As Australian banks move to offload or outsource their merchant acquiring businesses, a string of emerging payments companies are jostling to lure business customers with their service offers.
One of the new players starting to make an impression in the Australian market is Sydney-based Till Payments which acquired the merchant acquiring operations of Wirecard Australia two years ago.
Till, which was established in 2012 by CEO Shadi Haddad, is building a global merchant services capability with initial footings in the US, New Zealand and Canada.
Till is hoping to widen its presence in Australia following recent moves by Bendigo Bank and ANZ to outsource their merchant acquiring functions.
While Bendigo has farmed out its merchant business to Tyro, ANZ has formed a joint venture with French company Worldline to manage the delivery of acquiring services to its merchant customer base.
Under the new arrangement Worldline holds a controlling stake in the venture that is now approaching ANZ customers to sign new merchant contracts.
Till has embarked on an aggressive marketing campaign to win over ANZ merchants and business customers of the other major banks.
According to Till’s chief revenue officer Chris Hicks the market opportunity for his company is getting bigger as the major banks struggle to update their product and service offers.
“Our opportunity is huge,” he said.
“Banks are exiting the acquiring and payments space because they’ve decided they cannot afford the heavy capital expenditure to keep their merchant acquiring services up to date.
“Banks do banking well but payments is increasingly no longer part of banking.”
Till markets point of sale devices, along with gateway, online and mobile transaction services.
Hicks would not reveal how many Australian merchant accounts were on Till’s books, but he insists the company is expanding at a fast clip.
“We are scaling rapidly and becoming a significant player in the Asia Pacific region,” he said.
“We’re active and live in Australia, New Zealand, Canada and the US – our next big play is in South East Asia.”
According to Hicks, a point of differentiation with the major banks is Till’s ability to add payments functionality without burning a cost hole in the business.
He said the company was developing new services that would allow merchants to accept alternative payments instruments to settle transactions.
Till is also planning to issue debit cards, but the timing for a product launch has not been finalised.
Australian and US investors have poured more than A$140 million into funding the Till platform.
A successful capital raising in October last year resulted in the issue of convertible notes to a swathe of local and US private equity firms that included Woodson Capital, Avenir Growth Capital and Regal Funds Management.
According to ASIC records, the holding company - Till Payments Global Pty Ltd - is currently sitting on paid up ordinary capital of $57.1 million.
While Haddad appears to be the largest paid-up shareholder on the company’s register, a raft of Sydney fund managers also acquired direct stakes in the business towards the end of last year.
They include Scone Investments – an investment vehicle controlled by Paradice Capital Investments.
Paradice partner, Troy Angus, is a personal investor in Till, with a holding of 5171 shares worth $2.2 million.
Kolar Capital, a private investment company owned by First Sentier portfolio manager, Dushko Bajic, has $2.5 million on the line with Till.
Morry Waked, the managing director of Vinva Investment Management, owns 8391 shares in Till worth almost $3 million through a family-owned company.