MegaPath buys credit processing firm, beefs up retail offering

MegaPath today announced its acquisition of IP Merchant Solutions, a company that provides connections to credit card processors, for an undisclosed amount. MegaPath is now creating a new payment processor extranet service that will enable its restaurant and retail customers to more efficiently connect to credit card clearinghouses using a MegaPath multiprotocol label-switching virtual private network (MPLS VPN) connection.

“There is proven demand for this kind of service,” said Greg Davis, MegaPath’s vice president of product marketing. “This positions us very well in the retail and restaurant segment. All of those types of businesses use credit cards and have credit card data that needs to go to one of these processors. Now MegaPath can handle not only their WAN[wide area network] but also their credit card traffic.”

When a customer makes a credit card purchase at a retail establishment, a payment has to be made from the consumer’s bank to the retailer’s bank; these are generally handled by large credit card processors or clearinghouses such as First Data, Davis explained. IP Merchant Solutions had provided the connections to those clearinghouses for retailers whose other option was to buy Internet access and use customer premises equipment to set up their own IP-Sec tunnels to a number of different clearinghouses.

MegaPath had jointly sold its services with IP Merchant Solutions in the past to about a dozen customers but with this acquisition can create a single point of contact and network operations center for a managed service that eases retail burdens further, Davis said.

“From the customers’ perspective, they will have only one support contact, which is our NOC, and only one bill, so they don’t have to call two separate people to resolve some issue,” Davis said. “For MegaPath, it is a value-added service to our customers. At this point, it is something that we offer in addition to our MPLS VPN service. We are looking at how else we can offer this outside of that MPLS VPN, because there is no reason we couldn’t offer it as an add-on to a single-site Internet connection for smaller retailers.”

In addition, MegaPath’s managed service provides greater security and redundancy than retailers can usually afford to get on their own, Davis said.

The new services are intended to strengthen MegaPath’s play in the retail and restaurant space, which is one of the company’s primary customer groups.