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January 8, 2008

Metavante gains strength in Europe via Nomad acquisition

US-based banking and payments technology provider Metavante Technologies has announced the £29 million ($57.4 million) acquisition of UK card processor Nomad Payments.

By Verdict Staff

US-based banking and payments technology provider Metavante Technologies has announced the £29 million ($57.4 million) acquisition of UK card processor Nomad Payments. The move establishes Metavante in Europe, giving it a European centre of operations, a blue-chip client base, a high-volume processing platform and an established sales channel.
Nomad, a provider of prepaid and debit card processing and licensed software, is well positioned in the fledgling European prepaid payment markets. Prepaid card usage in the continent is expected to rocket to €375 million ($557 million) by 2010, a 600 percent increase from 2005, according to research and advisory company TowerGroup. Nomad will now operate as Metavante Technologies. It offers gift cards, money share cards and general-purpose prepaid cards that can be used as an alternative to a bank account.
Donald Layden, president of Metavante International Group, said: “Metavante’s extensive experience in prepaid processing is complementary and easily transferable to the UK and Europe. It also offers a rich opportunity to expand the prepaid processing value chain by offering synergistic Metavante services such as closed-loop and loyalty programmes, and fraud monitoring to the UK and European markets.”
Metavante also announced its full-year results this month, showing net income down 69.1 percent from $160.1 million to $49.5 million, mainly from charges. It took a $101.1 million reduction in goodwill related to its Image Solutions Division because of “updated expectations for long-term financial performance of that business”. Revenue was up 6 percent from 2006 at $1.6 billion.
In its Payment Solutions Group segment, which includes the company’s credit, debit and prepaid card management suites, net income rose 8 percent to $276.8 million from $256.7 million. As well as the acquisition of Nomad, it bought Bensoft, known in the market as RepayMe, a software company that aids the administration of benefits.
CEO and president Frank Martire said the outlook for 2008 was of “solid revenue growth, enhanced profitability and strong cash generation”. He added that while Metavante’s bank clients faced spending constraints and consumer payment transactions could fall, he was cautiously optimistic because of the business’s diversified product and service offering.
The Nomad deal is expected to add around 1 percent to Metavante’s 2008 revenue and to have no significant impact on the company’s profitability in 2008.
Metavante expects the main market opportunities in Europe to be financial institutions, retailers, government agencies, programme managers, open-loop gift cards, professional organisations and affinity groups.
Gareth Lodge, senior analyst with TowerGroup, said: “Prepaid cards as a direct substitute for today’s cash and cheques and give Europe’s banks an ideal mechanism to achieve efficiencies after SEPA is in effect.”
Metavante Technologies is the parent company of Metavante Corporation, which delivers banking and payments technologies to around 8,600 financial services firms and businesses across the globe. Metavante also owns the NYCE ATM network, an interbank network connecting cash machines owned by various financial institutions, which it bought from US processor First Data for $610 million in 2004. It recently signed a deal with Discover Financial Services to integrate the system with Discover Card transactions (see CI 392). Metavante was floated on the New York Stock Exchange in November 2007 and spun off by Wisconsin’s biggest bank, Marshall and Ilsey.

Nomad’s operations

Nomad started in 1991 as a card payments software provider and established a payment division in 2005. Its clients include Bank of Ireland, Clydesdale Bank, Newcastle Building Society, IDT Financial Services and Tuxedo Money Solutions. Its has also licensed its software to Société Générale, ING Ukraine and Romania, EFG Eurobank (which operates in Poland, Romania and Serbia), and Poland’s Bank Zachodni WBK.

Nomad initially processed debit cards before offering open-loop prepaid capability to clients through Cortex, its prepaid card software.
John Yeomans, Nomad president, said: “Joining an established and successful prepaid processor like Metavante will enhance Nomad’s products and services, and enable them to be offered to a wider range of clients throughout the UK and Europe. Our company will greatly benefit from Metavante’s financial strength and established credibility with financial institutions.”

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