Thursday, May 1, 2008
First Data is confident the acquisition will make it more efficient. "Clearly we'll be working through the detailed integration plans over the next few weeks and months, but I think the key point here is that this is really a growth story on both sides and not a consolidation story," said Mark Herrington, President of Prepaid Services at First Data.
"We're obviously extremely excited about what I believe is a very powerful combination because there is virtually no overlap between the two organizations," Herrington said. "The value of what both companies together bring to the market gives us the ability to deliver new and innovative products to our constituents."
First Data provides prepaid closed loop gift cards, fuel and payroll cards. InComm distributes stored valued gift cards as well as prepaid wireless products, reloadable debit cards, digital music downloads, games and bill payment solutions. Currently, InComm supplies stored value product marketing and technology solutions to international markets in Europe and Canada.
Both companies play different roles in these sectors. Consequently, the amalgamation of assets and experience creates a holistic prepaid suite that includes banking products, payroll solutions, and closed and open loop gift cards. Additionally, First Data anticipates expanded distribution for its own prepaid solutions to the small and mid-sized markets internationally and in the United States.
"Certainly it's going to enable us to have access to distribution of any new products that we develop internally," Herrington said. "That has been the barrier historically to our entry into the retail side of the equation, so this clearly opens up distribution for us for new products that we develop.
"We are very focused on deploying high value solutions to our customers, and I think a theme you should expect to hear over time is more about us driving a focus around core competence, product development and innovation. And InComm has a 15-year history of bringing new products to market – a lot of firsts, so it was a perfect fit as far as we were concerned."
First Data entered the prepaid market in 1995. The company expects this new alliance to improve its offerings particularly in the mobile payments arena. Herrington anticipates rapid deployment of chip enabled mobile phones over the next 18 to 24 months.
"Essentially we are invested in and have a deep domain expertise about the mobile payments landscape," Herrington said. "We're a payments company, so we are focused on being an enabler. We break it out into three areas – mobile banking, mobile payments and then marketing. We are looking at how we can bring value as a provider across all three of those offerings. The space certainly has a lot of runway ahead of it."
Herrington said First Data had been interested in expanding its prepaid space for "quite a while," and the acquisition of InComm was "based on market availability." Herrington will work directly with InComm's President and Chief Executive Officer, Brooks Smith, who will take over as head of First Data's Global Prepaid Services division when the transaction closes.
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