century Payments Inc., announced today. Austin, Texas-based Austin Ventures teamed up with former Chase Paymentech Solutions executive Robert Wechsler to form Century Payments and has committed $50 million to the Dallas firm. “We think that some ISOs are struggling a little bit because of the economy,” Wechsler, Century's president and chief executive, tells Digital Transactions News. “We formed this company … to take a tough a economy and go help them.” Century Payments was created from three companies: Symplicity Payment Solutions LLC, a Tampa, Fla.-based ISO; Dallas-based Beta Payments LLC; and Atlanta-based Novera II LLC. The firm will have three chief businesses, according to Wechsler: providing consulting services to other acquirers for managing their merchant-service provider, or ISO, operations; acquisition of ISOs; and ventures with acquirers for outsourced merchant-account acquisitions. More details will be disclosed as deals are announced, the first of which will be soon, Wechsler says. He adds that Century might acquire at least a dozen ISOs in its first year. Despite what he calls the “pull in the market” that has some ISO owners worried about profitability, “I think there's still an opportunity to get some good returns” if an ISO teams up with a strong partner, he says. Besides the financial backing from Austin Ventures, Century Payments has some deep acquiring experience at the top of its executive ranks. Wechsler is a former executive vice president and head of global sales and services at Chase Paymentech Solutions, the world's largest merchant acquirer. He left in 2006. Before that he was executive vice president and general manager of the national and middle-market business units of Chase Merchant Services LLC, one of Chase Paymentech Solutions' predecessor companies, heading up its sales force. His other stints include time at technology firm Convergent Group from its initial public offering to its sale to Schlumberger, and he was co-founder and chief operating officer of Link2Gov Corp., a transaction processor for the government market and now part of Metavante Corp. Eric Frazier, former executive vice president of national sales at Chase Paymentech Solutions, is now president of strategic business development at Century. In its January cover story, Digital Transactions News sister publication Digital Transactions magazine quoted acquiring executives and analysts who said that instead of hunkering down in a soft economy, now may be the right time for strong processors to go shopping for merchant portfolios. “A downturn can be a good time to be contrarian,” said C. Marc Abbey, partner at Linthicum, Md.-based First Annapolis Consulting Inc. “Counter-intuitively, it can be easier to move market share in a downturn.” Meanwhile, JPMorgan Chase & Co. posted a $627 million after-tax gain from the late 2008 dissolution of Chase Paymentech Solutions, according to the giant bank's fourth-quarter earnings report released today. JPMorgan Chase owned a 51% share of the acquiring business while former joint-venture partner First Data Corp. held 49% (Digital Transactions News, Nov. 3, 2008). Chase reported fourth-quarter merchant-processing volume of 4.9 billion transactions and $135.1 billion in bank card dollar volume. Those figures, however, include volume that until Nov. 1 came from merchant accounts now under First Data's wing.