For years, many commercial banks havebemoaned their inability to efficiently deliver appropriateservices to the small business market segment. Their existingcorporate products are too complicated for the simpler financialneeds and skills of small business executives, but trying torelabel and extend their consumer products has usually not worked,either. The banks’ quandary leaves the market open to otherentrants.
A new investor group with lots of payments industry experience hasnow set its sights specifically on the payment needs of smallbusinesses. In July, the newly-formed Universal Business PaymentsSolutions Acquisition Corporation (UBPS) announced it was acquiringthree smaller but growing companies, each providing a service inthis market, for a total investment of $179 million. UBPS intendsto unify its offerings into a single unique product, deliveringfive different types of payment services required by smallbusinesses, and also to achieve economies of scale by unifyingsales and customer support activities.
Is there anything uniquely local about payment services? Is thereany reason that hundreds of small payment intermediary serviceproviders often claim the small business customer relationships,but rely on the same payment “pipes” as every other financialintermediary? We cannot see how that is sustainable.
Small business executives in general are an overworked, highlystressed group. To date, many have been willing to settle for apayments solution that does the job without requiring them to thinktoo much about it.
Small businesses increasingly, however, are being drawn into thefast-changing world of procurement networks, electronic invoicingand straight-through processing, whether as suppliers or buyers.Today it is their often larger trading partners, not their banks,which are introducing them to more efficient ways to order,purchase, and pay. For the most part, small businesses will not beturning to their banks for help with these process improvements, sothe prospects for other value-added service providers lookstrong.
For more information about UBPS’ acquisitions, click here.
To view a UBPS company presentation, click here.