iPayment Looks to Agent Banks for Growth

Nashville, Tenn.-based independent sales organization iPayment Inc. expects on Wednesday to close on its $55 million cash acquisition of an agent-bank portfolio from First Data Corp. The portfolio consists of 18,000 small merchant accounts controlled by 170 agent banks and generating about $4 billion in annual card volume. First Data Merchant Services will continue to process transactions for the accounts as well as for new accounts added by the agent banks. In announcing the acquisition last week, iPayment said it will for the first time give the company access to a network of community banks that will continue to add merchant accounts “not available through our existing ISO relationships.” For its part, First Data said the sale and continuing processing agreement allow the Denver-based processor to continue growing its merchant-processing business “without generating conflicts with our alliance bank partners.” The deal is the biggest so far in a series of a dozen acquisitions in the last few years that had boosted iPayment's roster of merchants to 70,000. The First Data deal, for example, follows iPayment's acquisition two months ago of a 1,500-merchant portfolio. Founded in 1992, the ISO went public in May. It reported $5.4 million in profit for the nine-month period ended Sept. 30, compared to a $94,000 loss for the same period in 2002. Revenues for the latest nine-month period were $160.8 million, compared to $67.3 million a year ago.