South Portland-based Wright Express Corp. announced Friday that it has acquired the assets of rapid! PayCard, a privately held Tampa, Fla., company that provides payroll debit cards, e-paystubs and e-W2s.
Terms of the all-cash deal were not disclosed. Wright Express is a global provider of payment processing and information management services, with its core business in fleet management offerings.
The acquisition launches Wright Express into the growing business of payroll cards and gives the company a new offering for its existing customer base.
Wright has been researching the market for the last two years, Chairman and CEO Michael Dubyak told the Bangor Daily News, and he talked about moving the company into that space in the last earnings call.
Several factors play into Wright’s desire to expand into that sector. Statistics show there are roughly 60 million “underbanked” people in the United States, Dubyak said. At the same time, companies are looking to move away from cutting paper paychecks, and are heading toward direct deposit. A big bellwether in this trend came when Wal-Mart announced it would no longer issue paper checks several years ago.
Payroll cards are essentially ATM/debit cards that are not attached to a bank account. A company can give its workers the cards and directly deposit weekly pay onto those cards. Dubyak said the card is also ideal for temporary or seasonal workers, for interns, for contractors and the like – allowing a company to easily pay an employee without a lot of back-office paperwork. And Wright Express, through its new acquisition, is positioned to handle the transactions.
Wright has 285,000 businesses as customers in the United States, Dubyak said, ranging from fleet management for three-vehicle landscaper businesses up to clients such as AT&T and the federal government. Wright examined its customer base and found many of them were in industries that experts believe would be in the “sweet spot” for using payroll cards, said Dubyak. Those businesses have between 30 million and 40 million employees, he said, and even 10 percent of that base would be a good revenue stream for Wright.
Dubyak said he heard from one of his senior executives this week that the company has already sold an existing client on 1,100 payroll cards and other clients have been talking to Wright about their enthusiasm for the new offering.
The program is similar to the company’s Master Card program launched in 2000, which is an electronic corporate card program for clients, allowing for expenditures beyond fleet management. That program has become big, noted Dubyak, accounting now for more than $50 million of the firm’s annual revenue.
Acquiring rapid PayCard allowed Wright to jump-start its entry into the market, said Dubyak.
“These guys are very small but they have the right product, they treat their customers great, they have a culture like Wright Express,” said Dubyak. “And they know what it takes to work with employees and work a very effective program.”
Rapid! PayCard was founded in 2003, according to the company website, which said it provides paycard services to companies across the United States, serving a total employee base of more than 450,000 in all 50 states. The company has nine employees, who will become part of Wright Express’ work force.
Wright Express has more than 850 employees in six countries, with subsidiaries including Wright Express Financial Services, Pacific Pride and Wright Express International, as well as Wright Express Prepaid Cards Australia and Wright Express Fuel Cards Australia.
Dubyak said the company would look at offering payroll cards as a niche market in Australia, and would also explore market demand in Europe.
Wright trades under the symbol WXS on the New York Stock Exchange, and opened at $51.84 Friday morning, hitting a high of $53.13 during the day’s trading. In 2010, the company had profits of $87.6 million, on revenues of $390 million.