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Monday, January 21, 2013

UBPS acquisitions further ambitious vision

In December 2010, payments industry entrepreneur Bipin Shah created Universal Business Payment Solutions Acquisition Corp. "to seek opportunities to acquire one or more 'platform' companies in the payment processing industry," according to the preliminary prospectus for the $72 million initial public offering filed with the U.S. Securities and Exchange Commission. Shah currently serves as UBPS Chairman and Chief Executive Officer.

In December 2012, UBPS completed acquisition of the Texas-based online card processor JetPay Corp. and the Pennsylvania payroll services company A D Computer Corp. In July 2012, UBPS also purchased the Ohio-based ISO Electronic Merchant Systems. In a 2012 investor presentation, UBPS reported it had paid $179 million for the three companies.

UBPS plans to use these investments as a platform from which it will continue to acquire related businesses and further consolidate the small-business payments industry, according to information provided to investors. The company stated it plans to acquire and consolidate in both the payroll industry, where there are 1,800 businesses servicing 56 million small business employees, and in the acquiring business, where approximately 1,000 merchant payment service providers are doing business with 8 million small businesses.

Shah's leadership is key to UBPS

Shah has significant experience in providing not only vision to enterprises, but also the guidance needed to turn vision into reality. Previously, he was:

  • Founder of payment processor Gensar Inc., which was sold to Paymentech (now Chase Paymentech Solutions LLC) in 1996
  • Founder of payment processing company Genpass Inc., which was sold to U.S. Bank in 2005
  • Developer of the Money Access Center network
  • Developer of a debit POS system
  • Developer of a pay-at-the-pump POS system
  • Developer of a restaurant tip management system
  • Director at Visa Inc.

Shah said he is building UBPS to create a "one-stop shop for the payment needs of businesses" by using and leveraging the existing infrastructure of banks and retailers in innovative ways to create value for consumers, retailers and stockholders. According to Shah, JetPay and A D Computer provide UBPS with technology platforms that are secure, scalable and flexible.

"They not only provide UBPS with a competitive advantage, but their current and future capability in mobile banking and cloud technology will enable UBPS to develop products and services that will only accelerate that advantage," Shah said. "With a combined $32 million in revenues in 2012, approximately 7,000 customers, and solid profitability, we have created a platform we believe will drive growth and profitability significantly faster than the industry."

A D Computer serves unbanked

Shah said the A D Computer platform will lower costs and be more convenient for client companies. Employees will be able to get cash; pay bills; and access financial services through payroll cards, mobile technology, cloud payment systems, ATMs and POS systems.

Many employees receiving paychecks are underbanked, Shah noted. These workers pay millions for check cashing and money transfer services every year. "Using our system, people can send money across borders using an ATM rather than pay $20 to Western Union," Shah said in a January 2013 interview with The Green Sheet.

In an investor presentation in July 2012, UBPS said there are nearly 10 million small businesses in the United States employing 70 million people. Those employees make up about half the entire U.S. workforce. The company estimated that they represent a $2.1 trillion payroll.

Shah said A D Computer delivers 100,000 paychecks, and half of the people receiving those checks do not have access to banking services. "That's 80,000 employees paying a ridiculous amount to cash their checks," Shah said. "UBPS gives access to financial services to people who don't have banking, checking or a credit rating."

JetPay provides in-house transactions

JetPay processes all its front-end authorizations and back-end clearing and settlement in-house for both card-present and card-not-present transactions. In 2012, the company reportedly processed more than 150 million transactions totaling an estimated $30 billion in sales volume.

Shah said JetPay will provide "newer technology and specialized processing like internet, cloud services, and mobile technology." JetPay can also deliver these products and services around the world "far faster than traditional providers," he added.

Prepaid cards are also integral to the UBPS business plan. Shah stated the company will have gift card, loyalty, prepaid, student cards, and payroll cards among its offerings. Shah said he believes more payroll will be moving to plastic soon.

UBPS also intends to market to small businesses with annual receipts of $500,000 to $1 million per year by delivering new products and savings. For instance, Shah said he has developed a system for restaurants to charge customers when they order takeout over the phone. He said an average 20 percent of to-go orders are never picked up. The new system protects the merchant from loss after the order is placed. end of article

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