EVO Payments, Inc. operates as a global merchant acquirer and payment processor.
The company services more than 700,000 merchants and processing approximately 4.9 billion transactions annually. The company helps enable electronic commerce globally with local operations in 13 countries and the ability to serve over 50 markets around the world.
The company focuses on delivering products and services that provide the most value and convenience to its merchants and their customers. The company’s p...
EVO Payments, Inc. operates as a global merchant acquirer and payment processor.
The company services more than 700,000 merchants and processing approximately 4.9 billion transactions annually. The company helps enable electronic commerce globally with local operations in 13 countries and the ability to serve over 50 markets around the world.
The company focuses on delivering products and services that provide the most value and convenience to its merchants and their customers. The company’s payment and commerce solutions consist of its core proprietary products and services, value-added solutions, and services that the company enables through technical integrations with third-party providers. Its global footprint and ease of integration attract new partner relationships, allowing the company to develop a robust integrated solutions partner network and positioning the company to stay ahead of major trends in each of its markets.
The company operates three proprietary, in-house processing platforms, all connected via its EVO Snap solution and each supporting a different geographic region. EVO Snap provides a technical connection to the company’s regional processing systems and a central point of integration for all third-party product partners. Importantly, the company’s platforms allow it to address the unique needs of specific payments markets and to control the entire customer experience. In-house processing also allows the company to directly address merchant and regulatory concerns regarding the flow of cardholder data and other sensitive information.
Due to the company’s broad distribution, diversified product offering, leading tech-enabled solutions, and client service, it is able to build strong relationships with its merchants and referral partners. These merchants rely on its product offerings, including the company’s payment processing, on-boarding, underwriting, technical support, secure infrastructure, and settlement services, and its technology is often heavily embedded in the company’s merchants’ infrastructure.
As an intermediary between merchants and card networks, the company collects a series of fees primarily driven by the number, type, and value of transactions processed. These merchant service fees are then split into three components: fees remitted to the financial institution that issued the card (interchange), fees remitted to the card networks, and fees retained by EVO. In addition, the company generates fees for products and services provided to capture transactions, value-added services and more advanced technology solutions that the company provides to its merchants.
The company has operations in 13 countries and the ability to service merchants in more than 50 markets around the world. Its customers include large national and multi-national corporations, as well as SMEs spanning across most industry verticals. The company’s global merchant footprint is diversified among retail, restaurants, petroleum, government, and transit industries, among others.
Segments
The company classifies its business into two segments: the Americas and Europe. In both of its segments, the company provides its customers with merchant acquiring solutions, including integrated solutions for retail transactions at the physical and virtual POS, as well as B2B transactions.
Americas
The company’s Americas segment includes its operations in the United States, Canada, Mexico, and Chile. In the United States and Canada, where card penetration rates are among the highest in the world, the company is focused on driving growth from the changing trends in payment technologies, including the increased adoption of software at the POS for retail and B2B transactions.
For the year ended December 31, 2022, the company processed approximately 1.1 billion transactions in the Americas.
Europe
The company’s Europe segment includes its operations in Poland, Germany, Ireland, the United Kingdom, Spain, and the Czech Republic, as well as the company’s support of merchants in surrounding markets. The European merchant acquiring market has certain structural characteristics, such as accelerating cash-to-card conversion, including regulatory support for digital payment acceptance, increased tech-enabled payments adoption, bank-centric acquiring models, significant penetration of local debit networks, and terminal-centric SME markets, which provide the company with future opportunities for growth.
For the year ended December 31, 2022, the company processed approximately 3.8 billion transactions in Europe.
Products and Services
The company offers a comprehensive portfolio of card-present and card-not-present payment solutions for a variety of industry types and business sizes to facilitate merchants accepting credit, debit, prepaid, digital wallets, and other alternative payment methods. Its portfolio of solutions includes EMV, chip and signature enabled POS terminals, virtual POS terminals for desktops, mobile acceptance and mobile point-of-sale (mPOS) solutions for mobile devices and tablets, software-based POS solutions, online hosted payments, and integrated payment service provider (PSP) solutions for card-not-present bankcard, direct debit, and alternative payment scheme processing. The company also offers value-added solutions, such as gateway solutions, online hosted payments page capabilities, mobile-based short message service (SMS) integrated payment collection services, security tokenization and encryption solutions at the physical and virtual POS, DCC, ACH, Level 2 and Level 3 data processing, management reporting solutions, loyalty programs, and Visa Direct, among other ancillary solutions. Other industry-specific processing capabilities are also in the company’s product suite, such as recurring billing, multi-currency authorization, and cross-border processing and settlement.
