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Merchant Acquiring

EVO's New CEO, New Strategy Help Its Global Expansion

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Six or so interrelated events have aligned to help a U.S.-based independent sales organization expand into a global processor operating in 41 countries.

The process started about 18 months ago when Melville, N.Y.-based EVO Merchant Services began transforming itself into EVO Payments International LLC, mainly by holding a series of meetings with Deutsche Bank AG.

It gained momentum in January when James G. Kelly signed on as EVO CEO, bringing with him his extensive experience in international payments in his former job at Global Payments Inc. Ray Sidhom relinquished his title of EVO CEO but remained the company’s chairman.

James Kelly

James G. Kelly

By March, the talks progressed far enough that EVO began a formal relationship with Deutsche Bank in the United States. Last summer, EVO moved its U.S. merchant accounts to the Deutsche Bank platform.

EVO’s now working with Visa and MasterCard for certification as a standalone processor in the United States, Kelly says.

Meanwhile, EVO has acquired Deutsche Card Services from Deutsche Bank and is beginning a 10-year contract to support Deutsche Bank’s GTB Division in 39 countries across Europe. Until now, EVO has operated only in the United States and Canada.

“It’s the biggest footprint I’ve seen in my experience” and contains economic powerhouses that include Germany, the United Kingdom and France, Kelly says of the business the company is taking on in and around Europe.

“It goes as far as Iceland, down to Turkey, out to Poland,” he says.

EVO can operate in such a large number of countries because e-commerce will account for much of its business, Kelly notes.

In Europe, EVO will function as a payments services provider, or PSP, a category the European Union created about six years ago to allow institutions that aren’t banks to operate as acquirers or issuers, he says.

“We will not be an ISO in Europe,” Kelly says, “but we will be a payment institution for acquiring transactions across Europe and will no longer have that sponsorship designation. It’s like being a financial institution without being a bank.”

EVO is working to obtain regulatory approval to become a PSP, a process Kelly likens to appearing before the Federal Deposit Insurance Corp. in the United States.

Europe still uses ISOs for the most part, and becoming as PSP requires a much greater effort than becoming an ISO, Kelly says.

PSPs remain fairly new in Europe because the concept required a few years to gain traction, he says, noting that “a number” have been established recently.

As a PSP, EVO will have principle membership with Visa and MasterCard, he notes, and will be a processor in Europe as well as a PSP.

And it won’t be just any PSP.

In working with Deutsche Bank, EVO is joining forces with the world’s largest bank as measured in assets, which come to $2.8 trillion, Kelly says.

“Their business model is to support large multinationals and as a result they have offices and customers in many of these markets,” he says.

Size aside, Kelly still sees potential growth areas in Europe, including restaurants, health care facilities and schools – entities that tend not to accept cards there.

EVO has expanded organically in the United States – through sales instead of acquisition – and that approach should work well in Europe, Kelly says.

EVO’s expansion into Europe could eventually present opportunities abroad for other American ISOs, he says.

“Initially, our focus is to close the transaction and support Deutsche Bank in each of these markets, but we’ll own 100% of the equity in this business,” Kelly says. “If it made sense to support others in those markets or from the U.S. in those markets, we would entertain those discusssons at the appropriate time."

Despite the size of EVO’s expansion, the future could still hold more possibilities, he says. EVO could someday support Deutsche Bank in its Asian and Pacific markets, he notes.

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