Partnerships / Acquisitions

Paya Acquisition Aims To Solve City Hall’s Paper (Billing) Chase

Paya First Billing

Build or buy — or how about buy, then build?

Continuing an acquisitive strategy that seeks to expand integrated payment capabilities, Paya said on Tuesday (Jan. 8) that it had acquired First Billing Services, a billing processor based in Ohio that focuses on municipalities and utilities. The $57.5 million deal closed at the end of last year, and is the second transaction in two months for Paya, which said in November that it bought Stewardship Technology, a payments facilitator (payFAC) that serves nonprofits and faith-based organizations.

The deal for First Billing, said Paya in a press release, captures a suite of solutions for Paya that helps consumers pay their bills through their preferred methods, whether by paper check or bits and bytes. First Billing serves more than 600 utility and municipal government clients.

In an interview with PYMNTS’ Karen Webster, Paya President Greg Cohen said the First Billing deal reflects Paya’s determination to continue tapping into markets that are underpenetrated when it comes to independent sales organizations (ISOs), independent software vendors (ISVs) and other technology partners. Those partners want to offer integrated software and payment processing services to their own customers — which translates into omnichannel payment options for end users or, in this case, the individuals and businesses that want to pay their bills for government services by check, interactive voice response, phone or even text message.

With a nod to the government space, he said, “the areas we’ve been focusing on are traditionally not retail or restaurants.”

Cohen told Webster that First Billing is “in the right spot with the right technology.” He stated that offering bill presentment and processing for governments represents “amazing growth, [especially within] municipalities, and with the customers and partnerships that First Billing has.”

First Billing was founded in 2011, operating until the December 2018 transaction with Paya as the billing services affiliate of The Connor Group, a real estate investment firm. It initially focused on software developed for the apartment vertical.

Expanding into the government space, and as it exists today, First Billing’s offerings span the processing of check transactions, as well as credit and debit cards. In addition, said Cohen, the newly acquired firm helps government clients with everything from creating bills to operating lockboxes (where payments and remittances, in both paper and digital form, are sent directly to banks), to fielding phone calls from consumers. First Billing said its client base has grown from 500,000 to more than 2.3 million, as reported in the Dayton Daily News.

The continuum of services offered by First Billing reflects the varying degrees to which municipalities have set up their daily management systems to handle different payment options, and “how far along they are on the ‘digital adoption curve,’” he said.

“So, this is about being a one-stop shop — and having integrations to the different platforms allows [utilities] to have these offerings from end to end,” he added, where software and processing capabilities are outsourced.

An outsourced strategy is especially important in an age where local and state governments tend to be strapped for cash and budget-conscious when it comes to new technology deployments, noted Webster. Outsourcing to a third-party provider, said Cohen, also helps governments boost operational efficiencies as they improve collection activities and shorten the time it takes to turn receivables into cash.

Consider the fact, as First Billing noted on its site, that more than 50 percent of calls to its customers are to inquire about bills. Those calls last an average of three minutes, and two of those minutes are related to payments themselves. First Billing deals with that portion of the call, it said, which in turn helps staff productivity.

First Billing will continue to operate under its existing brand, the companies said on Tuesday.

The Broader Strategy

For Paya’s own customers (the ISOs, ISVs and PayFACs serving any number of verticals), the newly strengthened foundation in utilities and municipalities offers these players new ways to differentiate themselves, and to find new revenue opportunities in a dynamic payment services market.

No matter the vertical, Cohen said, “technology is the key” when it comes to improving the end customer experience and engaging with them in a digital manner. He said Paya’s customers want to be able to scale out to all types of electronic payments, and embrace the solutions that make those payment options possible.

Moving forward, Paya said, the firm will provide capital and resources to accelerate First Billing’s technology offerings, and support the latter’s “rapidly growing” customer base. In addition, Paya said it plans to integrate First Billing’s online billing and software applications into the Paya Connect platform, which lets developers create and support payment solutions.

“As we take all of these solutions that we build and buy, and put them together,” said Cohen, “it’s a new set of tools that our partners can take to market and create experiences for their end customers.”

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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