Pay 360 on the block

Capita has restated its commitment to selling its payment division – Pay360 – and says that the disposal process is already underway. A further update is promised later this year.

As a stand-alone, specialist business, Pay360 doesn’t fit with the new, slimmed down Capita. But it will make a very interesting acquisition for one of the global players looking to bulk up its UK business with a rosta of blue chip merchant customers including WH Smith and Royal London. Alternatively, private equity may be attracted by Pay360’s growing position in the fast growing niche of marketplace (or platform) payments. This is a specialist area for which the majority of the established acquirers and gateways don’t have adequate capability. 

Pay360 is a payment gateway and payment facilitator which processed £11b of card payments in 2021 with an ATV of £43. It also processed £40b of “other” payments which are likely to be mainly low margin direct debits. This reduces Pay360’s overall take rate to just 9bp which might put off some potential suitors. But it’s a very healthy business. Profit before tax 2021 was £7m, giving a very respectable EBIT margin of 15.9%.