By Mark Brousseau
You might have been surprised to hear this morning that long-time remittance and lockbox solutions vendor JB Software, Inc. is being acquired by India-based 3 i Infotech Ltd.
3 i Infotech signed a deal to acquire the TAWPI Hall of Fame member and its units for $25.25 million in cash, according to a Dow Jones report. The move will give the Indian company a greater footprint in the payments processing business in the U.S.
“This company has a payments processing product which is well accepted in the U.S. market. We expect strong growth for this product in markets outside the U.S. as well,” 3 i Chief Financial Officer Amar Chintopanth told the Dow Jones Newswires.
While Chintopanth might be expecting growth for JB Software, several industry watchers I spoke with today are anticipating more consolidation among remittance solutions vendors. “I expect to see continued consolidation among the remittance solutions providers, fueled by the growth opportunities offered by remote deposit,” Creditron President Wally Vogel (wally_vogel@creditron.com) told me, noting that JB Software was only an occasion competitor to Creditron, which was acquired this summer.
“Remote deposit, integrated with the accounting functions of remittance processing, provides a powerful tool with business implications for accounting application providers, banks, large corporations and remittance technology companies,” Vogel said. “There is an intersection of opportunities for these diverse players that makes this an exciting time for our market.”
Steve McNair (mcnairs1@aol.com), president of FTP Consulting Services, Inc., in Southlake, TX, also expects more consolidation among remittance solutions providers. Going forward, he believes we could see more end-user interest in payments outsourcing than in remittance software license sales.
“This deal is significant because it’s further evidence of the consolidation of the remittance market,” McNair told me. “What’s also interesting is that the deal is with an international company with little background in remittance processing. Given that, I’m wondering whether JB Software will be changing focus towards global engagements, and specialized processing efforts, such as government and custom applications.”
To that end, McNair said 3 i Infotech, by virtue of being based in India, could likely provide JB with the people necessary to deliver on custom programming efforts.
Clint Shank (cshank@sortlogic.com), president of Omni-Soft, Inc., the parent company of SortLogic SYSTEMS, sees this deal as part of a worrisome larger trend. “In my view, our market is eating itself from the inside out. The big sales based on big hardware and expensive software are gone, and in their place is a commodities market,” he said. "The folks that did well in the past are falling flat in this market. For instance, how long was IBM the most dominant player in our market? Forty years? Fifty years? What does it mean now that they aren’t even present? Look at BancTec and you see pretty much the same thing.”
“What we are experiencing is a real sea change,” Shank continued. “The big players are too slow to respond to an overnight shift in the market and the new guys are filling the void. It used to be that the big ate the small. Now it’s the quick that eat the slow.”
The question everyone I spoke with was asking was: “Who is the next to be eaten?”
What do you think? E-mail me at m_brousseau@msn.com.
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