What changed in this filing

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Item 1. Business

2021-03-31 compared with 2020-03-30 · 84 added, 101 removed, 310 unchanged (37% of the section changed)

Basis of Presentation

On July 25, 2018, MI Acquisitions, Inc.

("MI Acquisitions"), which was formed under the laws of the State of Delaware on April 23, 2015, acquired all of the outstanding member equity interests of Priority Holdings, LLC in exchange for the issuance of MI Acquisitions' common stock.

As a result, Priority Holdings, LLC, which was previously a privately-owned company, became a wholly-owned subsidiary of MI Acquisitions (the "Business Combination").

Simultaneously, MI Acquisitions changed its name to Priority Technology Holdings, Inc.

For financial accounting and reporting purposes under generally accepted accounting principles in the United States ("GAAP"), the acquisition was accounted for as a "reverse merger." Under this method of accounting, MI Acquisitions is treated as the acquired entity whereby Priority Holdings, LLC was deemed to have issued common stock for the net assets and equity of MI Acquisitions accompanied by a simultaneous equity recapitalization of Priority Holdings, LLC.

Net assets of the Company are stated at historical cost and accordingly the equity and net assets of the Company have not been adjusted to fair value.

As of July 25, 2018, the consolidated financial statements of the Company include the combined operations, cash flows, and financial positions of both MI Acquisitions and Priority Holdings, LLC.

Prior to July 25, 2018, the results of operations, cash flows, and financial position are those of Priority Holdings, LLC.

The units and corresponding capital amounts and earnings per unit of Priority Holdings, LLC prior to July 25, 2018 have been retroactively revised as shares reflecting the exchange ratio established in the recapitalization.

Overview of the Company

We are a leading provider of merchant acquiring and commercial payments solutions with a platform of microservices that activate and monetize vertically specialized merchant networks.

We offer unique product capabilities to businesses, enterprises and distribution partners such as retail independent sales organizations ("ISOs"), financial institutions ("FIs"), wholesale ISOs, and independent software vendors ("ISVs") in the United States.

We are a leading provider of payment infrastructure for merchant acquiring, integrated payment software and automated payable solutions.

We offer a single technology platform for integrated payments, low friction merchant boarding, underwriting, risk management and compliance monitoring to businesses, enterprises and distribution partners such as retail independent sales organizations ("ISOs"), financial institutions ("FIs"), wholesale ISOs, and independent software vendors ("ISVs").

The Company, then Priority Holdings, LLC, was founded in 2005 with a mission to build a merchant inspired payments platform that would advance the goals of our small and medium-size business clients ("SMBs"), enterprise clients, and distribution partners.

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merchant acquirer to become the 12th largest and the 5th largest non-bank merchant acquirer as of the end of 2020 according to the Nilson Report issued in March 2021.

In 2019 and 2018, we processed over 513 million and 466 million transactions, respectively, and over $43.0 billion and $38.2 billion, respectively, in bankcard payment volume across approximately 203,000 and 181,000 , respectively, merchants.

Headquartered in Alpharetta, Georgia, we had 588 employees as of December 31, 2019 and are led by an experienced group of payments executives.

In 2020 and 2019, we processed 457 million and 513 million transactions, respectively, and $42.3 billion and $43.0 billion, respectively, in bankcard payment volume across approximately 223,000 and 203,000, respectively, merchants.

Headquartered in Alpharetta, Georgia near Atlanta, we had 479 employees as of December 31, 2020 and are led by an experienced group of payments executives.

Our growth has been underpinned by three key strengths:

(1) a cost-efficient, agile payment and business processing infrastructure, known internally as Vortex.Cloud and Vortex.OS, (2) two proprietary product platforms:

the MX product line targeting the consumer payments market and the commercial payments exchange ("CPX") product line targeting the commercial payments market and (3) focused distribution engines dedicated to selling into business-to-consumer ("B2C") and commercial payments business-to-business ("B2B") payments markets.

