Goldman's Apple Card Leads to Big Win for Tiny Georgia Firm
(Bloomberg) -- Goldman Sachs Group Inc. has picked a little-known technology firm to help handle payments for its planned credit-card partnership with Apple Inc.
The bank struck a deal last year to license payments-processing software from CoreCard Software, owned by Intelligent Systems Corp., to help with its foray into the consumer-card business, according to a person with knowledge of the matter, who asked not to be identified because the information is private.
Such technology is typically used for tasks like managing card authorizations, identifying fraud in real time and calculating interest or rewards. The deal could give a big boost to Norcross, Georgia-based Intelligent Systems, which had about $16 million in revenue for the 12 months through Sept. 30 -- potentially setting it up to multiply in size if Goldman’s partnership with Apple proves successful.
Representatives for Goldman Sachs, Apple and Intelligent Systems declined to comment.
Shares of Intelligent Systems surged 20 percent to a record $24.20. The stock has climbed 87 percent this year.
Goldman’s selection of CoreCard is a surprise in an industry that’s long been dominated by companies such as Total System Services Inc. and First Data Corp., each more than 100 times larger than Intelligent Systems in terms of revenue.
“Companies that can’t find us are probably clueless,” J. Leland Strange, the firm’s chief executive officer, told investors on an August conference call. “If you can’t find us, you’re probably not a good prospect, and we don’t need to be knocking on your doors.”
The industry’s incumbents are facing increased competition from startups such as Stripe Inc. and Marqeta Inc., which are winning business by promising speedier time to market for new card programs and better controls for payments. Goldman invested in a funding round for Marqeta last year.
Shares of Intelligent Systems have been on a tear, more than doubling last year and generating a 1,300 percent return since the end of 2014 through Friday’s close. In November, it disclosed that it had landed a very large customer.
“I have reasons to believe that the 2019 year can be substantially better on both revenues and operating profits if we get the license revenues we’re anticipating,” Strange said on an investor call that month.
Founded in the 1970s, Intelligent Systems operates as a holding company and has overseen and subsequently sold a number of small tech and industrial firms. Those include washing-solutions maker ChemFree Corp., which was sold to CRC Industries Inc. in 2015, and PaySys International, which First Data bought in 2001.
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