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Two key results of First American Payment Systems L.P.'s acquisition of National Data Funding Corp.?consummated late last year and announced last week?are that First American gains an inhouse facility for wireless, Internet Protocol-based transaction processing while R. Scott Hatfield, one of NDFC's long-time owners, can now devote himself full-time to Debitman Card Inc., a non-bank PIN debit network in which he is a principal. The 15-year-old NDFC serves 3,800 merchant accounts, primarily processing PIN debit transactions. Price and other terms of the deal were not announced. Neil Randel, president and chief executive of Fort Worth, Texas-based First American, lists NDFC's wireless technology as a top reason he wanted to acquire the company. “More and more merchants are moving to IP,” he says. “This gives us a product we can own inhouse and control.” NDFC's home-grown technology allows multi-lane merchants to transmit transaction messages to processors via wireless connections from a terminal controller in stores or at other central locations. First American was also attracted to the Chico, Calif.-based independent sales organization's long-tenured sales force and profitability, Randel says. For his part, Hatfield says consolidation among ISOs is inevitable as interchange rates rise for both credit and debit card payments. Merchants, he says, blame ISOs for the cost increases, leading to increased merchant defections. “Merchants don't know it's the banks padding their pockets,” he says. Such churn is something larger, more resourceful ISOs are better able to counter, he argues. “If your sales force isn't larger than the next sales force, you lose,” he says. “For NDFC to survive we needed to join someone bigger and badder.” The sale, he says, allows him to devote himself full-time to Debitman, whose switch went live two years ago. Debitman signs up merchants to both issue and accept its debit card, which is processed over the automated clearing house. Its owners also include John K. Lannan, Debitman's chief executive, and David K. Paul, who was co-owner with Hatfield of NDFC. In other developments this week:
–Nashville, Tenn.-based iPayment Inc., one of the few publicly held ISOs, announced late yesterday that it had won summary judgment dismissing all claims in the first amended complaint filed against the company in U.S Bankruptcy Court for the Central District of California. The complaint had stemmed from allegations brought against iPayment and certain of its officers by the trustee for the estate of ITSV Inc. The allegations, filed last August, included charges of fraud connected with the company's March 2003 public offering (Digital Transactions News, Dec. 3 and Sept. 15, 2004). iPayment has denied the allegations since the case began. It serves more than 100,000 small merchants, handling credit and debit card payments from physical stores as well as Internet transactions. –Way Systems Inc., a Boston-based maker of wireless terminals that incorporate cell phone technology as well as PIN encryption and days-long battery life (Digital Transactions News, Sept. 8, 2004), says it has signed up more than 30 ISOs to market its device to mobile merchants. Way chief executive Will Graylin says the company is supporting its resellers with e-mail campaigns targeted at participants in trade shows held for businesses with a need for mobile transaction technology, such as arts and crafts fairs and plumbing groups. “We're shipping more and more units every month,” he says. Refusing to be specific, he says monthly shipments of the device, which operates on the GSM standard, are in the hundreds now, and the 2-year-old company expects to sell “tens of thousands” in 2005. Way's price to resellers for the device is $495 in single units, and its suggested maximum price to merchants is $695. TowerGroup estimates the mobile merchant market embraces 630,000 businesses employing 9 million people. Wireless terminals as a share of all terminal shipments will reach 11% this year, the consulting firm estimates, up from 8% in 2003. Way's investors now include Visa International as well as TNS Inc. and point-of-sale terminal industry veterans William Melton and George Wallner.
