Payment Processing Business | The $15M Business Hidden in Plain Sight
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Nov 26, 2024
Discover the intriguing world of high-margin payment processing targeted at state agencies, boasting an 81% EBITDA margin. Delve into the challenges of long sales cycles and the complexities of government contracts. Explore unique opportunities in mobile app payment solutions and the slow adoption of technology in municipalities. The hosts engage in lively banter while assessing potential risks, growth, and competition in this hidden gem of a business. Plus, insights into the benefits of credit card use for property taxes add another layer of intrigue!
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insights INSIGHT
Niche Payment Processing Business
This payment processing business targets state agencies and boasts an 81% EBITDA margin.
The hosts discuss the challenges of selling to government entities, including long sales cycles and RFP-driven contracts.
insights INSIGHT
Business Model Explained
The business model involves charging a service fee to users paying state agency fees online.
The company collects the total amount, remits most to the agency, and keeps the service fee.
insights INSIGHT
Slow Growth Despite High Margins
Despite doubling revenue annually, the business remains relatively small at $2.1 million.
Slow sales cycles and RFP-driven government contracts contribute to the limited size.
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Inside a High-Margin Payment Processing Business | Acquisitions Anonymous Episode 350
This week, Mills and Michael take a deep dive into a payment processing business that’s both wildly profitable and incredibly niche. With $2.1 million in revenue, 81% EBITDA margins, and a foothold in state agency payment systems, this is the kind of deal that grabs your attention. But is it all it’s cracked up to be?
Here’s what we cover:
- How it works: The nuts and bolts of processing payments for government agencies.
- The challenges: Long sales cycles, RFP-driven contracts, and slow adoption by municipalities.
- What makes it tick: Is their niche defensible, or just a fluke?
- Valuation speculation: Could this business fetch 10x EBITDA or more?
- Risks and rewards: Customer concentration, market saturation, and the ever-looming competition.
If you’re a strategic acquirer or someone in private equity, this one’s worth paying attention to. First-time buyers? Maybe not so much.
Why This Episode Stands Out:
1. High-Profit Margins: Seriously, 81%.
2. Niche Market: Payment solutions for state agencies—could be genius or a total headache.
3. Growth Potential: Doubling revenue year-over-year is impressive, but is it sustainable?
4. Also, don’t miss Mills and Michael sharing some of the best banter we’ve had in a while—this one’s as entertaining as it is insightful.
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