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Google Acquires TxVia, Continuing The Consolidation of Prepaid

By Mercator Advisory Group
April 3, 2012
in Analysts Coverage
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The home page of TxVia announced that it is now a part of Google:

For more than 5 years, TxVia has been delivering groundbreaking processing solutions to enable new and increasingly complex forms of payment. We’re delighted to announce that as of April 2, 2012, we are continuing that mission at Google.

Not clear at all is the mission TxVia will be assigned by Google, although this Google Commerce blog post by Osama Bedier, Vice President of Wallet and Payments, provides limited direction:

Today, we’re thrilled to announce that we’ve acquired payments technology company TxVia to complement our payments capabilities and accelerate innovation towards our full Google Wallet vision. TxVia is a technology pioneer that offers a fast, flexible and highly reliable payments platform—which we believe is one of the best in the world.

Google volume, however, will need to expand significantly before this acquisition turns a profit if it is based solely on cost savings associated with bringing prepaid processing in-house. The TxVia platform can certainly deliver Google increased prepaid flexibility with the MDA architecture but the cost savings will not come close to equaling what Google paid, without more volume, even if Google got a bargain.

Likely to further erode profitability will be the likely departure of many existing program managers currently processing on the TxVia platform. While some program managers may be willing to align themselves with the Google view of the world the others are likely to start looking elsewhere for processing services.

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