Wednesday , March 22, 2023

Shift4 Heralds Moves Into New Markets As It Sees End-to-End Volume Nearly Double

Payments processor Shift4 Payments Inc. announced early Wednesday a service outage at a major processor in August cost the company more than $22 million in payments to affected merchants. But it added the Allentown, Pa.-based company is plunging into a range of new markets with major clients including Allegiant Airlines, St. Jude Children’s Research Hospital, and SpaceX Corp.

The company also took steps to calm concerns about a report in October linking point-of-sale devices from PAX Technology Inc. with alleged security issues. Less than 10% of Shift4’s deployed devices come from PAX, Taylor Lauber, Shift4’s chief strategy officer, told equity analysts during an earnings call Wednesday. “We encrypt all our terminals with proprietary keys regardless of the manufacturer,” Lauber said. PAX issued a statement shortly after the news surfaced indicating it is unaware of any security issues but is investigating the matter.

The August service outage at the processor TSYS, a unit of Global Payments Inc., affected merchants and service providers nationwide, including independent sales organizations besides Shift4. Brad Herring, Shift4’s chief financial officer, said Wednesday the company decided to pay out $22.4 million to compensate merchants, along with $2.3 million to partner entities and $400,000 in other payments.

Isaacman: “Merchants are simply not signing up for non-integrated solutions.”

Shift4 has historically built a large client base in the hotel and hospitality market, but merchants in new markets could represent significant volume for the company, executives said Wednesday. St. Jude’s, a major signing in the nonprofit and charity market, offer the company a key beachhead in a big market for payments processing. In September, Isaacman and three other civilians completed a three-day space flight aboard the SpaceX Crew Dragon capsule. The sector offers up to $900 billion in charitable giving and out-of-pocket health-care payments, Shift4 said. Similarly, SpaceX’s Starlink subscription-based broadband service alone offers a potential volume of $100 billion, according to figures Shift4 presented Wednesday.

At the same time, the company reported progress in the critical integrated-payments market, where software developers stitch in payments capability when developing business software. Such transactions now account for nearly all payments processed by Shift4, reported chief executive Jared Isaacman, with the number of software partners having grown to 425 from “around 50” 18 months ago. “Merchants are simply not signing up for non-integrated solutions,” Isaacman said.

For the quarter, Shift4 reported revenue of $377.8 million, up 76% year-over-year. End-to-end payment volume, which the company processes itself rather than switch to other processors through its gateway, totaled $13.5 billion, up 90%.

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