Paysafe, MCPS consolidate assets, expand reach

London, U.K.-based Paysafe Group plc disclosed July 21, 2017, it will pay $470 million to acquire Delta Card Services Inc., the primary holding company for Merchants’ Choice Payment Solutions (“MCPS”), a Shenandoah, Tex.-based payment processor. A select group of syndicators will fund the transaction, including BMO Capital Markets and Deutsche Bank, representatives stated.

MCPS generates an estimated $14 billion in annual processing volume, mostly from small and midsize merchants. The company’s 2016 pre-tax earnings were $446 million, with gross assets valued at $90.4 million, according to recent reports.

Payments analysts called the merger an easy fit due to the long-standing partnership of Paysafe subsidiary Meritus and MCPS, their mutual ties to Woodforest National Bank and complementary areas of expertise.

“Paysafe excels in online gambling and other high-risk verticals, which are its bread-and-butter,” said a source familiar with the companies. “They needed a low-risk partner with expertise in mobile and POS technologies to round out and diversify their portfolio. MCPS, which specializes in A-paper retail and hospitality merchants, would gain financial clout as well as expertise in high-risk categories.”

Expanded technology suite

In addition to expanding its North American footprint, Paysafe will gain the MCPS technology suite, specific areas of expertise and 60,000-merchant portfolio to strengthen its capabilities and global reach. Gaining advanced data analytics will enable Paysafe to refine the underpinning integrated technology platform used in its POS, digital wallets and online cash solutions. This will facilitate real-time reporting for online and brick-and-mortar retailers and distribution partners, Paysafe representatives stated.

Paysafe will also add the MCPS Merchant Foundry platform to its suite of solutions. Designed to help small and midsize merchants manage all aspects of their businesses, the cloud-based solution provides a single-access view of transaction data, front- and back-office reporting and other merchant activity. Foundry POS is an Android, tablet-based POS solution that includes business management tools.

Retain leaders, consolidate portfolios

MCPS Chief Executive Officer Todd Linden and Chief Financial Officer Giovanni Diano, both of whom joined the company in 2010, will serve in Paysafe’s North America Processing operations. MCPS is also in the process of buying back some of its smaller ISO portfolios to lower acquisition cost before the merger, representatives noted.

Paysafe employs more than 2,200 people in 12 countries and has a processing volume of approximately $48 billion per year. The company has reportedly attracted solicitations and cash buyout offers, including inquiries from Blackstone and CVC Partners, but it has yet to comment to shareholders or analysts.

Editorial Note:

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