Silver Lake in play for payments

Angling for a piece of the growing card-payment industry, buyout firm Silver Lake Partners is counting on tech savvy, rather than feet on the street, to draw merchants to accept plastic for purchases.

Silver Lake announced April 14 that it has agreed to make a “strategic growth investment” in Mercury Payment Systems, buying 60% of the Durango, Colo.-based company through its Silver Lake Partners III fund. The price was not disclosed. Mercury targets small and mid-size merchants by letting software developers incorporate its payment technology into their own point-of-sale systems.

The transaction is the latest in a card-processing market that is undergoing rapid consolidation. Arsenal Capital Partners agreed in March to take control of FrontStream Payments Inc. of Brentwood, Tenn. FrontStream targets emerging card-acceptance markets such as taxicabs and quick-service restaurants.

Visa Inc., the largest card network nationwide, announced a strategic agreement April 21 to buy Mountain View, Calif.-based CyberSource Inc. for $2 billion, as a way to expand its e-commerce offerings.

And First Data Corp., the world’s largest card processor, has been a portfolio company of Kohlberg Kravis Roberts & Co. since September 2007.

“Other major merchant acquirers are for sale. I think activity is only going to increase,” says David Fish, a senior analyst at research firm Mercator Advisory Group Inc. He notes that Royal Bank of Scotland Group PLC is shopping its RBS WorldPay card-processing unit. Five bidders, including four buyout firms, are said to be finalists for the business. —Steve Bills