Client Responses to the PayNet/Equifax Merger

Commercial Credit, Small Business Credit, Digital Lending, Enterprise Risk Management

The number of U.S. banks has decreased steadily over the past three decades, dropping from approximately 14,500 in the mid-1980s to approximately 5,600 today. Accounting for this decline are a relaxation of regulations, failures during the financial crises and voluntary mergers between unaffiliated banks. Since the end of the Great Recession, voluntary mergers between have led this trend toward consolidations, and there is no doubt that such activity will continue.

Financial institutions might consider M&A activity for a number of reasons, including accelerating the business’s mission; creating economies of scale; diversifying through expanded geographies and markets; and increasing revenues and decreasing costs through operational efficiencies.

Recently, PayNet and Equifax combined forces. In making this decision, the key considerations were our customers, our employees and our overall businesses.

Reducing the cost of risk so customers can increase capital access

With every decision PayNet makes, we are committed to lowering the cost of risk to help increase access to credit for private companies. It’s all about cost to lenders, who – in order to become more profitable – must be able to reduce their cost of delivering capital. With a reduced cost of risk, investors are more likely make the capital investment. We saw that, combined with Equifax, we could provide even greater insights into risk, enabling a better, more accurate assessment, thereby making it easier to deliver capital to Main Street America. 

With the merger, we are one unified commercial team with the domain expertise to help push forward access to credit in the U.S. and Canada – and with the ability to go global. Our combined data asset covers all of the approximately 30 million private businesses in the U.S. That data includes trade line information for credit assessment purposes. This enables us to demystify risk, allowing for capital access for Main Street America, making it easier for lenders to extend credit to those businesses. 

Moreover, our combined organization creates an almost one-stop shop, versus what used to be a three to five-vendor process for discerning risk. This frees up transaction costs, making it easier for banks to participate and thrive in the Main Street America credit market.

By making it easier, faster and less costly to deliver capital, we anticipate many lenders will be able to target a double-digit expansion of credit to small businesses.

Customer feedback

Since making the announcement, we’ve received scores of positive responses from our customers and partners. Many are excited about the commercial powerhouse we create as our two organizations come together. And, many customers are looking forward to leveraging our combined data asset to assess risk more easily and help them extend credit to small businesses. 

What about the employees and businesses themselves?

Of course, we are committed to how the merger will affect employees and the overall corporate culture. In our case, we’ve had the benefit of working with and knowing Equifax’s business and employees for years. The combination of our organizations brings the best skills of both businesses forward to lower the cost of credit to Main Street America. 

By remaining true to our mission – to close the Main Street America credit gap by making the lending process faster, easier, more accurate and more profitable – we were able to make our decisions with customers, employees and the businesses at the forefront of our considerations. We look forward to serving the millions of Main Street businesses that historically have been underserved by the financial services industry.