In a banking climate where analysts expect payment system technology companies to flourish, Transaction Systems Architects Inc. is doing just that.

The Omaha-based parent of Applied Communications Inc. makes software that banks use to process a variety of electronic financial transactions, including those from automated teller machines and home banking systems.

Its stock, which is traded on Nasdaq, was near its 52-week low of $23 at the beginning of April but has bounced back in recent weeks. The stock was priced at more than $30 per share at the end of April and was trading in the $38-$40 range late Friday.

The run came as little surprise to analysts, who expect big things from payment technology companies like Transaction Systems.

According to a coming report from Robertson Stephens & Co., financial services providers over the next three years will more than triple their investments in payment system technology, to $2.5 billion.

Gary Craft, vice president of the San Francisco-based firm and author of the report, said the investments would be driven by banks' increasing emphasis on streamlining the payment system by migrating more transactions to electronic channels.

"We believe the spending by the payments industry on external technology is set to accelerate," Mr. Craft said in his report. He said software providers, clearing associations, and business networks stand to benefit most from the boost in spending.

About 27% of total spending, or $675 million, is expected to go toward electronic funds transfer software. Banks currently spend about $180 million per year on such software.

For this reason, Transaction Systems Architects is getting more attention on Wall Street.

"There's a very good chance of it being a $400 million company (in revenues) by the year 2000," said Patrick Burton, analyst at Lehman Brothers Inc., New York. Revenues for fiscal 1996, which ended in September, were $159 million.

Gregory Gould, an analyst at Goldman, Sachs & Co., said he has raised Transaction Systems Architects' 12-month price target to between $44 and $46.

The analysts said Transaction Systems' licensing practices have positioned it to benefit from the rising tide of electronic transactions.

Instead of trying to lock in customers with long-term licensing agreements, Transaction Systems strikes shorter-term deals whose value is linked to the volume of transactions being processed with the software.

The benefit is this: As a bank's transaction volume grows, so does Transaction Systems' revenue.

"The concept is deferred revenue," said Mr. Burton, adding that Transaction Systems has "tipped the pricing structure upside down."

Mr. Craft likened Transaction Systems' strategy to "storing acorns. The growth is so strong that even with them swapping one-time licensing revenues for these renewable licensings, you are still seeing 35% growth."

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