ISO YapStone Enters Utility Payments with Paymerica Acquisition

At a time when many independent sales organizations are struggling to keep transaction volumes up as consumers reduce discretionary retail and restaurant spending, YapStone Inc. is further entrenching itself in a stable and high-growth revenue niche, recurring payments, through its Dec. 31 acquisition of the assets of Paymerica LLC. Jacksonville, Fla.-based Paymerica is an ISO that processes about $1.2 billion in annualized charge volume and has two distinct business lines?a diversified merchant mix and a specialty business serving utilities. It was the utility business that made Paymerica attractive to San Francisco-based YapStone, which provides credit and debit card payments and electronic-check processing to apartments, vacation-rental properties, and other real-estate niches. “This allows us to expand in to utility payment processing,” YapStone chief executive Matthew Golis tells Digital Transactions News. Golis will not disclose how many utility merchants Paymerica has, but says most of them are small or regional gas and electric companies, water utilities, and related firms. YapStone, which last year processed charge volume above $2 billion, will roll out its processing platform to Paymerica's utility base. Golis describes Yapstone's platform as a better system than the one Paymerica currently uses and as easily transferable to utilities. “They [Paymerica] have the same philosophy of focus on the vertical; what had been the missing piece for them was the superior technology,” he says. “That's what they're gaining from us.” Terms of the deal between the two privately held companies weren't disclosed. Paymerica's co-founders, Charles Yancey and David Bork, will stay on, as will most of its employees. YapStone is an ISO for Chase Paymentech, the nation's largest merchant acquirer, but has its own gateway and virtual terminal and does its own merchant underwriting, Golis says. Paymerica is an ISO for Nashville, Tenn.-based iPayment Inc. Most new merchants that YapStone books through its new Paymerica channel will be boarded through Chase Paymentech, according to Golis. MasterCard Inc. last year introduced incentive interchange rates for recurring-payment merchants that YapStone said would help develop an under-penetrated card market (Digital Transactions News, Feb. 21, 2008).