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By buying Humboldt Merchant Services LP in a deal announced last week, Moneris Solutions Inc., a Schaumburg, Ill.-based acquirer, got something it did not have: ISOs.
Greg Cohen, president of the U.S. arm of Moneris Solutions Corp., a Toronto-based processor, says the acquisition will put 150 to 200 ISOs on the Moneris acquiring platform. And, the deal gets Moneris a West Coast office.
As reported in last week's ISO&Agent Weekly, Cohen says, "It gets us into that space, and we're not there today."
Humboldt's ISOs will have access to Moneris's products, and Moneris will have a new sales outlet–the ISOs, he says.
"We knew we wanted to increase our distribution," Cohen says.
ISOs will benefit because Moneris will have more merchants and that could lower pricing for payment card processing services, he suggests. "The bigger you get, the better [the] pricing you have," Cohen says.
Ken Musante, Humboldt president, says the deal resolves the uncertainty surrounding Humboldt since its parent, Reno, Nev.-based First National Bank of Nevada, went into receivership earlier this year. That also put Humboldt Merchant Services into receivership but did not impair its operations, Musante says.
That means Harris Bank, the Chicago-based unit of Harris N.A., becomes Humboldt's new sponsor bank, Musante tells ISO&Agent Weekly. Existing merchant contracts will be assigned to Harris, he says.
"From the merchant's standpoint, it will be seamless," Musante says.
The Humboldt name, which the company traces to 1993, will remain in use. For certain products the company could use either name, depending on which has better recognition among customers, Musante says. The deal is expected to close by the end of the year.
ISOs working with Humboldt, Musante suggests, ultimately will benefit from Moneris's involvement in the payments industry.
"We're now owned by a bank-owned acquirer," Musante says. "We'll be better able to implement changes with interchange. We'll be able to disperse that over a wider merchant base. They have a lot of merchant technology that we don't have."
The purchase of Humboldt constitutes a "good play" for Moneris, says David Fish, senior analyst at Mercator Advisory Group Inc., a Maynard, Mass.-based payments advisory firm.
The deal also provides more evidence of consolidation among companies in the payment-acquiring industry, Fish says. "The industry has been talking about consolidation within the acquiring space for a few years now," he tells ISO&Agent Weekly.
Jamie Savant, partner at Omaha, Neb.-based The Strawhecker Group and an early executive at Humboldt, says the acquisition is a good move for Moneris.
"This creates an opportunity for Moneris to use Humboldt to focus on smaller agents and ISOs that want to have a relationship with Moneris," Savant says. "It will create a large opportunity for sales organizations." Savant was not involved in the transaction.
Those opportunities could extend across the border into Canada, says Cohen. Moneris is a joint venture owned by RBS Royal Bank and BMO Bank of Montreal, two large Canadian banks.
Moneris is determining whether U.S. ISOs may sell services to Canadian merchants, Cohen says. "We will evaluate channel-expansion opportunities in both organizations [Moneris and Humboldt] as we move closer to closing," he says.
