Total System Services Inc. has preserved its processing arrangement for one of the industry's largest merchant acquiring portfolios by striking a deal with the company that purchased the portfolio from Bank of America Corp.
TSYS, which is majority owned by Synovus Financial Corp., announced Friday that it signed a contract with National Processing Co. to process the independent sales organization portfolio that NPC, formerly Iron Triangle Payments Systems, purchased in September from the Charlotte company's BA Merchant Services.
NPC, along with its affiliates, is the sixth-largest merchant acquirer in the United States, TSYS said.
The portfolio, which includes about 400 ISOs and about 140,000 merchants, catapulted Iron Triangle into the top echelon of merchant acquirers and gave the Louisville company the rights to the National Processing brand name. (Bank of America bought a predecessor National Processing Co. in 2004 for $1.4 billion and renamed it BA Merchant Services.)
Iron Triangle's purchase also included Best Payment Solution Inc., a BA Merchant Services unit that processes card payments for 20,000 merchant locations.
About the same time that deal was closing, Iron Triangle was negotiating one to retain TSYS as the outsourced merchant processor for the portfolio. That multiyear agreement went into effect in the third quarter, TSYS said.
Mark D. Schatz, an executive vice president at NPC, said in an interview that the fact that TSYS had already been the outsourced processor "was one of the key impetuses" for making the deal with TSYS.
"We didn't want to interrupt the ISOs and merchants," Mr. Schatz said. "By entering in a deal with TSYS, we could make it a nonevent."
Iron Triangle made its first major acquisition a year ago, when it bought Retriever Payment Systems, a Houston processor with about 95,000 merchant customers and annual transaction volume of about $8 billion.
Darrel Anderson, senior vice president of strategic partnerships for TSYS Acquiring Solutions, said that "technically very little changed" from when B of A owned the portfolio. The purpose of the agreement was "to ensure little merchant disruption, and so far all things point to a smooth and transparent changeover."
TSYS does not have direct contractual relationships with merchants, Mr. Anderson said.
The merchants would view NPC as the processor, because "their name is on every piece of paper and invoice, but when you get behind the covers, we're really the engine that's driving it," he said.
Mr. Schatz said that one of the new services that NPC brought to the portfolio is a customer relationship management technology platform. "Now the ISOs have all these tools that they didn't have before to take care of their merchant portfolios."
The platform can assist ISOs on many different types of maintenance requests, changes of address, and demand deposit changes, and the ISOs can initiate requests themselves, he said. "That's really important, because every ISO has a different approach to a market segment."
Gwenn Bezard, a research director at Aite Group LLC in Boston, said a company buying a business line from B of A is not going to have the resources to handle the entire processing operation on its own.
"If you become a smaller company, it's a obvious to stay put with your existing processor," he said.
