Tier Technologies Inc. has sold its government business process outsourcing unit, the latest in a series of divestitures aimed at focusing the company on its electronic payments operations.
The company announced the sale Monday and noted that it had previously sold its state systems integration and health and human services business units, its Virginia call center, and its independent validation and verification businesses.
Two units remain that it wants to sell. The Reston, Va., payment company did not identify them or name any potential buyer, though it had said in May that it expects to complete these transactions during its fiscal fourth quarter, which ends Sept. 30.
"As we dispose of noncore assets we expect to generate additional cash from these transactions," Ron Rossetti, Tier's chairman and chief executive, said in its May 6 earnings call. (Tier made no executive available for interview Tuesday.)
"The primary use of this cash contribution will be to fund growth initiatives in our core electronic payments business," he said, "and to fund sales and marketing initiatives for new product verticals and potential acquisitions with synergies to our planned business direction."
Mr. Rossetti said Tier has two goals in divesting so many units: "first, to drive top-line revenue growth by better serving existing clients, as well as expand[ing] our marketing efforts into new verticals, and, second, to streamline our back-office operations to support greater growth at a lower cost per transaction."
Tier's main business is processing consumer and business credit card transactions on behalf of government agencies; its Official Payments Corp. is one of two companies authorized by the Internal Revenue Service to handle card transactions for federal taxes.
Jennifer Roth, a senior analyst in the global payments practice at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said the strategy of shedding nonpayment businesses makes sense.
"The amount of revenue, year over year, was beginning to decrease" in Tier's nonpayment business lines, Ms. Roth said. "Executive management decided to put those up for sale and focus on a business that was growing exponentially."
