Page 10 - GS140601
P. 10
News
ChapterTitle
Vantiv goes vertical network of 600 application developers, 2,430 resellers
and 88,700 merchants. Also, Vantiv said potentially 3,000
with Mercury total developers could write software for Mercury's SaaS
solution, while its reseller channel could expand to 5,000
dealers.
op ten merchant acquirer Vantiv Inc. agreed to Based on its innovative distribution model, Mercury has
acquire software-as-a-service (SaaS) payment grown from the 35th largest acquirer in 2005 to the 11th
provider Mercury Payment Systems LLC for largest today, Vantiv said. The Vantiv-Mercury tandem
T $1.65 billion. The acquisition is evidence of a thus creates a "winning combination of technology,
growing trend in the merchant services space of mer- distribution and scale," Drucker stated.
chants abandoning traditional POS systems for vertically
integrated, big data-driven solutions. For ISOs wedded From ISO to ISV
to standard POS terminals and pitches based on cheaper Rick Oglesby, Senior Analyst at Double Diamond Payments
rates, better watch out. Research, said the Vantiv acquisition is another indication
that the traditional ISO business model is running out
In a May 12, 2014, conference call, Charles Drucker, of steam. For decades, ISOs have relied on competing
Vantiv's President and Chief Executive Officer, laid out on price and the distribution of terminals that were
the reasoning behind the acquisition, which heavily barely differentiated from one another. But that model is
involves the ISO channel. He said Mercury has one of the proving to be no match for independent software vendors
world's largest sales forces and provides Vantiv with the (ISVs) selling integrated, highly differentiated payment
equivalent of 13,000 feet on the street "to actively mine the solutions.
channel." He also emphasized that Mercury offers Vantiv
the opportunity to expand into one of the fastest growing The ISV model is a "far more efficient acquisition model
areas in payments. for acquiring than has been the ISO model for a very long
time," Oglesby said. "The ISO model is effectively getting
Vantiv cited research that said the integrated payment phased out at this point because the ISV model is far more
channel is expected to grow to over 30 percent of payments effective. … Dropping terminals on desks and competing
volume by 2017. "The movement from traditional, terminal- on price is definitely losing out to the ISV model which is
based payments to integrated payments software is based on the value of the overall software package."
gaining momentum," Drucker said. "And we expect the
integrated payment channel to grow significantly faster Oglesby sees a so-called clash of the titans brewing as large
than the broader payment industry." acquirers have purchased their way into the integrated
payments market, with Global Payments Inc. gobbling
Mercury CEO Matt Taylor added that, especially among up Accelerated Payment Technologies and Payment
small and midsized businesses (SMBs), the integrated Processing Inc., while Vantiv acquired Element Payment
payment solution is "really taking off." This trend is Services Inc. and, now, Mercury.
especially important to Vantiv because the acquirer
estimated Mercury had penetrated only 10 percent of the "It's really compelling at this point and time because those
SMB market. "We see a lot of opportunity for growth," are two mega acquirers that are readying themselves
Drucker said. to take on the other megas with the most productive
Secular and growing acquisition channel that the industry has seen over the
last 10 years," Oglesby said.
Drucker stated that "powerful secular trends" are
contributing to the rise of the integrated payments model. For ISOs the future is clear – either they can partner with
The declining cost of software, when combined with the ISVs or become ISVs themselves, he stated.
ability for said software to vertically integrate payment
services with other business processes, is driving the
demand for integrated, omni-channel technology "The movement from traditional,
solutions, he said. In addition, the software can be more
easily and cost efficiently upgraded, leading to the terminal-based payments to integrated
increased displacement of traditional POS terminals, payments software is gaining momentum.
according to Drucker. And we expect the integrated payment
Vantiv believes Mercury's SaaS model provides just that, channel to grow significantly faster than
and Mercury's growth history underscores that belief. the broader payment industry."
Vantiv said the number of software solutions Mercury
has "shipped" to SMBs grew by 69 percent from 2010 to – Charles Drucker, Vantiv Inc.
