To Stuart C. Harvey Jr., the new frontier for U.S. merchant processors is Europe.
Consolidation in the European merchant processing industry is just beginning, said Mr. Harvey, the recently appointed president of Nova Information Systems of Atlanta and chairman of its European unit, euroConex Technologies Ltd. - and he is eyeing that market hungrily.
"If you look at Nova and our competitors in the U.S., we've all been through here with a rake, looking for acquisitions, so the space is really consolidated," Mr. Harvey, 43, said in an interview last week.
EuroConex, which, like Nova, is a unit of U.S. Bancorp of Minneapolis, is now in nine European countries, he said. "Our objective is to complete the footprint. We want to be processing in every major European country."
The European merchant processing industry is somewhat provincial, Mr. Harvey said; most of the processors are banks, and many of them work only in their own country, or even in their own region of their country.
Banks there "have held on to their acquiring business for the most part," he said. "They are very reticent to outsource it."
The fact that there are more than 80 merchant processors in Europe could present a significant opportunity for Nova and euroConex, Mr. Harvey said.
"You've got to think that number will come down considerably as outsourcing becomes more acceptable," he said. "That's the trend we see emerging. We're getting a lot of calls saying, 'Can you take a look at us?' "
European banks are willing to talk to euroConex because "we're not threatening their cash management business," Mr. Harvey said. "We're not threatening their issuing business."
Nova formed euroConex five years ago as a joint venture with Bank of Ireland Group and bought out its stake last year.
Gwenn Bezard, a research director at Aite Group LLC in Boston, said there are two reasons U.S. third-party processors, including Nova, First Data Corp., and Total System Services Inc., are gaining a foothold in Europe: The European Commission has been encouraging cross-border competition, and regulators in some countries have been requiring companies that have monopolized processing in those countries to divest themselves of certain contracts.
In the Netherlands, for example, Interpay Nederland BV, a debit network in Utrecht that also processes transactions, has been forced to divest ownership of the acquiring contracts with merchants, Mr. Bezard said.
Marcel Woutersen, an Interpay spokesman, said Wednesday that because of the formation of the European Union and the introduction of euro, it is much easier now to do cross-border activities.
Companies in Europe, including Interpay, will mostly likely consolidate their industry, he said.
Mr. Harvey has held various posts at Nova and euroConex since 2003. His appointment as Nova's president is its second major one there in the last nine months. He will report directly to Pamela A. Joseph, who succeeded Edward Grzedzinski, a co-founder, as the chairman, president, and chief executive officer in November.
Nova has also entered the Canadian market, by helping the banking industry convert to smart card/PIN technology. Mr. Harvey said his company is also looking at other burgeoning markets.
"You can't ignore both the population and card explosion in India and China and, ultimately, in South America," he said. "From a card standpoint, they're not that highly penetrated."
Though India has over a billion people, only about 140,000 online merchants there accept cards, Mr. Harvey said.
