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TSYS' ProPay Purchase Vaults It into the Small-Merchant Market

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When Total System Services Inc. closes its deal in the next month to acquire ProPay and its various payments services, the payment processor will have a new "Square-like" look and feel to ramp up its merchant acquiring business. 

TSYS has made it known that it wanted its own mobile card reader to compete with Square. Although ProPay's ProPay Jak device fits the bill, TSYS didn't bring ProPay into its fold "just to have something Square-like," says Mark Pyke, president of the merchant services segment for Columbus, Ga.-based TSYS. 

Pyke says a new "vertical market with direct selling" is likely to be the key addition to the TSYS menu after purchasing ProPay.

Mark Pyke

Mark Pyke

ProPay has established a solid business as an independent sales organization, offering merchants self-enrollment and instant activation for card acceptance.

"This is a new selling method for TSYS, plus it gives us exposure to micro merchants, which is a hot space," Pyke says.

As a long-time TSYS client, ProPay has developed many online and offline payments capabilities that connect with ease to TSYS' technology, Pyke says.

ProPay considers itself a merchant account and payment services provider as well as a technology and data security provider, says ProPay president Greg Pesci.

"ProPay has been a customer of TSYS for at least 12 years and we have had exposure to the TSYS teams and their capabilities," Pesci says.

That familiarity has resulted in ProPay becoming "a huge fan of TSYS" always with an intention to consider a way to develop a deeper business relationship, Pesci says.

The acquisition clearly illustrates that TSYS intends to keep the momentum it has built in the last year and a half to move forward in the merchant acquiring space, says Brian Riley, senior research director and analyst with Needham, Mass.-based CEB TowerGroup.

"The ProPay acquisition gives TSYS some real ballast, and definitely a strong digital play," Riley says. "ProPay has a lot of the mobile card-reader dongles out there, which adds a strong sector for TSYS."

When the deal is officially closed, ProPay will become a unit of TSYS, continuing to operate out of its current headquarters in Lehi, Utah, where the company has operated since 1997. ProPay currently processes for approximately 250,000 small and micro-merchants.

"We are committed to the team ProPay has," Pyke says. "ProPay is not an overnight success and, culturally, the company is just a good fit for us."

Riley says TSYS rarely stubs its toe with business maneuvers.

"TSYS tends to move slowly, but very calculated," Riley says. "ProPay opens a whole different world for TSYS, but they have worked together a long time and they know how the processing channels work."

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