JetPay Acquiring CollectorSolutions

by Raymond Pucci 0

Mid-tier payments industry players are combining through the pending acquisition of CollectorSolutions by JetPay. The buyer delivers both payroll and payments processing services and is bulking up on the payments side with this deal.

An acquisition by JetPay Corp. (Nasdaq: JTPY) will help a North Texas payment processing business grow its annual volume and clientele.

JetPay Corp. announced last week its acquisition of CollectorSolutions Inc., a Pensacola, Florida debit and credit card processing company specializing in government agencies and utilities. Under the deal, CSI will merge with JetPay but remain a separate entity under the company’s corporate umbrella.

Headquartered in Berwyn, Pennsylvania, JetPay Corp. is the parent company of JetPay Payroll Services, JetPay Strategic Partners and Carrollton-based payment processing company JetPay Payment Services.

With the deal, JetPay Payment Services will work with CSI to expand its government, nonprofit and utility customer base. CSI will bring JetPay $700 million in annual credit and debit card processing volume and roughly $4.5 billion in annual e-check processing volume. Combined, the two businesses will serve more than 15,300 merchants across the country.

You look at where payments are growing, and one of the places is the government and public utilities space. There are still some government and utility organizations that don’t take credit cards, and CSI and JetPay can (add them as customers).

As with larger M&A deals in the payments industry, this one is all about increasing scale and size. Both companies specialize in the government and public utilities vertical market, which will give the combined entity an opportunity to offer added services and compete more aggressively with larger competitors.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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