Financial technology (fintech) firm TIO Networks is acquiring Softgate Systems for US$31 million, in a deal the Vancouver-based company says will create North America’s largest walk-in bill payment network.
Walk-in bill payment networks serve consumers lacking access to mobile or online payment options — typically older residents or new immigrants.
“Cash is not going to go away for our life,” TIO CEO Hamed Shahbazi told Business in Vancouver.
“There’s still a significant portion of the population that’s paying in person. Our job is to really sort of capture that customer base…and be the ones who move them toward mobile.”
Tio already offers online and mobile solutions when it comes to bill payments. Shahbazi said focusing on customers who still rely on brick-and-mortar bill payments would ultimately fuel the mobile side of the business as those customers adopt new technology.
A June study from the World Economic Forum concluded fintechs have created significant challenges for big financial institutions, which have had difficulty adapting to technological changes — such as mobile banking — compared with the smaller, more agile tech companies.
Shahbazi said the company has been partnering with New Jersey’s Softgate for the past eight years and the acquisition will help TIO expand in the U.S., from a presence in 15 states to 46 states.
“It definitely fills out a lot of our coverage map, it gives us a lot more scale,” he said, adding the Softgate acquisition also gives TIO access to money transmitter licences, “which are very hard to come by.”
TIO said the deal would help drive US$37 million in incremental revenue to create more than C$100 million in annual revenue by the end of this fiscal year.
