With merchant services provider Cayan firmly under its umbrella, Total System Services is prepared to venture deeper into retail acquiring and processing through Cayan's omnichannel Genius platform.
TSYS has provided payment processing and other services for small-business clients across many verticals, with its strongest emphasis on salons, wellness and health, including practices from dental to veterinary, and a growing business in field services, charity and education. But with the $1.05 billion acquisition of Cayan closed last week, TSYS is prepared to make good on what attracted the company to Cayan in the first place — the opportunity to expand in various verticals, especially retail.
"They are incredibly good at retail; very strong in stadiums, pharmacy, hardware, specialty clothing and others," Philip McHugh, executive vice president of TSYS and president of the TSYS merchant solutions segment said of Cayan's team.
Cayan's Genius omnichannel platform gateway will join the TSYS menu with the ProPay platform on the front-end of payment processing.
"Cayan has true omnichannel capability," McHugh said. "We are both in-store and online or mobile, but getting integrated in-store with the same software that does a gateway online is very hard to do. Cayan has done that."
TSYS has to "build up our online and in-app sales acumen," McHugh acknowledged. "But we now know we can do it pretty seamlessly with Genius."
Cayan co-founder and CEO Henry Helgeson has developed a reputation in the payments industry for keeping his company and its staff ahead of the technology curve. It was a significant factor in TSYS' due diligence to make an acquisition pitch to a company it felt could help technology development in the future. Helgeson will remain president of Cayan and report directly to McHugh.
"Even before I came to TSYS, I had met Henry and knew he was well known for his foresight and integrity," McHugh said. "Without a doubt, Henry and his Cayan team stood out for their culture and views in knowing this is becoming a software-driven business, not just a processing business."
As with any acquisition, TSYS will faces some challenges in absorbing Cayan.
Cayan clients currently process through First Data, but will be switched over to TSYS, a transition that historically has caused at least some ruffled feathers, said Paul Martaus, a merchant acquirer consultant and industry researcher at Martaus & Associates.
"Retailers notoriously don't like change, especially if they like what they currently have," Martaus said.
Still, TSYS made the move to acquire Cayan to also obtain the merchant services provider's skill at nurturing client relationships.
"Back when Cayan was [called] Merchant Warehouse, they did a lot of work with small merchants, with 90% of those relationships being kept in place by the salespersons, so they have strong relationships built," Martaus said. "But it's a quirky love-hate thing in this business where the merchant, even with a strong sales relationship, may still decide to stay with the processor he has."
TSYS knows this transition is an important and immediate task.
"We will work with merchants to make sure they are happy with the best outcome, and we want the Genius platform to thrive with any merchant, regardless of who they are using now," McHugh said.
Large processors have dealt with acquisitions that shift client bases in the past, and McHugh doesn't foresee issues with merchants processing with TSYS moving forward.
The acquisition of Cayan comes on the heels of Columbus, Ga.-based TSYS moving to strengthen sales and independent sales organization relationships, such as by increasing its shareholder stake in Central Payment.