The banking technology outsourcing provider Fiserv Inc. of Brookfield, Wis., has expanded into merchant processing.
Fiserv Credit Processing Services of Lake Mary, Fla., is working with Primax Payment Systems, a credit and debit card transaction processor. The relationship enables Fiserv's customers to act as merchant acquirers, with Primax processing the transactions.
Patricia Hewitt, the vice president of business development for Fiserv Credit Processing Services, said Thursday that Fiserv and Primax have been working together for a few months, but her company did not formally introduce the service until last week.
Ms. Hewitt said that Fiserv has not previously offered merchant processing, but "our bank card clients have asked us for the opportunity to provide merchant services, under the auspices of Fiserv, to their clients."
Fiserv is well known for its acquisition strategy, and has also been known to eventually buy out companies with which it has partnered. Ms. Hewitt said that Fiserv has no current plans to buy Primax, though she added that it is always on the lookout for potential acquisitions that will add value.
"Right now we feel this is the best way for us to answer the need" for merchant processing service, Ms. Hewitt said.
Analysts viewed Fiserv's move as a way to cross-sell more products.
Offering merchant processing is "really is a play to address the small-business market - or a play for Fiserv's clients to address the small-business market," said Madhavi Mantha, a senior analyst of with the Boston market research firm Celent Communications LLC.
Ms. Mantha said that the larger merchant processors have typically been more interested in larger merchants, and that the small-business market is underserved. Fiserv's customers are typically small banks, and she said that Fiserv's merchant service is "enabling smaller banks to offer a range of services that have traditionally been the domain of larger banks."
Though small merchants' have less transaction volume than large merchants, profit margins can often be much wider, because the small companies have less leverage to demand low interchange rates, Ms. Mantha said.
Aaron McPherson, the manager of payments research at Financial Insights Inc. of Framingham, Mass., said that Fiserv's bank customers could use the service to capture both the card issuing and merchant processing sides of a transaction. Large banks are already moving in this direction, and he said that smaller banks are trying to follow suit.
John Kraft, an analyst for D.A. Davidson & Co., said Fiserv and other vendors are trying to offer more products to their customers. "The banks that we talk to, more and more are saying, 'We'd prefer to deal with fewer vendors.'"
