Chase Exits ISO Business With Portfolio Sale to First American Payment Systems

Merchant processor First American Payment Systems L.P. on Thursday reported that it bought the independent sales organization portfolio of Chase Commerce Solutions, the merchant-acquiring and payment-processing unit of banking giant JPMorgan Chase & Co.

Neither company would disclose the purchase price or the number of ISOs and merchants involved in the deal, which closed Dec. 31.

By contrast with some other big merchant acquirers that generate a large percentage of their payment card charge volume through ISOs, Chase Commerce Solutions in recent years has relegated ISOs to a small supporting role in its huge business that includes large e-commerce merchants and the new ChaseNet, a closed-loop service for Chase merchants processing transactions from Chase Visa cardholders. In 2015’s first nine months, Chase processed $691.1 billion in charge volume, an increase of 12% from a year earlier, on 30.3 billion transactions, up 9%. JPMorgan Chase is scheduled to report fourth-quarter financials Jan. 14.

“We continuously look for opportunities to simplify the business while strengthening and growing our core business,” a Chase spokesperson tells Digital Transactions News by email. “After a thorough review of our ISO business and our overall strategy, we made the decision to sell the ISO portfolio.”

Adil Moussa, a consultant who works closely with ISOs and acquirers as principal of Omaha, Neb.-based Adil Consulting, says by email that “finally Chase made a decision about the ISO portfolio. It has been a couple of years that this issue has been debated, and whether Chase was going to continue supporting the ISO channel. I think it is good closure for the handful of ISOs that were using Chase. Some of them were itching to add a new provider to hedge their bets.”

The “real question,” according to Moussa, “is are they going to stay on with [First American]?”

That’s certainly First American’s plan. Although the Fort Worth, Texas-based processor, which serves more than 140,000 merchants in the U.S. and Canada, wouldn’t say how many ISOs it works with, they play a much bigger role for First American than they do at Chase. Rick Rizenbergs, executive vice president of sales, says his company spent a good deal of time doing due diligence on the Chase portfolio.

“What attracted us—it really is a sweet spot in what we do in supporting ISOs and their strategies and growth,” Rizenbergs tells Digital Transactions News.

The Chase portfolio will bring merchants to First American in a wide variety of industries, including mom-and-pop retailers, restaurants, and e-commerce businesses, according to Rizenbergs. He says First American offers a variety of differentiated products for ISOs. They include gateway services, EMV chip card payments, American Express Co.’s OptBlue small-business program, tablet-based payments, and services for integrated software vendors that combine business-management programs with payments—a hot sector in the merchant-acquiring business.

“We’ve developed some terrific tools to help ISOs win and integrate with partners,” he says. “We don’t take a one-size-fit-all approach in the ISO business.”

First American would not disclose its annual charge volume. Its sponsor bank is Cincinnati-based Fifth Third Bancorp.