Paya, formerly Sage Payment, modernizes its business model

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Sage Payment Solutions has spent most of the past half-year separating itself from its former parent company, Sage Group, a break that necessitated a new name as it changed its focus to sell a broader range of technology innovation for merchants and businesses.

"It's hard to talk to ERP [enterprise resource planning] companies when your name is Sage Payments Solutions," said Greg Cohen, president of what is now called Paya. "A lot of them are going to see it as competitive, and we're now doing more than just serving Sage's software."

The Reston, Va.-based Paya rebranded this week to distinguish itself from the U.K.-based Sage, an accounting, payroll and payment gateway company. GTCR, a Chicago-based private equity firm, acquired Sage Payment Solutions in June 2017 with the intention of serving a much broader base of clients, channel partners and merchant service providers who are hungry for a way to easily address trends such as faster payments, mobile technology, AI and other innovations.

Since the GTCR acquisition, which closed in August, Sage Payment Solutions operated as a standalone company. It has been retooling its product line, hiring new staff and prepping its relaunch.

The former Sage Payment Solutions offered credit card, ACH, check, gift card and loyalty card processing. GTCR has invested $360 million beyond the acquisition price to power Paya's diversification and expansion.

The relaunched company will target ISOs, ERP companies and payment facilitators. These companies can operate as resellers or refer directly to Paya, which will also target third-party developers and partner with other processors.

Mobile technology is expanding the ways merchants receive payments, and is making payments faster. Both of these trends require more flexible point of sale options, as well as more direct ties between payments and data management as the gap between selling and buying closes. These trends are also expanding to other kinds of businesses that move money, forcing payment gateways to partner, build and acquire to serve these needs faster.

"Merchants are responding to multichannel shopping that consumers are demanding to research, order and pay," said Raymond Pucci, associate director of research services for Mercator Advisory Group. "This impacts tech developers to provide solutions and applications to meet these needs."

The traditional processing industry is expanding horizontally through a series of big deals. TSYS spent $2.4 billion to acquire TransFirst in 2016, First Data spent $750 on CardConnect and Vantiv has also invested billions on new technology to integrate payments.

Paya will focus heavily on collaboration, including with other processors—it has struck partnerships with Vantiv and TSYS to expand ERP services to new geographic markets, for example, Cohen said.

An early opportunity will come from B-to-B automation, Cohen said.

"We're seeing demand for same-day ACH for B-to-B," he said, adding there's lots of space to for automation in B-to-B, where most payments are still paper-based. "There's a big value add for B-to-B, probably more than retailers," Cohen said.

Paya will still work with the U.K.-based Sage, operating outside of that company's corporate umbrella. Paya's original service — processing payments and posting the transactions into accounting system ledgers — creates a rich flow of data that can power marketing programs for third-party developers, merchants and other companies.

"It can go into more business segments than just retail, to anyone who has a valued for a combined card and ERP type offering," Cohen said. "That gets you more into a biller-focused market."

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