In an effort to bolster one of its key industries, Georgia may become the first state in the nation to allow credit card payment processors to quit working with bank partners.
Georgia lawmakers created a new type of non-bank charter last year to allow payment processors to cut banks out of the credit-, debit- and gift-card payment equation. Normally, under agreements with MasterCard and other credit card networks, a traditional bank has to serve as a middleman. The new charter allows payment processors to ask credit card companies to let them tap directly into their networks to complete transactions, a role now done by traditional banks.
The state hopes the new business model will meet the credit card companies’ rules and draw more payment processors to the state, bringing more financial industry jobs and solidifying its role as the nation’s center for such firms.
With some of the nation’s largest payment processors, including First Data and Global Payments in metro Atlanta and TSYS in Columbus, Georgia’s firms handle about 80 percent of credit and debit card transactions in the country, according to some experts.
To gain state approval for the charter, companies must agree to have at least 50 Georgia residents working within a payments processing center within a year.
“I think it is potentially a very big deal. I think there are going to be a lot of jobs in Georgia” as a result of new payments processors, said Bo Fears, the banking commission’s deputy commissioner of legal affairs. Fears said he didn’t know Credorax’s plans. The company doesn’t currently have such an operation in Georgia.
The Georgia Department of Banking and Finance said Boston-based Credorax filed an application Monday to charter a limited purpose bank, Credorax Bank North America. The state agency is taking public comments on Credorax’s application until Oct. 29 and will make a decision within 90 days.
Credorax declined to comment.
Launched in 2007, according to the company’s web site, Credorax is a payments processor that focuses on e-commerce and mobile payments in the U.S. and internationally. In Europe, it deals directly with Visa and MasterCard under agreements similar to those contemplated by the new Georgia limited bank charter.
Last year, private equity firm FTV Capital, of New York and San Francisco, invested $40 million in Credorax.
