As 2019 draws to a close, the year’s super mergers in the payments-processing business may be creating super opportunities for startup service providers. That, at any rate, has been the experience so far of acquiring-industry veteran Trent Voigt and his new company, Paynetwork LLC, which does business as Paynetworx.
The venture, which launched officially in October, has signed on about 10,000 merchants representing approximately $20 billion in annual processing volume, according to Voigt. “The queue is full,” Voigt tells Digital Transactions News. “My salespeople say it’s like shooting fish in a barrel.”
One big reason merchants are coming to the Dallas-based firm, he says, is something he calls “merger hell.” That refers to the trio of big combinations that this year brought together some of the processing industry’s biggest players, reducing what had been six independent companies to three. As a result of the multibillion-dollar mergers, First Data Corp. is now part of Fiserv Inc., Worldpay Inc. has joined with Fidelity National Information Services Inc., and Global Payments Inc. has swallowed Total System Services Inc.
The deals no doubt will bring many of the efficiencies the companies have promised, but Voigt says right now what is likely to be temporary inefficiencies and momentary disorganization is driving at least some merchants into the arms of smaller players like Paynetworx. “The merger hell going on is just really making it pretty easy,” he says. “Customers are upset. They’re not getting phone calls returned. [Independent sales organizations] can’t get what they need for their merchants.”
Though Paynetworx prepared for its startup with a tech-oriented approach that includes a cloud-based platform and a single message type supporting all payment types, Voigt admits the fallout from the merger mania came along as a bit of serendipity. “We just happen to be sitting in the catbird seat,” he says. “We didn’t know these mergers would happen.”
Paynetworx isn’t likely to be the only beneficiary of 2019’s rash of dealmaking. “More customers are unhappy and are willing to look to an alternative service provider like us,” notes Robert Carr, chief executive and chairman of Beyond Inc. and former chief executive and founder of Heartland Payment Systems, which was acquired by Global Payments in 2016 for $3.5 billion.
As a result, Carr notes, “it’s the best time ever to get into the business. It’s harder to make more money than it used to be, but the opportunities to attract merchants are bigger than ever.”
But Paynetworx isn’t counting only on what could turn out to be a temporary rash of merchant and ISO dissatisfaction with current providers. Voigt is also placing a bet on the future by supporting cryptocurrency. In fact, Paynetworx has built its own exchange to trade in Bitcoin and other digital coins for both merchants and buyers.
Despite problems in the crypto market, including what can be wild swings in value even as a transaction is in process, Voigt insists the currency will be a vital part of future processing. He also says there are more merchants looking for a crypto capability than many might imagine. “Why do you want us instead of Worldpay?” he asks. “Well, it’s because we have crypto and they don’t. It’s a differentiator.”
Still, while Voigt says potential clients are calling Paynetworx to ask about cryptocurrency processing, he admits the service isn’t yet suited for small merchants. Larger, more sophisticated sellers, though, are more likely to come on board. “The market is starting ripen, [but] I’m not knocking on the dry cleaner’s doors right now,” Voigt says.
Voigt can rely on a long history in the business. He started another Texas-based processor, JetPay, in the early 1990s and took it public years later. But Voigt personally held onto the company’s European division, JetPay Solutions Ltd., which is now a key part of Paynetworx, accounting for its London co-headquarters. The company now boasts a head count of 48, with just two salespeople. For now, he says that’s enough. “Sales are coming in the door. And we have a lot of ISOs in the queue,” he says.
But Voigt tempers his outlook with a dose of realism. “For now, that’s great,” he says. “It won’t last forever.”