Digital Transactions Authoritative, insightful and timely information for payments professionals
United Bank Card Inc., which earlier this week announced it is selling a portfolio of 15,500 merchants to Optimal Payments Corp. for $44 million, said today it will use the cash to add new departments and hire more staff to help cope with rapid growth. Jared Isaacman, founder and chief executive of the Hampton, New Jersey-based processor, which serves about 27,000 merchants, says UBC is adding new merchants at a rate of about 2,200 a month, and expects within a few months to build its total portfolio back to its former size. In an interview with Digital Transactions News, Isaacman says the deal for the portfolio, which accounts for more than $1.5 billion in credit and debit card volume annually, has been structured to require no processor conversions or changes in banks or networks for the merchants being sold to Optimal. United Bank Card will, on Optimal's behalf, support the merchants that are part of the transaction. Independent sales organizations and sales agents working for UBC whose merchants are part of the deal “have the option to sell their residual portfolio or they can continue to be paid on a regular basis and their merchants will remain on UBC's current platform and bank,” UBC says in a statement released today. Adds Isaacman: “We wanted to make the deal as transparent as possible.” The company expects to add new departments, including quality control and merchant retention, and to hire more personnel for existing departments, including customer service, technical support, and ISO support. It also plans to expand a facility in Tucson, Ariz. “We did this [Optimal deal] as a capitalization move,” Isaacman says. “We feel we've climbed to a leading spot and don't want to give that up.” Montreal-based Optimal, a subsidiary of Optimal Group Inc., expects the portfolio to lift what it calls underlying earnings?earnings from continuing operations before taxes?in the second quarter to $7.05 million from a previous guidance of $5.4 million. “This transaction continues Optimal's announced strategy of growing its traditional, card-based processing business by acquisition while at the same time building on our sales and agent network to drive organic growth,” said Mitchell A. Garber, Optimal's president and chief executive, in a statement released Monday. “[It] provides Optimal Payments with greater scale in U.S.-based card-present payment processing. ” Optimal Group also announced it is moving its processing service for online-gaming transactions from Optimal Payments to a new subsidiary, FireOne Group. It had earlier announced it intends to sell a minority interest in this subsidiary.
