TransFirst Looks to Buy a Bill Processor to Create Card-Based Service

Noted in recent years for its strategy of buying assets in high-growth processing niches, TransFirst LLC is back in the hunt, this time looking for a bill-payment processor that can help it create a service for small financial institutions that would allow customers to pay bills on the banks' Web sites with any credit or stored-value card. Web-based bill payment, which banks have come to recognize as a primary means by which to attract and hold on to customers, can be made even more attractive to consumers with credit card options, TransFirst believes. “We want to provide that [bill-payment] solution to our bank but we also want to allow their customers to pay bills with credit cards so they can earn miles,” says Andrew Rueff, senior vice president for corporate development at Dallas-based TransFirst. Consumers, he says, now want a wide range of payment options. “It's the next step in bill payment,” he says. “Pay anyone with anything.” The company, which processes card transactions for smaller banks and over the past few years has been an active buyer of merchant and agent-bank portfolios, is now talking to a number of unspecified bill-payment processors, Rueff says. The bill-payment capability, he adds, will one of the final pieces privately held TransFirst needs to add before executing an initial public offering it has aimed at for some time. The IPO, he says, could happen as soon as the middle of next year, provided the company meets certain growth targets. TransFirst, which processes for 760 financial institutions and 155,000 merchants, handles an annualized volume of $20 billion currently. Processing credit cards for bill payment is not new, nor is it a difficult payment module to add, Rueff says. But most larger banks, with heavy investments in their own card portfolios, shy away from it in their online banking services, preferring not to take transactions on other banks' cards and instead relying primarily on funds transfers through the automated clearing house. Smaller banks, which don't issue cards or have less capital committed to a card portfolio, are less likely to balk at transactions from cards issued by other institutions, Rueff says. At the same time, the capability offers an added convenience for small-bank bill-payment programs that would help tie customers more closely to their banks, he says. Mergers-and-acquisition activity in the bill-payment market heated up this summer when Fiserv Inc. acquired BillMatrix Corp., a processor for utilities and other billers (Digital Transactions News, July 28), for $350 million.