Deluxe expands reach with FAPS acquisition

Deluxe Corp., a leading technology provider, entered into an agreement on April 21, 2021, to acquire First American Payment Systems. Deluxe leaders called the $960 million all cash transaction a milestone in the company's 106-year history that will add more than $600 million in recurring annual revenue while expanding distribution and scale.

Barry McCarthy, president and chief executive officer at Deluxe, observed that the company's receivables-as-a-service generates more than $2.8 trillion annually and the One Deluxe initiative aims to further accelerate software and service growth.

"With electronic payments playing an increasingly important role across the economy, the addition of First American’s independent, leading payments platform will advance our One Deluxe strategy and our overall growth trajectory,” McCarthy said. “First American’s end-to-end payments platform presents significant cross-sell opportunities as we continue to invest in our higher growth payments segment, and this combination will create a multitude of opportunities to drive tremendous value for our shareholders.” 

Neil Randel, chief executive officer of First American, thanked McCarthy for advancing the accomplishments of the First American team over the last 30 years. “I look forward to working closely with Barry, Mike and the team to exponentially grow our combined company and deliver enhanced value to all of our stakeholders,” he said.

Organic, acquisitional growth

McCarthy additionally noted, in a morning conference call and webcast, that the company's historic growth had been largely driven by acquisition, which changed when he became CEO in 2018. We paused on acquisitions, he stated, to deliver sales-driven growth and meet the following five prerequisites before doing any further acquisitions:

• Modernized technology stack: We wanted a modern tech stack, capable of operating the company efficiently and integrating the new acquisition.

• Enterprise-class sales organization: We wanted sales executives capable of selling the entire Deluxe portfolio, which would enable Deluxe to scale with any acquisition to our very large customer base.

• New improved products: We focused on developing new products, capable of helping any acquired company grow.

• World-class talent: We wanted to build a diverse team of world-class talent from payments and technology sectors.

• Strengthened balance sheet: Finally, we wanted to improve and strengthen our balance sheet by eliminating underperforming unprofitable businesses.

Deluxe executed on all five objectives, and during a global pandemic, and was ready to opportunistically augment its business with a transformative payment platform opportunity, McCarthy stated.

Expanded service offering

Michael Reed, president of payments at Deluxe, told The Green Sheet that combining Deluxe and First American capabilities will broaden the company's receivables-as-a-service and payables-as-a-service offerings to financial institutions, small and midsize businesses and hundreds of established enterprise clients.

"We recently launched the Deluxe Payment Exchange, which helps businesses send one-time payments where remittance status is required," Reed said, adding that the platform generated $16.4 billion in transaction value in 2020. And on the disbursement side, our payroll product dispersed $8.8 billion in value in 2020, he noted, and Deluxe added HR services to the payroll platform to help customers and merchants manage their businesses and employees all the way from hiring an employee to helping them retire and everything in between.

Ultimately, the First American acquisition will enhance everything Deluxe can offer in terms of helping a customer through their entire lifecycle of incorporation services, Reed stated, from building a website and designing a logo to helping independent software vendors run specific business software.

"With the First American acquisition, we will now be able to process credit, debit, and check payments, which really rounds out both companies' capabilities," Reed said. "It's 100 percent complementary to both of our businesses."

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.