Global Payments’ Acquisition Ups The Ante At The POS

Earlier this week, Atlanta-based Global Payments acquired specialty processor Accelerated Payment Technologies (APT) from Great Hill Partners for $413 million. APT is already a Global client, so the deal doesn’t bring significant new volume or revenue. Instead, the deal appears to be designed to boost Global’s capabilities and credentials in some key growth markets, including dental, medical, pharmacy and veterinary, by leveraging APT’s relationships with over 700 value-added resellers (VARS) that focus on these markets. In addition, many analysts are speculating that Global is hoping that the deal will improve margins that have been battered by intense market competition as well as the impacts of the major data breach incidents earlier this year.

A range of analysts have already covered most of the obvious financial aspects of the deal, but a couple, less obvious aspects of the deal intrigue me. First and foremost, the deal brings Global a veteran team of payments innovators. Global CEO Paul Garcia even mentioned this in the press release, saying, “We look forward to having their talented management team join Global Payments.”

Quotes like that often are standard press-release fodder, but in this case, I believe Global is getting some unique talent. APT is led by industry veteran, Roy Banks, previously of Authorize.net. Banks and his team of industry alumni have deep experience in building technology solutions for small and mid-sized merchants. While at Authorize.net, Banks’ team recognized and took advantage of the powerful potential of the ISO and VAR channels, customizing tools and capabilities that made Authorize.net the easiest and most attractive internet gateway solution for ISOs to sell. In a crowded, and hypercompetitive internet market, many credit those ISO-oriented features as a key part of Authorize.net’s success. Despite facing a crowded and fragmented market, within a space of five years from being founded, Authorize.net was a clear market leader.

The deal also brings Global some new technology and new sales capabilities in the rapidly evolving POS solution market. This market is complex and dynamic. Players as diverse as PayPal, Square, Verifone, Secure Health Pay and ScoutMob are inundating merchants with new POS solutions. At the same time merchants are struggling to assess how cloud-based POS solutions and mobile technologies will change the traditional payments environment.

APT has experience managing in this dynamic world, with a 25-year track record of designing customized POS solutions tailored to the specific needs of industry verticals, from the health care field, specialty retail and others. So although APT sold its POS software division (CAM Commerce) in 2010, the expertise and knowledge from business are still evident in the APT business model. In addition, APT has something very few of the upstarts have: ability to credibly sell innovative technology solutions in the POS space. In a world where players like Groupon are learning hard lessons about how difficult it is to cost-effectively sell new solutions to small and mid-sized businesses, APT and its management team have a proven track record.

As with most acquisitions, there will be integration challenges, as Global Payments brings APT under its corporate umbrella. However, this is one integration I look forward to watching. With luck, they will keep the innovation engine humming.