A young Boston payments processor has become the first company to apply for a new type of bank charter in Georgia that the state hopes will bolster one of its key industries: the companies that run the financial pipelines behind all those zillions of credit card transactions.
The Georgia Department of Banking and Finance said Credorax filed an application Monday to charter a limited purpose bank, Credorax Bank North America, that would allow the company to directly handle payments for Visa and other credit card companies, rather than running payments through a traditional bank.
The sate agency is taking public comments on Credorax’s application until Oct. 29 and will make a decision within 90 days.
Normally, under agreements with MasterCard and other credit card networks, a traditional bank has to serve as a middleman.
But with a new law that took effect late last year, Georgia lawmakers created the new type of non-bank charter to allow processors to take out that middleman — the only state in the nation to do so. They hope the new charter 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.
Credorax executives could not be reached for 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.
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