Payments processor Stax said last week that it acquired CardX, the company that has made a name for itself beating back state bans on merchant surcharges.
Orlando-based Stax will add CardX's software for managing transaction surcharges and related compliance to its portfolio of payments tools offered to merchants.
The purchase will combine Stax's 22,000 business clients with CardX's 2,600 customers, with the latter keeping its brand name and Chicago offices, the Nov. 30 press release said.
Surcharging has become a hot topic in the payments industry as some merchants and their associations increasingly gripe about the interchange fees they must pay card companies and other intermediaries when consumers use credit and debit cards. Some merchants have put surcharges on transactions to offset the expense, but most have been reluctant to shift the cost burden to their customers.
The acquisition "will certainly help bring greater exposure to CardX and their services via Stax’s existing merchant base, but merchant’s willingness to adopt the capability is yet to be seen in full," Strawhecker Group Project Manager Zach Spellman said by email.
At the moment, online retail juggernaut Amazon and card giant Visa have taken center stage in the battle over fees for processing transactions. Earlier this year, Seattle-based Amazon began imposing surcharges on Visa credit card transactions in Australia and Singapore to protest the fees. It also said it would stop accepting Visa credit cards issued in the United Kingdom next month in the escalating fight.
The companies declined to disclose how much Stax paid for the CardX acquisition, which would allow the company to better compete in the omnichannel arena where software vendors are dueling to give merchants myriad ways to accept payments, especially online. Electronic transactions soared after the COVID-19 pandemic kept hoards of consumers shopping from home.
"Stax is attempting to grow their omnichannel payment offering through the addition of surcharging capabilities, which is still a relatively new and growing practice within the U.S," Spellman said.
Stax, founded in 2014, is led by co-founder and CEO Suneera Madhani and has about 130 employees, according to the company's website. The company, which was formerly known as Fattmerchant before a rebranding in April, has raised about $200 million.
This year, the startup has been on an acquisition tear. In March, it bought a majority stake in Ottawa-based subscriptions billing company Fusebill.
The CardX services build on Stax's existing surcharging services, specifically adding compliance disclosures, pricing for different card types and reconciliation, among other functions. "This eliminates the compliance risks and operational headaches that our merchant customers have often associated with surcharging," Stax said by email.
CardX, which as of August had about 30 employees, has been campaigning nationwide to overturn state bans on surcharging. This past July the company's executives were instrumental in Colorado overturning its ban on surcharging, after similar successes in a handful of other states.
CardX CEO Jonathan Razi said he looks forward to sticking with CardX for this next chapter of its growth under the Stax name and plans to keep up the battle against the remaining bans in two states, Connecticut and Massachusetts.
"We’ll stay at the forefront of surcharging policy and we believe we have important insights to share with lawmakers, particularly in the two final states that don’t allow surcharging," he said by email. "The right surcharging solution is good for businesses, good for consumers, and also good for the card networks, and, thanks to our increased scale as part of Stax, we’ll be able to share even more real-world data on these points."