The company’s solutions enable merchants of all sizes to accept digital payments, including credit and debit cards, closed loop gift cards, pre-paid cards, ACH, and other alternative payment methods. This spectrum of solutions includes:
EMV chip, magnetic swipe readers, contactless, chip and signature, chip debit, and gift services for hardware terminals;
The company’s mPOS solutions and services, including mobile SMS payments solutions;
Integrations to various ERP systems to provide accounts receivable departments with B2B payments options and automated reconciliations;
A variety of eCommerce solutions, including gateway and PSP products, online hosted payments pages, payment links, shopping cart-plug-ins, and virtual terminals;
Comprehensive real-time digital and signatureless merchant boarding systems (from application to merchant processing);
Market-specific business models for partners, including PSP and referral programs; and
Online reporting systems for partners, integrators, and merchants providing access to the company’s platforms worldwide.
In addition, as a merchant acquirer, the company provides in-house customer service utilizing in-market call centers, as customers need to be served locally in market. The company also has developed a consolidated shared services operational capability for back-office services, including credit underwriting, risk, chargebacks, and terminal deployment and repair. Its capabilities also include a regionally-based merchant boarding system, risk management, and ISV technology development centers, supporting the Americas and Europe.
The company’s diverse offerings are supported by its two unique underlying global products, EVO Snap and the company’s proprietary customer relationship management (CRM) solutions. EVO Snap is a highly customized, EMV compliant technology platform that allows merchants to easily access the company’s key POS-related products in all of its markets with one single integration, including core processing and value-added services (e.g., ACH, Level 3 processing, and DCC). The company’s merchants and partners benefit from a single global certification and common interface in the Americas and Europe, a key feature for retail and eCommerce merchants and referral partners with a global customer base. This common application programming interface (API) allows ISVs and developers to seamlessly integrate to EVO Snap and access all of its new features.
The company’s global CRM solutions enable all merchants, whether they are recruited through its financial institutions, direct sales, or partner channels, to be seamlessly managed throughout the merchant lifecycle. The company provides all partners and agents access to these tools to ensure effective digital customer lifecycle management by streamlining the boarding and management of merchants and supporting its digital payment product and service solutions.
Seasonality
The company typically experiences seasonal fluctuations in its revenue, which can vary by region. Historically, in both the Americas and Europe, the company’s revenue has been strongest in the fourth quarter (year ended December 2022) and weakest in the first quarter as many of the company’s merchants experience a seasonal lift during the traditional vacation and holiday months.
Sales and Distribution Network
Within each segment, the company has developed a diverse network of sales distribution channels to drive growth for its merchant portfolio. Leveraging the company’s global direct sales force, the company targets merchants across a wide variety of countries, industries, and sizes. Strategic investments in new products and distribution channels and the seamless introduction of these capabilities to its global markets are central components of the company’s growth strategy. These sales distribution networks consist of its Tech-enabled division, which includes the company’s independent software vendor (ISV), B2B, and eCommerce businesses, as well as the company’s Direct and Traditional divisions.
Tech-enabled
The company’s Tech-enabled division represents its relationships with merchants requiring a technical integration at the POS between the company and a third party software solution whereby the third party passes information to the company’s systems to enable payment processing. These merchant acquiring arrangements are supported by its direct sales force, as well as partnerships with ISVs, integrated software dealers or resellers, and eCommerce gateway providers. In the United States, the company’s Tech-enabled division also includes its B2B business, through which the company provides integrated solutions to enterprise resource planning (ERP) software to enable companies utilizing this software to accept digital payment methods from their business customers. The company’s B2B relationships are supported by its proprietary solutions sold directly to merchants and via ERP software dealers or resellers. The company has emerged as a preferred partner for these third-party referral partners because of the ease of integration through its proprietary solutions, high merchant satisfaction levels driven by the quality of its service, and the ease and speed of the company’s boarding systems for new merchants.
