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The merchant acquirer First American Payment Systems LP says its acquisition of the technology vendor Govolution Inc. is a bid to capture a piece of the growing market for electronic payments made to government agencies.
November 3
Count the merchant acquirer First American Payment Systems LP among the U.S. payment processors looking abroad for growth.
The Fort Worth company said Tuesday that it has acquired International Automated Transaction Service from Ticketmaster Entertainment Inc. The unit handles payment processing for more than 9,000 organizations, focusing particularly on electronic contributions to nonprofit agencies.
David Fish, a senior analyst at the payments research firm Mercator Advisory Group Inc., noted that other American processors — among them the First Data Corp. unit of Kohlberg, Kravis Roberts & Co., Fidelity National Information Services Inc., Chase Paymentech Solutions LLC and Total System Services Inc. — have established international operations in recent years to maintain growth as the domestic market has matured.
But those efforts have largely targeted specific markets, such as Britain or Brazil, Fish said. "It seems like the next step for global merchant acquirers is handling global merchants."
First American said IATS, of Vancouver, British Columbia, provides electronic payment processing to charities and other nonprofits in the United States, Canada, and other countries. It did not disclose the price it paid to Ticketmaster, of West Hollywood, Calif.
Neil L. Randel, First American's chairman and chief executive officer, said the purchase gives his company, which provides processing services for more than 100,000 merchants in the United States, a strong position in a global market with potential for significant growth.
"The acquisition of IATS makes First American one of the industry leaders in the nonprofit payment processing sector," Randel said in a press release.
The United States has nearly 1 million publicly supported charities that collect more than $307 billion annually, but 80% of those contributions are made by check.
"We are well positioned to penetrate the nonprofit industry with electronic processing," he said.
First American has pursued similar strategies in the past to focus on payment niches. It bought the technology vendor Govolution Inc. in November 2005 to process electronic payments made to government agencies.
