Debit network company Shazam made a move this month to streamline its business by shedding its merchant services portfolio.
NCMIC Finance acquired the merchant services business from Shazam as of April 4, according to a press release earlier this month.
That will allow privately-held Shazam, based in Johnston, Iowa, to focus on its debit card rails just as that business is getting a lift from increased consumer use of debit cards.
Shazam has also likely benefited from the Federal Reserve Board’s 2022 clarification that a rule requiring more than one debit card network be available for routing all transactions includes purchases made online.
“This strategic move allows us to focus on strengthening our core offerings while ensuring our merchant clients continue to receive the caliber of service they are accustomed to,” Shazam CEO Paul Waltz said in the release.
Shazam spokesperson Crista Herbert declined to comment beyond the press release, including on the financial terms of the deal with NCMIC.
Based on data from The Strawhecker Group, the Shazam business was bigger than that of NCMIC, at least in terms of volume value. The consulting firm’s directory of U.S. merchant acquirers showed Shazam’s 9,000 merchant services clients accounted for about $3.8 billion in processing volume last year while NCMIC’s 14,900 clients generated $2.4 billion in volume.
Shazam delivered its merchant services through bank and other financial institution clients, offering Visa, Mastercard, Discover and American Express payment acceptance, among other payment types.
While U.S. credit card purchase volume rose about 5% to $4.5 trillion in transactions for the first nine months of last year, relative to 2023, debit card volume rose 6% to $3.4 trillion, according to the research firm The Nilson Report’s January issue. That meant the larger credit card share shrunk to 56.88% of the combined debit and credit card purchase volume, down from 57.08% for the same nine-month period in 2023.
For Iowa payments peer NCMIC, based in Des Moines, the combination will result in the company having financial institution clients in 21 states with 12,000 merchants in all 50 states, Stacy Conradt, an NCMIC senior content manager, said by email.
NCMIC has had a niche in serving chiropractors and reaches additional clients via its Professional Solutions Financial Services division. The acquisition will let it double down on healthcare.
“Combining the team also provides more healthcare vertical capabilities” and the company will be better able to integrate with healthcare clients’ other systems, Conradt said.
As part of the transaction, NCMIC is also onboarding six Shazam employees who will continue working with their existing accounts and clients, Conradt said. In addition, Shazam will continue to refer merchant services clients to NCMIC.
NCMIC will gain “capabilities and technology platforms to serve our customers with an ‘open architecture’ system instead of aligning with one payment platform,” Conradt added. The release also noted “stronger fraud prevention.”
