First USA Paymentech Inc.'s latest acquisition will give it a leg up as a transaction processor for the hospitality industry.
For the past five years, the No. 3 processor has been developing a niche in the hospitality area. This week it acquired Transglobal Systems Inc., an information management firm specializing in the hospitality and travel industries.
The Fort Lauderdale, Fla.-based firm brings 2,300 merchants, including 300 large national accounts. The merchants, such as Carnival Corp., Intercontinental Hotels, and Hilton Hotel Corp.'s gaming division, have an annual credit card sales volume of $1.6 billion.
It is the second acquisition this month for Paymentech. The Dallas-based unit of First USA Inc. also bought Merchant Link Inc., a company that provides support to merchants in the restaurant and hotel industries.
Industry observers said the Transglobal acquisition is part of a trend for companies in the consolidating merchant processing business to stay competitive by developing expertise in information management.
"This is an important acquisition," for First USA Paymentech, and one that will make them "more competitive," said Nicholas Ferrante, president and chief executive officer, Ferrante Financial Services Inc., Chatsworth, Calif. "It gives them the pieces they were missing before."
Mr. Ferrante said processing credit card transactions is easier than managing and using the different kinds of information that come from the transactions.
"The credit card will be an element of broader information merchants need," he said.
"It is exactly right on top of our strategy, which says we are going to continue to make acquisitions and acquire portfolios," said Pamela H. Patsley, Paymentech's president and chief executive officer. "It was an area where there was an opportunity to bring more value to the customers with some unique process."
Elena R. Anderson, Paymentech group executive for portfolio management, said Transglobal "really developed reporting the merchants needed to best understand their processing," adding that it is important "for all large merchants to manage information."
Transglobal CEO Larence Park called the deal "an excellent fit." Paymentech has "invested in the leading technology our clients demand."
Transglobal, an independent service organization, has developed hotel property information software that includes guest check tracking, signature capture, and record retention. Paymentech has not decided if Transglobal will operate as a stand-alone unit or be folded into its core business.
Paul Martaus, president of Martaus and Associates in Clearwater, Fla., said Transglobal's hospitality industry technology is state-of-the-art, and includes software that predicts customers' spending patterns when they check into a hotel.
The emphasis on merchant services will shift as it becomes "an information processing business," Mr. Martaus said.
The travel and lodging industries are profitable areas for merchant processors to establish a foothold.
Visa said 1996 lodging and restaurant sales on its U.S. cards were $38.9 billion. MasterCard's U.S. total was $21.3 billion.
Last year, Paymentech processed 342 million bank card transactions with a sales volume of $36.5 billion. Its largest competitors in the hospitality processing sector are First Data Corp., Hackensack, N.J.; First Tennessee National Corp., Memphis; and Post Integrations, Phoenix.