ProPay Deal Would Vault TSYS into Small-Merchant Market

Total System Services (TSS) will have a new "Square-like" look and feel to ramp up its merchant-acquiring business when it closes its deal for ProPay in the next month.

TSYS has made it known that it wanted its own mobile card reader to compete with Square. Though ProPay's ProPay Jak device fits the bill, TSYS did not seek to bring ProPay into its fold "just to have something Square-like," says Mark Pyke, president of the merchant services segment for Columbus, Ga.-based TSYS.

A new "vertical market with direct selling" is likely to be the key addition to the TSYS menu after purchasing ProPay, Pyke says.

ProPay has established a solid business as an independent sales organization, offering merchants self-enrollment and instant activation for card acceptance.

"This is a new selling method for TSYS, plus it gives us exposure to micro-merchants, which is a hot space," Pyke says.

As a longtime TSYS client, ProPay has developed many online and offline payments capabilities that connect with ease to TSYS' technology, Pyke says.

ProPay considers itself a merchant-account and payment-services provider as well as a technology and data-security provider, says ProPay president Greg Pesci.

"ProPay has been a customer of TSYS for at least 12 years, and we have had exposure to the TSYS teams and their capabilities," Pesci says.

That familiarity has resulted in ProPay becoming "a huge fan of TSYS" and motivated it to consider a way to develop a deeper business relationship, Pesci says.

The deal clearly illustrates that TSYS intends to keep the momentum it has built in the last year and a half to move forward in the merchant-acquiring market, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.

"The ProPay acquisition gives TSYS some real ballast, and definitely a strong digital play," Riley says. "ProPay has a lot of the mobile card-reader dongles out there, which adds a strong sector for TSYS."

When the deal is completed, ProPay will become a unit of TSYS, continuing to operate out of its current headquarters in Lehi, Utah, where the company has been since 1997. ProPay currently processes for approximately 250,000 small and micro-merchants.

"We are committed to the team ProPay has," Pyke says. "ProPay is not an overnight success, and culturally the company is just a good fit for us."

TSYS rarely stubs its toe with business maneuvers, Riley says.

"TSYS tends to move slowly, but very calculated," Riley says. "ProPay opens a whole different world for TSYS, but they have worked together a long time and they know how the processing channels work."

This story originally appeared on paymentssource.com