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July 2014

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Payment Processing Financial Tech Sprouts Big Growth Firm

Urvaksh Karkaria
Staff Writer-

Atlanta Business Chronicle

An Alpharetta, Ga.-based financial technology company plans to invest in an expansion that will add more than 100 jobs.

Priority Payment Systems LLC, which provides credit card processing, electronic invoicing and other electronic payment services, is seeing a surge in demand for its payment services and data analytics products, as commerce and payments go digital.

Priority Payment's customers includes banks, retailers, restaurants, hotels, car dealerships and health-care companies.

The trend toward moving financial transactions from paper to digital is driving demand, CEO John Priore said.

"Companies are looking at their accounts receivable and accounts payable departments, and saying there's a more efficient way to manage their transaction volume," Priore said. Priority Payment, which did not disclose revenues, was launched in 2005 by Priore and five others.

To keep pace with demand, the company is expanding its office footprint more than 40 percent to 75,000 square feet.

Priority Payment, which funds its growth through its own profits, is part of Atlanta's blooming financial technology ecosystem that includes more than 90 fintech companies. Four of the top 20 American Banker FinTech 100 companies are headquartered in Georgia: NCR Corp., First Data Corp., Total System Services Inc. (TSYS) and Equifax Inc.

More than 60 percent of companies in the payment processing industry call Georgia home. And, about 70 percent of all U.S. payments processed annually run through the state.

The financial technology sector is an economic development priority for Alpharetta, because it is a fast-growing industry that creates high-paying, white-collar jobs, said Peter Tokar, the city's economic development director.

In February, financial software maker Fiserv Inc. said it plans to add 500 jobs in Alpharetta, and move more than 2,000 jobs from Gwinnett County.

Alpharetta is well-suited for data-heavy fintech companies because the region has robust fiber optic infrastructure and a redundant power grid.

Payment processing and financial transactions require fast connections, and the network in Alpharetta has 60 percent faster download speeds than the national average, Tokar said.

Alpharetta is an excellent place to grow a tech company, Priore said, noting the area's deep pool of technology and the company-building talent needed to fuel fast-growing companies.

For Priority Payment, which employs about 450, growth comes organically and via acquisition. Priority Payment is on a buying spree — having done 11 deals in the past four years — to gain market share.

Most recently, the company acquired New York payment services provider Cynergy Data LLC for an undisclosed amount.

As part of the deal, private equity firm and Cynergy investor Comvest Partners will invest in Priority Payment.

The acquisition strategy is aimed at entering new product lines or targeting new types of customers.

Priority Payment has done deals to increase its share of community bank customers and to expand its capabilities in ACH (Automated Clearing House) processing.

"It was always part of our strategy to obtain scale in the marketplace," Priore said.

Acquisitions not only increase the revenue stream by adding customers, it also helps retain existing business.

"We want to go to our existing base of merchants [and] help retain them by offering services that will help them generate more revenue," Priore said.

Industry consolidation is also fueling acquisitions.

"There is a tremendous amount of capital required into maintaining security and regulatory compliance," Priore said. "Because of that you're going to see some consolidation."

A maturing industry is also driving consolidation. Some competitors have seen growth plateau and are looking for exit opportunities, creating M&A opportunities.

Going forward, Priority Payment plans to expand its presence in the health care, education, property management and utilities sectors, Priore said.

Urvaksh Karkaria covers Technology.

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