Total System Services Inc. says its planned purchase of a California payment technology company would help it adapt its own payment capabilities.
TSYS' acquiring solutions unit said it expects to close its purchase of Infonox Inc. of Sunnyvale today. The companies, which announced the deal Friday, have worked together and shared clients such as Capital One Financial Corp.
Infonox's software lets acquiring clients accept multiple forms of payment — including checks, magnetic stripe cards, contactless cards, and potentially new kinds of payments — while using a single process to clear them.
TSYS said the software also works with a wide variety of payment-initiating equipment, including a computer at the point of sale, a kiosk, an automated teller machine, or a mobile phone.
"If you look at the acquiring space and you look at the payment space in general, there are a lot of moving parts," Robert J. Philbin, the president of TSYS' acquiring solutions unit, said last week. "This takes us out of a commodity-type equation" and lets TSYS adapt as payments evolves.
TSYS plans to put new customers on the Infonox platform immediately and to convert existing clients to it in the next 18 months. Letting clients accept more payment types should help them increase payment volume, TSYS said.
Safwan Shah, Infonox's president and chief executive, said his company's flexible technology allows will even help clients accept older payment types more easily.
For example, "everyone wants to accept checks and not only accept them but do electronic conversion of checks" at the cashier, said Mr. Shah, who is to remain president of the Infonox unit once the deal closes, reporting to Mr. Philbin.
Through Infonox's software platform, the computer that accepts card transactions could be used to do electronic conversions of checks, he said, and then be programmed to handle newer payment types as they are introduced. "We have to start seeing these transaction devices as a delivery channel" that can work with multiple forms of payment, he said.
Mr. Philbin said this capability is a key to his unit's growth. "It was very important to add these capabilities into our suite of offerings," he said.
In turn, Infonox will have a broader field for its technology than it was able to reach on its own. "Together with TSYS, we will be in a position to lead the industry … rather than deliver on specific points," Mr. Shah said.
Brian Riley, a research director in the bank cards practice at TowerGroup, an independent research firm owned by MasterCard Inc., said the Infonox technology has huge potential.
"The most exciting thing about this kind of an acquisition is not what we know the product can do but how it will evolve," he said.
Though TSYS has tried to make its own platform more adaptable, "most other systems out there are a basic Rube Goldberg design," essentially the opposite of what Infonox has built, he said.
Infonox's abilities are most evident in its kiosks, which allow for conventional transactions, bill payment, and other transactions, Mr. Riley said. Since it also works on mobile phones, an area without a standard for banking and payments, the software puts TSYS in a good position to steer technology development there.
The Infonox system is more dynamic than rival platforms and allows for the same sort of evolution that the industry has seen with prepaid cards, Mr. Riley said.
Few foresaw that prepaid cards would someday be used for person-to-person money movement or as allowance cards for teenagers, but both uses emerged as technology evolved, he said. "What's really neat about this stuff is the only limitations are the boundaries of your own creativity."