Where technology is supersonic
On Aug. 16, 2013, serial payment entrepreneur Bipin C. Shah rang the closing bell at the NASDAQ stock exchange in New York City. The occasion marked the official renaming of Universal Business Payment Solutions Acquisitions Corp., where Shah is founder and Chief Executive Officer, to JetPay Corp. The company's new stock symbol is JTPY.
Ten days later, private equity firm Flexpoint Ford LLC agreed to invest up to $40 million in Berwyn, Pa.-based JetPay, with an additional $10 million invested by a Flexpoint affiliate the following October. What did the investors see in the business? An acquirer and processor to rival the big players, said Trent Voigt, CEO of JetPay's Dallas-based subsidiary JetPay Processing Services.
JetPay reported that it processes over $20 billion a year in merchant volume and is headed for double-digit growth in 2014. It serves large e-commerce businesses like Amazon.com and Expedia, but its portfolio contains about 5,000 small to midsize merchants as well. With the acquisitions of JetPay Processing Services and AD Computer, a full-service payroll processor in Center Valley, Pa., in 2012, and the vertical integration of those business units into JetPay's overall infrastructure, the company is poised for growth.
To accomplish that growth, JetPay will need to expand its ISO channel, which now stands at about 70 ISOs. "[O]ne of our big strategies over the next six months to a year is we will be really pushing our ISO channel," Voigt said. Flexible and reliable According to Voigt, technology flexibility is JetPay's market differentiator. Its platform, which can be specialized for individual merchants, is based on the Extensible Markup Language (XML), which Voigt called pliable.
Typically, merchants, or ISOs, have to format their data to the requirements of legacy processors. JetPay is different. "With XML, the credit card number can come in the last field or in the first field; I don't really care," Voigt said. "It makes integration so much easier."
Reliability is another differentiator. Voigt estimated the extent of platform downtime to be only nine minutes in the last 12 years. He said JetPay doesn't employ typical maintenance windows if a problem in its system arises; it is able to redirect transactions and allow them to flow unimpeded while it fixes the problem.
Big e-commerce merchants drive 20 transactions per second 24 hours a day, so maintenance windows scheduled in the middle of the night equate to a "death sentence" for them, Voigt said. "Expedia doesn't care that it's two in the morning because they are worldwide," he added. "It's not two in the morning everywhere else."
JetPay said tailoring its platform for individual merchants doesn't affect other merchants on that platform. For example, it can decline a transaction initiated by a U.K. cardholder on a merchant's U.S. website and employ a special code to switch that customer to the merchant's U.K. site. And that feature does not have to be available to any other JetPay merchant, Voigt stated. Payroll adds stickiness Voigt said JetPay is not suitable for merchants who seek only the cheapest card processing rates. Rather, JetPay is after merchants who appreciate value over price. "In fact, we train ISOs to sell value," Voigt noted. "And once they figure out they can sell value and features, customers will pay a little bit more."
Merchants might be willing to pay more if they also get payroll services in the bargain. Via its payroll services center in Pennsylvania, JetPay can be the human resources department for small businesses, handling not only payroll but the ever more complicated tax filing requirements as well, according to Voigt.
Providing payroll services, including prepaid paycards for merchants' unbanked employees, makes JetPay merchants "stickier," Voigt said. It's less likely merchants will change service providers when they have direct deposit, paycards, and time and attendance processes, as well as bankcard processing, set up through JetPay, he added. 
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