EVO Buys in Poland to Extend Its Global Merchant Acquiring Reach

Continuing its international expansion through partnerships, U.S.-based EVO Payments International LLC has acquired a controlling interest in Polish financial institution PKO Bank Polski's merchant acquiring arm.

The two companies are establishing a 20-year alliance, with EVO buying a 66% interest in the bank's eService acceptance network. EService is the largest network of terminals that support contactless payments in Poland, the companies say.

"Our interest is to continue what we're doing; we're always in discussions with potential partners," says James Kelly, CEO of EVO. "There's no market in Europe we're not interested in."

There has been a rapid transition from paper to plastic payment methods in Eastern European countries, he says.

The Polish market is seeing the same type of transition.

"We decided to partner with PKO because of their scale and market presence," says Kevin Hodges, EVO's chief financial officer. "Poland itself is a growing market with increased adoption of payment cards."

EVO has been expanding internationally for the past two years, morphing itself into a global payments company operating in nearly 50 markets. In June, EVO completed its purchase of Deutsche Card Services, a subsidiary of Deutsche Bank. And on Nov. 4, EVO finalized its acquisition of Banco Popular's merchant acquiring business, a plan it disclosed nearly a year earlier. 

"The company strategy is to develop relationships…in Europe with financial institutions that can provide us with distribution," Kelly says. "As the European markets work through the financial recovery…part is raising capital and a bigger part is they're looking for partners that can provide sales and technology expertise."

Because most major banks in Europe use a common processor with their merchant acquiring business, it's hard for banks to differentiate, says Kelly. These financial institutions are moving away from owning the merchant acquiring business to joint ventures with independent sales organizations, he says.

"All you have to differentiate on is price…or banks within the market are looking towards other markets, such as the U.S. or new products, such as integrated point of sale systems like Square," says Kelly.

European banks have several choices for ISO partners, including Worldline and WorldPay, which are based in Europe. ISOs from the U.S. could be attractive partners as well, due to the innovation coming from the country and the prevalence of U.S.-based networks such as Visa and MasterCard, Kelly says.

EVO also acquired Denver-based IP Commerce's technology this year, creating a group called EVO Snap. The acquisition provided EVO with the technology it needed to integrate as a full-service processor.

In July, six banks in Poland, including PKO Bank Polski, created a joint venture to develop common mobile payments standards that link payments directly to bank accounts instead of through card networks. The banks involved make up 70% of Poland's electronic banking market. 

The mobile payment system will be based on PKO Bank Polaski's IKO mobile wallet. EService works with IKO and will continue to do so after the EVO acquisition, says Hodges.