TNS Inc., the Reston, Va., operator of an international network for card transactions, has entered the online and telephone card processing market by buying Dialect Payment Technologies, an Australian payments processor.
The $4.2 million purchase was announced Tuesday. TNS said the purchase should contribute to earnings within 12 months, but it did not say how much the purchase of Dialect, a privately owned Brisbane company, would lift its revenue. Last year TNS had $286.2 million of revenue.
Raymond Low, the president of TNS, said the purchase put his company in the "card-not-present" business, which includes the growing market for processing online transactions. He said he had been looking for a way into the card-not-present market since his promotion in October. (Before that he had run TNS' British unit.)
"We needed to get into the card-not-present business," Mr. Low said. "Dialect came along, and it was too good an opportunity to miss."
Dialect has operations in Australia, New Zealand, and the Middle East, along with prospects in Europe, he said, though its largest single client is a U.S. company, which he would not identify.
The deal for Dialect was the second in e-commerce announced in as many days. The Mountain View, Calif., payment processor CyberSource Corp. said Monday it had agreed to pay $565 million in stock and cash for Authorize.Net Holdings Inc. of Marlborough, Mass. That transaction is expected to close by early October.
The deal closed June 8, and TNS shares have climbed since then, from $12.11 June 8 to above $13.50 Tuesday afternoon.
Mr. Low said that in contrast to Authorize.Net, which focuses on e-commerce merchant processing, Dialect has relationships with issuers, banks, and card associations,
"We now have inherited, as a consequence of our acquisition of Dialect, direct sales channels into American Express and MasterCard," he said.
MasterCard Inc. white-labels the Dialect network to connect with financial institutions, and American Express Co. does the same to connect with retailers, Mr. Low said. TNS now has "a very different relationship with the card associations" as a result of the purchase. "It's unique in the payment gateway space, as well."
Dialect was formed in 2002 by combining two companies: QSI Payments, a provider of payment systems for banks and card associations, and News Connect, a technology marketing company. QSI was formed in 1991, and its customers included Amex, MasterCard, and Virgin Blue.
"There are a lot of synergies there," he said. "We have a good spread of acquiring relationships and a good opportunity to upsell Dialect."
TNS has been in the transaction network services business for 17 years. Though the largest part of its business is in the United States, the company has been in the British market since 1995, mainly through its retail processing network, and it has operations in 29 countries, Mr. Low said.
"We have opportunities in pretty much every country where we operate in this space," he said.
TNS was roiled by a boardroom struggle that began in March of last year, when John J. McDonnell Jr., its founder, chairman, and chief executive officer, offered to take the company private.
In August the board rejected his offer and voted to replace him as chairman. He said at that time that the board was too focused on cutting costs, and he advocated investing in the company, and even looking at potential acquisitions, as the best way to ensure future growth. In October, Mr. McDonnell stepped down as the CEO.