(1) two proprietary product platforms:

the MX product line targeting the consumer payments market and the commercial payments exchange ("CPX") product line targeting the commercial payments market, (2) focused distribution engines dedicated to selling into business-to-consumer ("B2C") and commercial payments business-to-business ("B2B") payments markets, and (3) a cost-efficient, agile payment and business processing infrastructure, known internally as Vortex.Cloud and Vortex.OS.

The MX product line provides technology-enabled payment acceptance and business management capabilities to merchants, enterprises and our distribution partners.

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In addition to payment processing, the MX Merchant product line encompasses a variety of proprietary and third-party product applications that merchants can adopt such as MX Insights, MX Storefront, MX Retail, MX Invoice, MX B2B and ACH.com, among others.

This comprehensive suite of solutions enables merchants to identify key consumer trends in their business,

quickly implement e-commerce or retail point-of-sale ("POS") solutions, and even handle automated clearing house ("ACH") payments.

This comprehensive suite of solutions enables merchants to identify key consumer trends in their business, quickly implement e-commerce or retail point-of-sale ("POS") solutions, and even handle automated clearing house ("ACH") payments.

By empowering resellers to adopt a consultative selling approach and embedding our technology into the critical day-to-day workflows and operations of both merchants and resellers, we believe that we have established and maintained "sticky" relationships.

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We strive to enable Vortex.Cloud to maintain greater than 99% uptime.

All computational and IP assets of our operating companies are hosted and managed on Vortex.Cloud infrastructure.

All computational and IP

assets of our operating companies are hosted and managed on Vortex.Cloud infrastructure.

With Vortex.Cloud, we have constructed a uniform set of APIs, called Vortex.OS (operating system), that provide critical functionality to our payment divisions.

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Considering that the commercial payments volume in the United States is over twice the size of consumer payments and substantially less penetrated for electronic payments, we believe that this market represents a high growth opportunity for us.

More recently, we began to build our Integrated Partners component which offers solutions for ISVs, third-party integrators, and merchants that allow for the leveraging of our core payments engine via application program interfaces ("APIs") resources.

Our Integrated Partners component which offers solutions for ISVs, third-party integrators, and merchants that allow for the leveraging of our core payments engine via application program interfaces ("APIs") resources.

Integrated Partners connects businesses with other businesses and their customers in the real estate, hospitality, and health care marketplaces.

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Due to the nature of our strong reseller-centric distribution model and differentiated technology offering, we can drive efficient scale and operating leverage, generating robust margins and profitability.

For the year ended December 31, 2019, we generated revenue of $ 371.9 million (which reflects the adoption of the new revenue recognition standard, ASC 606), a net loss of $ 33.6 million and Adjusted EBITDA (a non-GAAP measure) of $58.9 million , compared to revenue of $375.8 million (which reflects the retroactive adoption of the new revenue recognition standard, ASC 606), net loss of $17.8 million and Adjusted EBITDA of $49.4 million for the year ended December 31, 2018.

For a discussion of Adjusted EBITDA and a reconciliation to net income (loss), the most directly comparable measure under GAAP, please see the section entitled "Item 7 - Management's Discussion and Analysis of Financial Conditions and Results of Operations—Certain Non-GAAP Measures" elsewhere in this Annual Report on Form 10-K.

For the year ended December 31, 2020, we generated revenue of $404.3 million, net income attributable to the stockholders of Priority Technology Holdings, Inc.

of $25.7 million and Consolidated Adjusted EBITDA (a non-GAAP liquidity measure) of $63.8 million, compared to revenue of $371.9 million, net loss of $33.6 million, and Consolidated Adjusted EBITDA of

$72.1 million for the year ended December 31, 2019.

For a discussion of Consolidated Adjusted EBITDA and a reconciliation to net income (loss), the most directly comparable measure under GAAP, please see the section entitled " Item 7 - Management's Discussion and Analysis of Financial Conditions and Results of Operations —Liquidity and Capital Resources" in Part II of this Annual Report on Form 10-K.

