Peter Neubauer, CEO of PayLife Bank, the Austrian domestic
processor, is to end its relationship with First Data in 2010 after
signing new issuing and acquiring deals.
PayLife, which processes, issues and acquires for Austrian
banks, has linked up with SIX Card Solutions, the Swiss processor
formerly called Telekurs Card Solutions, to provide acquiring and
issuing processing for the debit sector. SiNSYS, a processing
business owned by SIA-SSB and Atos Worldline, will take over
PayLife issuing processing for the credit and prepaid sector. The
deals were decided after an 18-month internal review at PayLife,
during which it looked at the changing landscape of the payments
industry in Europe, particularly regarding the Single Euro Payments
Area (SEPA), to establish what strategy to pursue.
Neubauer told CI: “This has to be considered in the
wider SEPA context. The specific European developments were drivers
for this decision. We were looking for businesses which on one side
could provide relevant services at good prices and on the other
side we chose platforms, especially on the issuing side, which
would have a good chance of surviving in the SEPA environment.”
SIX Card Solutions will provide clearing for PayLife’s 106,000
merchants and process the Austrian Bankomat business, as well as
processing the transactions on 7 million Maestro Bankomat debit
cards. SiNSYS is to be responsible for around 1.1 million credit
cards serviced by PayLife.
PayLife, which was known as Europay Austria
until a rebrand in September last year, has issued over 8 million
payment cards in total. It is the largest domestic acquirer in
Austria, with a market share of 80 percent, mainly in debit.
Domestic debit in the country was Bankomat before being converted
to Maestro ten years ago. PayLife used to be sole acquirer for
Maestro in Austria, but now has stiff competition, according to
Neubauer. It has a card issuing business with 700,000 cardholders
in Austria, most of which have MasterCard cards, and it also offers
issuing support to the country’s banks. Banks issue the cards, and
PayLife provides the back-office services.
It is one of a number of similar companies which were set up
across Europe by banks to promote the use of cards and electronic
payments. These businesses are coming under increasing pressure as
SEPA gradually breaks down the barriers between countries in the
payments industry and exposes them to outside competition. Under
SEPA, merchant acquirers are able to operate cross-border more
easily to compete with monopolies in domestic acquiring markets.
These cross-border acquirers have an advantage over domestic
players like PayLife because they allow multi-national merchants to
work with one central acquirer rather than different acquirers in
each of the countries in which the merchant operates.
Neubauer said: “This is the reality and the reason we chose a
partner with a platform fully capable of supporting ourselves in
such strategic moves, and it gives us comparative advantage in
terms of functionality and seamlessness in providing acquiring
service to merchants, which will be key in the future.”
PayLife’s 18-month strategic review of the industry identified
two main factors in the future payments landscape. Firstly,
according to Neubauer, processors need to focus on cost reduction
for the business to remain economical as the industry increasingly
becomes a scale business. Secondly, processors need the
functionality to support customers.
He added: “I can also say from our own experience from some
merchants we have accompanied cross-border that every single market
has its specific challenges for the merchant and also the acquirer.
Everywhere it’s a different story, with interchange, the available
level of technology, the sheer competitive situation in the
retailing area. You have to be very flexible, which is why we chose