The company’s network of over 1,500 integrated partnerships allows the company to target a range of merchants, including SMEs and larger merchants, such as corporations and multi-national customers, who desire an integrated software solution for their physical locations, an eCommerce gateway solution for their virtual storefronts, and sophisticated integrations to ERP systems to enable digital payment acceptance for B2B transactions. The company’s proprietary eCommerce capabilities and eCommerce referral partners, as well as the company’s differentiated B2B product offerings, including payment integrations to top-tier and industry-specific ERP systems, enable the company to target larger merchants across its domestic and international markets.
ISV: The company’s integrated payments solutions are embedded into business management software solutions owned or licensed by the company’s tech-enabled partners, which span numerous industry verticals and geographic markets. The company grows its ISV business by enabling digital payments acceptance through business management software solutions for new and existing merchants, leveraging its tech-enabled referral network, and its direct sales force. The company has invested and continues to invest in infrastructure that allows software providers, including dealers and resellers, to offer its proprietary integrated payment solutions to merchants across all of its markets. These investments include enhancing the company’s infrastructure, as well as strategic acquisitions of integrated technology solutions. The company’s EVO Snap platform’s simple yet powerful connection point provides software developers and their partners access to its three processing platforms—thereby allowing merchants to accept various payment methods across all of the company’s geographic markets.
In July 2021, the company acquired Anderson Zaks Limited, an omni-channel payment gateway provider in the United Kingdom to expand its tech-enabled capabilities and broaden the company’s ISV network in the U.K. and across Europe for merchants in key retail verticals, including hospitality, pharmacy, venues, ticketing, and general retail, among others.
B2B: The company offers B2B solutions, which combine its payment processing capabilities and business automation software through its market-leading PayFabric gateway to simplify digital payments acceptance for the company’s merchants’ business-to-business transactions. In addition to the company’s processing capabilities, it offers various interchange management solutions, reporting solutions and other business automation tools to merchants, particularly larger companies with complex payment needs. As a result of its strategic acquisitions and internal development, the company is able to offer its solutions to Microsoft, Oracle, Sage, Acumatica, and SAP merchants leveraging its certified native integrations, as well as merchants utilizing various industry-specific business management solutions through the company’s custom integrations. The company’s investments in the development of its B2B PayFabric gateway have also enabled the company to offer these merchants proprietary payment solutions for retail eCommerce transactions.
In May 2022, the company acquired North49 Business Solutions, Inc., a certified Sage development partner based in Canada, to provide enhanced B2B integrated payment solutions for Sage customers.
eCommerce: The company’s eCommerce solutions enable its merchants to securely and seamlessly accept various payment methods in any of its markets. The company is able to deploy its proprietary eCommerce gateway solutions to merchants of all sizes across its global footprint through its direct sales and tech-enabled referral networks. The company provides proprietary, regionally designated eCommerce gateway solutions across Europe, Latin America, and the U.S. The company will continue to expand its eCommerce offering, particularly in its international markets, through strategic acquisitions and continued investments in the company’s proprietary and related solutions that align with customer preferences and local government requirements. For example, in August 2022, the company acquired certain technology assets that include shopping cart and website design software that expands its proprietary eCommerce capabilities in Mexico and Chile and decreases the company’s reliance on third parties, and in December 2022, the company acquired Electronic Data Processing Source S.A., a leading merchant service provider in Greece to enhance tech-enabled capabilities. Additionally, in June 2021, the company acquired Pago Fácil, a leading eCommerce payment gateway in Chile that offers an array of digital payment solutions, including acquiring services, eCommerce software integrations, and value-added solutions that the company will leverage across Chile and Mexico.
Direct
The company’s Direct division primarily represents the direct solicitation of merchants through international bank relationships and certain other referral sources in the U.S. and is supported by the company’s worldwide direct sales force. In its international markets, the company has long-term, exclusive referral relationships with leading financial institutions that actively pursue new merchant relationships on its behalf. As part of these relationships, the company targets large merchants through a coordinated sales approach with its financial institution partners.
These financial institutions, including Deutsche Bank USA, Deutsche Bank Group, Grupo Santander, PKO Bank Polski, Bank of Ireland, Raiffeisen Bank, Moneta, Citibanamex, Sabadell, Banco de Credito e Inversiones (BCI), and the National Bank of Greece S.A. (NBG), among others, often provide the company with access to their brands, significantly enhancing the company’s credibility and recognition in the marketplace. In several markets, the company operates with more than one financial institution partner. The company also has referral arrangements with a limited number of independent sales organizations (ISO) that refer merchants to the company.
