Paradata Gears Up for a Major Expansion in Its U.S. Merchant Base

Paradata Systems Inc. is getting set to build up its market share in Internet-based transaction processing in the U.S. To that end, it has added two U.S.-based transaction-processing veterans to its board and is starting to seek out larger independent sales organizations and other resellers to more rapidly expand its U.S. merchant base. Shannon Byrne, chief executive and a co-founder of the 9-year-old Canadian processor, says she expects to quadruple both the company's total and U.S. merchant base over the next three years by cutting new deals with bigger ISOs and by exploiting merchants' growing recognition of the advantages of Internet Protocol-based payments in the physical world as well as the general growth trend in e-commerce transactions. She will not reveal the company's current merchant count, but outside estimates put it at around 5,500. About 70% of this clientele, says Byrne, is already U.S.-based. “We've grown predominantly by word of mouth,” she says. “Now we want to attract larger resellers.” Key to that plan is the addition of Steve Elefant and Jeff Marcous to Paradata's board of directors. Elefant co-founded payments software firm ICVerify Inc. and most recently was a top executive at micropayments processor Yaga Inc. Marcous is president of Dynamic Payments Solutions, a Utah-based ISO, and a former executive with Authorize.net and Cardservice International. Byrne hopes to call on the contacts and expertise of Elefant and Marcous as she maps Paradata's expansion strategy. That will be critical if she's to meet her objective. A quadrupling of the company's U.S. merchant base would link it ultimately to an estimated 15,000 retailers. As executive chairman, Elefant will work closely with Byrne in selling Paradata to major resellers, she says. Whereas Paradata works mainly with ISOs signing on average 50 to 800 merchants per month, Bryne says the company's goal now is to step up to those “boarding 1,000 to 2,000 per month.” Many of these, she says, are starting to stake out serious positions in the Internet transactions business. “What's happening is we're seeing resellers who never played in the Internet,” she says. “ISOs want a platform that can handle the full range [of Internet-based payments from physical stores through e-commerce].” Paradata, based in Whistler, British Columbia, processes IP-based transactions in physical stores as well as payments on virtual terminals and from merchant Web sites. The transaction breakdown, says Byrne, is roughly equal across these three channels. A virtual terminal is a secure Web site on which merchants can enter payment data received from customers over the phone or by fax.