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Payment platform provider NMI’s acquisition of gateway provider USAePay for an undisclosed sum is based on the rationale that it better positions NMI to meet merchants’ need for connected, multichannel payment technology, which has become especially valuable in the face of the pandemic. It also bolsters NMI’s economies of scale.
Despite being heavily focused on e-commerce and card-not-present solutions, one area where NMI lags other payment technology providers is card-present applications, which is a USAePay strength.
“NMI is an online-focused player and most payment-technology providers want to offer connected, multichannel solutions, like Square and Clover,” says Jared Drieling, senior director of consulting and market intelligence for The Strawhecker Group. “This deal gives NMI card-present capabilities on top of its traditional card-not-present offerings. It’s an omnichannel play.” The Strawhecker Group is an Omaha, Neb.-based advisory firm specializing in payments.
The deal, announced Tuesday, will also strengthen NMI’s business in several verticals, such as retail, restaurant, and mobile merchants, three merchant segments where Glendale, Calif.-based USAePay has an established presence. “USAePay also offers access to specialized vertical merchant segments, such as restaurants, which is an important variable of the deal,” Drieling adds.
NMI has been striving to expand its offering of multichannel payment solutions since its 2018 acquisition of Creditcall, a United Kingdom-based gateway provider. With the deal for USAePay, the company acquires a gateway operation that has been in the payments market for more than 20 years.
“The past year has shown that merchants need omnichannel payment solutions, such as order online and curbside pickup, and this acquisition positions us to continue to be able to meet this need,” says Kyle Pexton, president of Schaumburg, Ill.-based NMI. “The deal brings further depth to our offerings, strengthens our position in various verticals and provides our ISO, ISV, bank and fintech partners choice and flexibility to meet merchants omnichannel payment needs.”
NMI’s platform is a white-label offering that independent sales organizations, independent software vendors, banks, and financial technology providers can resell under their own brand.
In addition to rounding out its card-present offerings, the deal also expands NMI’s economies of scale, according to Thad Peterson, a senior analyst for Aite Group, says by email. Aite is a Boston-based research and advisory firm.
“Scale and capability are the two drivers of value for payment processors, and the acquisition helps on both counts,” Peterson says by email. “Merchants have a lot on their plate, and it really helps to have a single processor to manage their payments capability, regardless of channel or tender type. This combination helps to address merchant needs and at the same time provides NMI with additional volume to scale their business.”
Based on 2020 figures, the combined entity represents more than $100 billion in payment volume and more than 1.5 billion in payment transactions. San Francisco-based private-equity firm Francisco Partners acquired a majority stake in NMI in 2017.
