Eye on Acquiring: IP Commerce To Stop Processing; Passilla at Chase; Groupon And SumUp

IP Commerce Inc., a 9-year-old Denver-based company that provides platforms for independent software vendors (ISVs) and other payments developers, will discontinue its front-end payment-processing service effective June 30, according to a notice on the home page of the company’s Web site.

The company began notifying clients earlier this month, according to a report in the Bloomberg news service. It remains unclear how many businesses will be affected by the move, though one major client, Groupon Inc., tells Digital Transactions News it will switch affected merchants on its Breadcrumb Payments platform to other, unnamed processors with which it has relationships. Breadcrumb Payments allows restaurants to process payments on tablet devices. “We anticipate no customer impact,” says a Groupon spokesperson by e-mail.

Similarly, one of the back-end processors with which IP Commerce has worked, Vantiv Inc., tells Digital Transactions News it will continue to support ISVs originally boarded by IP Commerce. “We will continue to process for the ISVs and other companies that used the IP Commerce platform to integrate with Vantiv’s payments processing platform,” says a spokesperson by e-mail. “This will be a seamless transition for our customers, and we will continue boarding and servicing our clients as usual.” These businesses will be able link to Vantiv’s processing services via software developed by IP Commerce and operated in-house by Vantiv, sources say.

Alfred “Chip” Kahn IV, founder and executive chairman of IP Commerce, did not immediately return a call from Digital Transactions News seeking comment.

Still, Rick Oglesby, a senior analyst at Boston-based researcher Aite Group LLC, estimates the processing business is worth more than $6 billion annually in dollar volume for IP Commerce. “I’m kind of caught off guard by this [move],” he says. “It’s pretty surprising. It’s a good portion of their business.”

In other developments, JPMorgan Chase & Co. announced former Elavon chief executive Mike Passilla has joined the bank as chief executive of its newly created Merchant Services unit. Passilla’s responsibilities will include Chase Paymentech, a major Dallas-based merchant processor that handled 29.5 billion transactions last year, including about half of all online traffic, according to Chase.

Dan Charron, who has been running Chase Paymentech since the death in March of long-time president and chief executive Mike Duffy, was named president of the processor and will report to Passilla, who ran Atlanta-based merchant processor Elavon for three years until leaving a few weeks ago.

Passilla steps into his new role at Chase at an interesting time for the bank in its relationship to merchant acquiring. A top card issuer, Chase earlier this year announced the formation of Chase Merchant Services as part of a plan to directly acquire transactions on its extensive Visa card portfolio. CMS is licensing a version of Visa Inc.’s VisaNet software to offer merchants favorable pricing and cardholders cash discounts or other rewards when they use their Chase Visa cards at Chase merchants.

Finally, Chicago-based offers kingpin Groupon invested in SumUp, a European company that offers technology allowing small merchants to accept cards on smart phones. Also investing were American Express Co. and current investors. The total funding, along with the amounts from the two new investors, was not revealed, though SumUp in a press release referred to it as a “double-digit million Euro injection.”

The Groupon investment struck some observers as curious, given that the company offers a competing product in the United States. A Groupon spokesperson says the company has no comment beyond remarks attributed to Jason Harinstein, Groupon senior vice president for corporate development, in a press release. In the release, Harinstein says: “We are pleased to have the opportunity to invest in SumUp, whom we’ve identified as an early leader in the emerging mobile payments space outside the U.S. We share a vision to transform the way local merchants interact with their customers and have confidence in the SumUp team’s ability to execute against this vision.”