Headlines:
S1 Buying a U.K. Software Maker
S1 Corp. has signed a definitive agreement to buy a U.K. firm that makes software for automatic teller machines.
The Atlanta technology company will pay $37 million in cash for Mosaic Software Holdings Ltd. That price may increase by $15 million if Mosaic meets certain targets this fiscal year, which will end May 31. Its main U.S. office is in Deerfield Beach, Fla.
Jaime Ellertson, S1's chief executive, said in a press release that the purchase would let it cross-sell its products to the 210 financial institutions and retailers Mosaic serves. He particularly hopes to promote S1's flagship product line, Enterprise, which tracks customer activities across banking channels.
The Mosaic purchase would let S1 offer software for every major channel, Mr. Ellertson said.
S1 did not say when it expects the deal to close, and a spokesman said it was too early to say when the integration of Mosaic's ATM technology into Enterprise might be completed.
Mr. Ellertson had said last month that S1 is developing an updated version of Enterprise that could be available in mid-2005.
Gwenn Bezard, a senior analyst for the Boston market research firm Celent Communications LLC, said S1 "would need at least six to eight months" to integrate Mosaic.
This would be a good deal for S1, which has been profitable over the past few years while competitors have been struggling to break even, Mr. Bezard said.
Though analysts agree that Enterprise gives banks a comprehensive view of customer activity - which bankers have said they want - installing the software in several channels requires an expensive and time-consuming overhaul.
"The main challenge for them is going to be to really sell the idea that financial institutions need to replace their various software components," Mr. Bezard said.
Payment Processors Settle With the FTC
The Federal Trade Commission has settled with payment processors it had accused of aiding telemarketer fraud by transferring funds over the automated clearing house network.
The owners of First American Payment Processing Inc. of Phoenix admitted no wrongdoing but agreed to pay a $1.5 million penalty. The FTC also named as defendants two companies it said were affiliated with First American, CET Corp. and Check Processing Center LLC.
All the defendants signed the order, which requires a federal judge's approval, on Nov. 2. The FTC announced the settlement last week.
The defendants agreed to several restrictions. They may not process payments for outbound telemarketers by ACH or any other method, though they can continue using the ACH network for other companies.
The type of fraud that the FTC accused First American of aiding emerged in 2000, when the ACH became accessible to consumers. Since very little information is required to initiate an ACH debit over the phone or the Internet, companies found they needed stricter methods of authentication. In some instances, individuals were using the information on their paychecks to initiate ACH debits from their employers' bank accounts.
Telemarketing firms were another source of fraud. Many such companies initiated ACH debits from consumer accounts without their permission, despite rules forbidding the practice.
Nacha, the electronic payments association, fought this practice by tracing the transactions and blocking companies with high return rates - a telltale sign of fraud.
The FTC alleged that First American and its affiliates knowingly helped companies that deceptively sold so-called advance-fee credit cards. In such scams, telemarketers charge consumers hefty activation fees and then mail invalid cards, or none at all.
In May the FTC won a motion of summary judgment against a network of Florida card companies that used this scheme. The companies were fined $12.5 million.
