In an effort to reach more merchants, U.S. Bank is hoping its acquisition of payments company Talech will help it fuse payments with other day-to-day business functions through a single point of entry. Talech, a seven-year-old payments software company based in Palo Alto, Calif., offers a software solution that lets businesses integrate multiple tasks — including order management, inventory, staff reporting and customer management — in one point-of-sale system. Terms of the acquisition, which was confirmed on Monday, were not disclosed.
According to Brian Mahony, chief strategy officer at Elavon, a wholly-owned subsidiary of U.S. Bank that offers merchant services to customers in the U.S., Mexico and Europe, buying Talech will help the bank extend its reach among small- and medium-sized business customers, including those who want to seamlessly offer products and services online and offline. Talech currently serves more than 8,000 restaurants, retailers and professional services companies representing $2.3 billion in payment processing volume.
“The vision is of being a digital leader and serving businesses of all shapes and sizes, and this particular acquisition is aimed squarely at small and mid-sized businesses,” Mahony told Bank Innovation. “The software that [Talech] uses to run their business will have financial services embedded [in it],” he added, noting that the software offers a single point of access for an array of functions that previously needed to be handled through separate tools and workflows.
U.S. Bank’s Talech acquisition comes as payment providers (both incumbents and new entrants) quickly add new capabilities to point-of-sale systems in order to gain inroads to the small- to medium-sized business market. For instance, in August, Square rolled out an Orders API, a feature that allows sellers to manage fulfillment logistics from within the Square ecosystem. This added to Square’s existing product suite for small businesses, including APIs that correspond to customer and employee management, inventory and catalogs.
For Elavon, a secondary objective is to enhance the offering as a means to appeal to customers outside of the U.S. market. “This is an offering that we will make available to other distribution channels as well,” Mahony noted.
In a crowded field, however, U.S. Bank will need to differentiate. “Many companies are trying to do the same thing,” said David True, partner at payments consultancy Paygility Advisors. “A lot of this comes down to ‘feet on the street’ and getting your sales force educated on why your [solution] is better than the other ones.”
Despite the hurdles, the breadth of U.S. Bank’s business customer reach, along with the talent from Talech, will help it guard against competition, according to Christine Barry, research director at Aite Group. “[Businesses] struggle with different systems and multiple logins, and this acquisition addresses both of those challenges,” she said.
As for its ability to go head to head with startups, trust in an established institution will likely factor in U.S. Bank’s favor. “Fintechs might be faster, but merchants will trust financial institutions and very often prefer going to banks,” Barry said.
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