In December 2022, the company commenced operations in Greece through its joint venture and exclusive referral relationship with the National Bank of Greece.
The company utilizes a dedicated sales team, including outbound telesales, to build and maintain relationships with its merchants, referral partners, and international bank referral network. The company has a long history of operating as a direct sales organization and has succeeded by pursuing merchants through its direct sales efforts and retaining merchants by delivering high levels of customer satisfaction. The company views its direct sales force as complementary to its financial institution relationships, as its direct sales force generates new merchant opportunities in addition to the referrals the company receives from its various partners.
A key component of the company’s Direct division is its highly customized lead management, merchant boarding, and risk management software tools. These technologies allow the company to quickly and efficiently accept new merchant leads from sales representatives and bank partners, digitally onboard merchants, and manage transaction risks. In both the financial institution referral model and through the company’s direct sales team, the company builds and maintains a direct relationship with its merchants in order to control its sales, pricing, underwriting, boarding, and support processes.
The company’s Direct division is its largest division as its international markets are dominated by referrals from the company’s financial institution partners.
Traditional
The company’s Traditional division is its heritage United States portfolio and is consisted primarily of dormant commercial relationships with independent sales agents, ISOs, and other partners.
Growth Strategies
The company’s strategies include organically growing existing markets; supporting its existing portfolio and adding new customers; introducing its comprehensive, global set of payment and commerce solutions to its existing markets; leveraging its global infrastructure to service multinational and enterprise merchants; customizing solutions to meet in-market needs; expanding its global footprint; broadening its distribution network; and growing and enhancing its innovative payments and commerce solutions.
Intellectual Property
As of December 31, 2022, the company had two pending patent applications covering certain aspects of its proprietary technology, including its EVO Snap product, and new integrated product innovations. In addition, the company owns a portfolio of trademarks in multiple jurisdictions around the world, including for its primary mark, EVO.
Regulatory Environment
As a result of the implementation of the Payment Services Directive of 2007 in the EU, a number of the company’s subsidiaries in its Europe segment hold a PI license, which allows them to operate in the EU member states in which such subsidiaries and their branches do business.
The company is also subject to network operating rules promulgated by the National Automated Clearing House (ACH) Association relating to payment transactions processed by the company using the ACH Network and to various state federal and foreign laws regarding such operations, including laws pertaining to electronic benefits transactions.
The company and its clients are subject to various federal, state, and international laws prohibiting unfair or deceptive trade practices, such as Section 5 of the Federal Trade Commission Act.
The company is subject to anti-money laundering laws and regulations, including certain sections of the USA PATRIOT Act of 2001. The company is also subject to anti-corruption laws and regulations, including the U.S. Foreign Corrupt Practices Act (the ‘FCPA’) and other laws, that prohibit the making or offering of improper payments to foreign government officials and political figures and include anti-bribery provisions enforced by the Department of Justice and accounting provisions enforced by the Securities and Exchange Commission (the ‘SEC’).
The company is also subject to certain economic and trade sanctions programs that are administered by the Office of Foreign Assets Control (OFAC), which prohibit or restrict transactions to or from, or dealings with, specified countries, their governments and, in certain circumstances, their nationals, and with individuals and entities that are specially-designated nationals of those countries, narcotics traffickers, and terrorists or terrorist organizations.
In the EU, the company’s businesses are subject to requirements under the Fifth Money Laundering Directive ((EU) 2018/843), which has now been implemented in all European jurisdictions in which EVO operates.
Competition
In the United States and Canada, the company primarily competes with independent merchant acquirers, including Fiserv, Inc. (Fiserv), Global Payments, Inc. (Global Payments), and Fidelity National Information Services, Inc. (FIS), in addition to the merchant acquiring and processing divisions of certain financial institutions, including Chase Paymentech Solutions, LLC and Elavon, Inc. (Elavon), a subsidiary of U.S. Bancorp.
In Europe, the company competes primarily with Barclaycard, a subsidiary of Barclays PLC, Elavon, Global Payments, FIS, Fiserv, Nexi S.p.A. (Nexi), Worldline SA, and Polskie ePlatnosci, a subsidiary of Nexi, in addition to in-market financial institutions.
History
EVO Payments, Inc. was founded in 1989. The company was incorporated in 2017 as a Delaware corporation.
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