Businessmodel of Evertec

Customer Segments

Evertec’s payment processing solutions are utilised by a range of business customers across multiple sectors. The Company, however, primarily serves six industries:

• Financial services, where it provides banking payment solutions, card issuing and acquiring services and document processing services;
• Retail, where it provides electronic payment services, electronic cash register capabilities and infrastructure solutions;
• Wholesale and distribution, where it provides IT management and cloud solutions;
• Healthcare, where it provides document processing and IT professional services;
• Insurance, where it provides electronic payment services and point of sale terminal devices; and
• Government, electronic benefit transfer solutions and infrastructure services. Geographically, Evertec’s customers are based principally in Latin America and the Caribbean, including Costa Rica, México, Guatemala, Panamá, Puerto Rico, the Dominican Republic and the Virgin Islands.

Evertec has a particularly significant relationship with Popular Inc, which operates Banco Popular. In 2015, products and services billed through Popular Inc accounted for around 45% of the Company’s total revenue.

Value Propositions

Evertec provides value to its customers in three principal ways: the quality and reliability of its products, the affordability of its services, and its commitment to developing up-to-date technology. The Company is one of the most established names within the payment solutions field in Latin America and has partnerships with other high-profile companies and institutions in the region, notably Popular Inc.

Channels

Evertec’s products and services are available to browse on its website at www.evertecinc.com/ The Company, however, sells and distributes its products services primarily through a proprietary direct sales force that has established ties with the Company’s major customers.

According to its 2015 annual report, Evertec is also in the process of building a range of indirect sales channels that allow the Company to leverage the distribution capabilities of partners across several markets. The Company’s indirect sales channels will be operated by value-added resellers and distributors, as well as by joint venture partners and merchant acquiring alliance partners.

Customer Relationships

Evertec’s products and services are not available on a self-service basis. Purchases are made via direct contact with the Company’s sales team, which provides solutions tailored to the individual needs of its clients. The embedded nature of Evertec’s solutions, and the high costs associated with switching service providers, mean that the Company typically enjoys longstanding relationships with recurring customers. For example, customers representing approximately 97% of Evertec’s 2014 revenue continued to be customers in 2015. In most cases Evertec provides services under one to five year contracts

Evertec provides ongoing personal care to its customers through its support staff, who can be contacted by email, over the phone or via an online contact form. The Company also operates Twitter, Facebook, LinkedIn and YouTube accounts, through which it keeps its customers updated with company developments and can directly respond to customer feedback.

Key Activities

Evertec is a full-service transaction processing company. It provides a range of merchant acquiring, payment processing and business process management solutions to customers across multiple business sectors.

These solutions include, services to merchants that allow them to accept electronic methods of payment, such as debit, credit, prepaid and electronic benefit transfer cards; payment processing products and services for blue chip regional and global corporate customers, government agencies and financial institutions; and a full suite of business process management solutions, which include core bank processing, network hosting and management, information technology consulting services, business process outsourcing, item and cash processing, and fulfillment.

Key Partners

Evertec collaborates with a variety of companies to provide secure and reliable solutions and to identify potential customers. The Company’s partners principally comprise:

• Merchant referral partners, comprising financial institutions, trade associations, buying groups, and franchises that endorse Evertec’s services and refer their own customers to Evertec; and
• Alliance partners, comprising high-profile companies across the technology, financial services and payment solutions sectors that assist Evertec in developing effective payment solutions. Among Evertec’s merchant referral partners is Popular Inc, Evertec’s largest customer. The Company has alliance partnerships with CardinalCommerce, which has integrated its own payment services into Evertec’s solutions; Tyco Integrated Security, with which it collaborated to create a security solution model to help financial institutions prevent, respond and recover a range of security incidents; and Cisco, to which it assists in providing cloud services. Evertec was named Cisco’s Cloud Partner of the Year for Central America, North of South America and the Caribbean in 2013.

Key Resources

Evertec’s key resources are its technology and intellectual property, its personnel – notably its sales and support staff, and its partnerships.

According to its 2015 annual report, the Company owns numerous registrations for trademarks in jurisdictions across the world and owns or has licenses to use software and technology that is critical to the Company’s operational success. Searches of records held by the US Patent and Trademark Office, however, identified no patent applications filed in Evertec’s name.

Cost Structure

Evertec incurs costs in relation to the development of its technology and solutions, the management of its partnerships, the operation of its sales and marketing channels and the retention of its personnel. Evertec owns one property in Costa Rica, and leases office space in nine other locations across Latin America and the Caribbean.

Revenue Streams

Evertec principally generates revenue through its Merchant Acquiring and Payment Processing segments with the collection of transaction and discount fees paid by its merchant and financial customers.

Transaction-based fees are dependent on factors such as number of accounts or transactions processed, typically consisting of a fee per transaction or item processed, a percentage of dollar volume processed, or a fee per account on file.

Evertec also provides services, such as consulting, that generate a fixed fee on a monthly basis or fees based on time and expenses incurred. These services are provided primarily by the Company’s Business Solutions segment. Additionally, Evertec generates a small proportion of its revenue from service contracts.

In 2015 Evertec generated $374 million in revenue, an increase of 3% on the previous year. The Company’s Business Solutions segment accounted for $179.8 million, or 48.1%, of total revenues; the Merchant Acquiring business generated $85.4 million, or 22.9%, of total revenues; and the Payment Processing business accounted for $108.3 million, or 29.0%, of total revenues.