U.S. Bancorp has received permission to operate a banking company in Ireland to process card transactions in Europe without sponsorship from another bank.
Stuart C. Harvey Jr., the chairman of U.S. Bank's European merchant processing unit euroConex Technologies Ltd. and the president of its immediate parent, Nova Information Systems, said in an interview last week that the Irish Financial Services Regulatory Authority approved the application last month to run a licensed credit institution.
The Dublin banking company, Elavon Financial Services Ltd., was created solely to facilitate U.S. Bank's European payments operations, especially euroConex, he said.
"It's not technically a full-service bank. We're not doing any lending. We're not taking any deposits," Mr. Harvey said. "We're not there to compete with our bank partners. It's just there to support payments."
He compared the Irish license to an industrial loan company charter in the United States.
In the past euroConex had to get bank sponsors throughout Europe to participate in the Visa International and MasterCard Inc. networks there, Mr. Harvey said, and it cleared and settled transactions through these banks. It has agreements with Bank of Ireland, Banco Santander Central Hispano SA of Spain, Alliance & Leicester PLC of the United Kingdom, and SEB Kort AB of Norway, among others.
"Because of the card scheme and regulatory constraints, we always had to have a European bank sponsoring us in whatever territory we did business in," he said.
The Irish banking license will let euroConex sponsor itself, though it will maintain its relationships with the European banks to market its merchant processing and acquiring services, Mr. Harvey said.
In addition to supporting the merchant processing operations of euroConex, Elavon will be able to issue corporate credit cards in Europe for U.S. Bancorp's corporate payment systems, he said.
U.S. Bancorp's merchant acquiring subsidiary, Elan Financial Services, which currently has no operations in Europe, also could use the Elavon license to do business there, he said.
Bruce Cundiff, a senior analyst for Javelin Strategy and Research of Pleasanton, Calif., said that working through Elavon will be much easier than finding bank sponsors.
"The ability to act as your own entity, as opposed to establishing these relationships in every country that you want to do business in Europe," makes euroConex much more "streamlined operationally," he said.