2012. Further, Mercury operates an already formidable
10
ChapterTitle
Vantiv goes vertical network of 600 application developers, 2,430 resellers
and 88,700 merchants. Also, Vantiv said potentially 3,000
with Mercury total developers could write software for Mercury's SaaS
solution, while its reseller channel could expand to 5,000
dealers.
op ten merchant acquirer Vantiv Inc. agreed to Based on its innovative distribution model, Mercury has
acquire software-as-a-service (SaaS) payment grown from the 35th largest acquirer in 2005 to the 11th
provider Mercury Payment Systems LLC for largest today, Vantiv said. The Vantiv-Mercury tandem
T $1.65 billion. The acquisition is evidence of a thus creates a "winning combination of technology,
growing trend in the merchant services space of mer- distribution and scale," Drucker stated.
chants abandoning traditional POS systems for vertically
integrated, big data-driven solutions. For ISOs wedded From ISO to ISV
to standard POS terminals and pitches based on cheaper Rick Oglesby, Senior Analyst at Double Diamond Payments
rates, better watch out. Research, said the Vantiv acquisition is another indication
that the traditional ISO business model is running out
In a May 12, 2014, conference call, Charles Drucker, of steam. For decades, ISOs have relied on competing
Vantiv's President and Chief Executive Officer, laid out on price and the distribution of terminals that were
the reasoning behind the acquisition, which heavily barely differentiated from one another. But that model is
involves the ISO channel. He said Mercury has one of the proving to be no match for independent software vendors
world's largest sales forces and provides Vantiv with the (ISVs) selling integrated, highly differentiated payment
equivalent of 13,000 feet on the street "to actively mine the solutions.
channel." He also emphasized that Mercury offers Vantiv
the opportunity to expand into one of the fastest growing The ISV model is a "far more efficient acquisition model
areas in payments. for acquiring than has been the ISO model for a very long
time," Oglesby said. "The ISO model is effectively getting
Vantiv cited research that said the integrated payment phased out at this point because the ISV model is far more
channel is expected to grow to over 30 percent of payments effective. … Dropping terminals on desks and competing
volume by 2017. "The movement from traditional, terminal- on price is definitely losing out to the ISV model which is
based payments to integrated payments software is based on the value of the overall software package."
gaining momentum," Drucker said. "And we expect the
integrated payment channel to grow significantly faster Oglesby sees a so-called clash of the titans brewing as large
than the broader payment industry." acquirers have purchased their way into the integrated
payments market, with Global Payments Inc. gobbling
Mercury CEO Matt Taylor added that, especially among up Accelerated Payment Technologies and Payment
small and midsized businesses (SMBs), the integrated Processing Inc., while Vantiv acquired Element Payment
payment solution is "really taking off." This trend is Services Inc. and, now, Mercury.
especially important to Vantiv because the acquirer
estimated Mercury had penetrated only 10 percent of the "It's really compelling at this point and time because those
SMB market. "We see a lot of opportunity for growth," are two mega acquirers that are readying themselves
Drucker said. to take on the other megas with the most productive
Secular and growing acquisition channel that the industry has seen over the
last 10 years," Oglesby said.
Drucker stated that "powerful secular trends" are
contributing to the rise of the integrated payments model. For ISOs the future is clear – either they can partner with
The declining cost of software, when combined with the ISVs or become ISVs themselves, he stated.
ability for said software to vertically integrate payment
services with other business processes, is driving the
demand for integrated, omni-channel technology "The movement from traditional,
solutions, he said. In addition, the software can be more
easily and cost efficiently upgraded, leading to the terminal-based payments to integrated
increased displacement of traditional POS terminals, payments software is gaining momentum.
according to Drucker. And we expect the integrated payment
Vantiv believes Mercury's SaaS model provides just that, channel to grow significantly faster than
and Mercury's growth history underscores that belief. the broader payment industry."
Vantiv said the number of software solutions Mercury
has "shipped" to SMBs grew by 69 percent from 2010 to – Charles Drucker, Vantiv Inc.
2012. Further, Mercury operates an already formidable
10
