Dive Brief:

• Prepaid Technologies, a Birmingham, Alabama-based business-to-business payment company, said in a press release Tuesday that it has acquired New York-based WorkStride, a software company that offers customer engagement and rewards technology services.
• The move is an effort by Prepaid Technologies to double down on rewards and customer engagement tools as the company grows its client base, the company’s CEO, Stephen Faust, said in an interview. Financial terms of the deal weren't disclosed.
• The acquisition, which closed in late May, will expand the company’s business-to-business payments tool set, which includes corporate expense management, disbursements and rewards, said Faust.  

Dive Insight:

Prepaid Technologies, which was founded in 1999, works with the card network companies Visa, Mastercard and Discover to deliver customized payment solutions to corporate clients.

The restaurant chain Taco Bell is a direct customer while the company services the electronics business Sony and the retailer Lowe’s through partners, a spokesperson for Prepaid Technologies said. The Prepaid Technologies cards provide payroll, purchasing, disbursement and reward services. 

Last November, Prepaid Technologies raised $96 million in new growth financing from the investment firms Edison Partners and StepStone Group. The company has raised $101 million in total.

WorkStride, which was also founded in 1999, is being sold by the private equity firm The Riverside Company, which acquired it in 2012.

The WorkStride business will allow Prepaid Technologies to add communication opportunities with payment recipients, including capabilities to let recipients choose how they receive funds and rewards, Faust said. 

"It reduces costs for the big enterprise customer and provides greater engagement and client satisfaction with the end-user," said Faust, who said the company has "thousands" of enterprise customers. The acquisition also gives the company access to WorkStride's 170 business customers, he noted.

“It could be a survey that says ‘Hey, tell us how we are doing as a business,’... [it offers] a better customer experience, speed of delivery of the payment, but also engagement on top of that,” he said.

Prepaid Technologies is competing with multiple firms as it seeks to expand in what the company says is an $8-trillion business-to-business payments market. One of the company’s core strengths is payroll cards, according to Francisco Alvarez-Evangelista, an advisor at the research firm Aite-Novarica Group.

Other firms in this field include Blackhawk Network and Onbe, which offer prepaid and disbursement solutions. The field is getting increasingly competitive as incumbents aggressively make acquisitions, Alvarez-Evangelista said.

Faust said Prepaid Technologies’ differentiator is the ability to offer a “one-stop shop” for clients’ corporate payment and expense-management needs.

“Our diversification gives us an edge because we can go into that customer and say, ‘Hey, we can help you with rewards business in your employee engagement platform, but we can also help you solve for pay,” he said. “We see opportunity for all of these various lines of business growing.”

The company has posted 40% revenue growth year-over-year over the past five years, a spokesperson said.