Industry Overview

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We expect to grow through our existing reseller network and merchant base, capitalizing on the inherent growth of existing merchant volume and reseller merchant portfolios.

By providing resellers with agile tools to manage their sales businesses and grow their merchant portfolio, we have established a solid base from which to generate new merchant adoption and retain existing merchants.

By providing resellers with agile tools to manage their sales businesses and grow their merchant portfolio, we have established a solid base from which to generate new merchant adoption and retain

existing merchants.

By engaging in a consultative partnership approach, we maintain strong relationships with our reseller partners and continues to exhibit strong merchant adoption and volume growth trends.

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Our Vortex.Cloud operating infrastructure is purpose-built to rapidly and seamlessly consolidate complementary businesses into our ecosystem, optimizing revenue and cost synergies.

Technology Infrastructure and Product Solutions

Infrastructure

Vortex.Cloud is a highly-available, redundant, and audited (PCI, HIPAA, NACHA, and FSOC) computing platform with centralized security and technical operations.

We strive to enable Vortex.Cloud to maintain 99.999% uptime.

All computational and IP assets of our payment operating divisions are hosted and managed on Vortex.Cloud infrastructure.

Vortex.Cloud enables the rapid inclusion of data and systems of acquisition targets for smooth consolidation to our operating infrastructure and accelerates achievement of revenue and cost synergies.

Vortex.OS provides critical technological functionality to our payment operating divisions.

The Vortex.OS APIs include:

electronic payments, security/crypto, data persistence, time series data (events), and artificial intelligence (AI).

Our purpose-built payments engine facilitates industry leading organic growth and efficient consolidation of acquisitions resulting in strong profit margins.

Consumer Payments Offering

Reseller Tools

Our objective is to empower our resellers to grow their businesses and improve their merchant portfolios.

To do so, we provide our resellers with a feature rich API architecture, powerful merchant relationship management tools, and thought leadership resources.

MX Connect provides dynamic portfolio management giving resellers total control over their financial data along with convenient low friction merchant onboarding, automated underwriting, and robust portfolio reporting and compensation tracking.

In addition, we offer our resellers thought leadership resources to support their growth and educate their employees.

Priority University ("PriorityU") includes proprietary white papers on Apple Pay, EMV, regulations & compliance, and other industry topics.

PriorityU also includes a comprehensive set of marketing and training tools that re-sellers can leverage to train their employees and tactfully engage merchants.

In addition to the written and video-based tools on our website, we maintain a live reseller support phone line to provide resellers with real time assistance.

Finally, we offer our resellers Brand Licensing and Wholesale Development Programs which allow resellers to leverage the strength of the Priority brand for immediate and meaningful marketing impact.

Merchant Products

Our core payment processing technology allows merchants to accept electronic payments via multiple integrated POS technologies.

However, our payment processing platform goes beyond traditional electronic payments acceptance with a fully integrated platform called MX Merchant.

Our proprietary product maximizes the lifetime value of merchant relationships.

Our flagship offering, MX Merchant, is a customizable payments platform that allows merchants to accept electronic payments and manage their business.

Merchants can accept credit cards, debit cards, and cash using a virtual terminal, monitor payment activity in real-time, manage payment history and customer data, and create customizable reports and statements.

MX Merchant is a proprietary software platform and virtual terminal that can be deployed on hardware from a variety of vendors and operated on a standalone basis or integrated with 3rd party software products.

The MX Merchant platform also allows customers to add applications from the MX Merchant Marketplace to build a payment platform customized to that merchant's business, including:

MX Invoice – Invoice and recurring billing app which speeds up the payment process and creates automatic, trustworthy, and easy to use invoices.

MX Retail – Inventory and stock control app utilizing both MX Merchant and MX Retail applications to handle all point-of-sale needs, rewards program and inventory management with an iPhone application.

MX B2B – Ensures merchants receive lower rates for Level II / III processing by setting up user level permissions based on job function.

MX Insights – Customer engagement and data analytics tool focused on marketing campaigns with intelligent customer targeting through use of big data.

MX Storefront – Allows merchants to quickly and easily create a professional, comprehensive, entirely customizable website, complete with full payment integration.

MX Medical – Delivers patient payment estimates at the POS of a medical practice.

The tool informs patients of their payment responsibility and presents the patient with a range of payment options.

Once the patient leaves the medical practice, notifications and messaging are pushed to the patient's mobile device alerting them to future payments.

ACH.com – Integrated ACH payment processing platform.

We offer several third-party products and services to our merchants including:

ControlScan – On demand tools merchants can utilize to analyze, remediate, and validate PCI compliance.

e-Tab – Provides a mobile restaurant / hospitality ordering and payment platform.

We acquired the e-Tab business assets in February 2019.

Terminals – we offer several EMV ready terminals and mobile card readers from manufacturers such as Ingenico, Verifone, and Magtek.

Merchant Financing – we are a reseller of several merchant financing solutions provided by American Express.

Commercial Payments Offering:

Managed Services and CPX

We provide curated managed services and AP automation solutions (CPX) on behalf of industry leading financial institutions and card networks such as Citibank, MasterCard, Visa and American Express ("AMEX").

Our turnkey merchant development, business process outsourcing and refined supplier enablement program, allow commercial partners to leverage our long-standing customer relationships.

Established in 2008, our commercial payments offering has allowed us to profit from the large and growing commercial payments market.

Priority CPX offers solutions to key pain points such as scalability of expanding supplier onboarding while decreasing costs through automation.

Successful implementation of our AP automation strategies provides vendors with the benefits of cash acceleration, buyers with valuable rebate/discount revenue, and the Company with stable sources of merchant acquiring, credit card interchange and discount fee revenue.

Managed Services

We provide business process outsourcing services to AMEX that offer AMEX's merchants access to several programs, including AMEX Buyer Initiated Payments ("BIP") and AMEX Merchant Financing loans.

Acting as an outsourced sales force, we utilize approximately 160 employees to originate BIP or Merchant Financing loans for AMEX, earning a fee for each origination.

Additionally, AMEX compensates us for personnel fees incurred for the employees who sell these outsourced services.

We do not take any credit risk associated with the aforementioned programs.

Priority CPX is a turnkey commercial payments platform that automates the AP payment process between buyers and suppliers to maximize financial rebates and ensure timely, automated payment of vendor payments.

CPX Access - Interactive portals connecting Buyers and Suppliers to promote the payment and data exchange between partners.

CPX Gateway - Seamless integration with enterprise resource planning systems that produce a single payment file for the entire CPX solutions suite.

CPX Commercial Acceptance - Optimize payment programs with a full suite of targeted solutions and powerful outreach campaign management and automated electronic quick-start application.

CPX Payments - Leveraging a complete suite of traditional and transitional payment solutions to completely automate AP files.

Sales and Distribution

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1) Retail ISOs/Agents and Financial Institutions, 2) Wholesale ISOs, and 3) Independent Software Vendors and Value-Added Resellers.

MX Connect allows resellers to engage merchants for processing services and a host of value-added features designed to enhance their customer relationship.

MX Connect allows resellers to engage merchants for processing services and a host of value-added features designed to enhance their customer

relationship.

Merchants utilize our diverse product suite to manage their business, increasing our ability to retain the merchant if the ISO were to leave the Company.

• Retail ISOs/Agents and Financial Institutions (i.e.

community banks) – A non-risk bearing independent group of sales agents, individual sales agents, or financial institutions (mostly community banks) that operates as a sales force on behalf

of the Company.

community banks) – A non-risk bearing independent group of sales agents, individual sales agents, or financial institutions (mostly community banks) that operates as a sales force on behalf of the Company.

Retail resellers are not employed by us but rather are independently contracted to acquire merchants to utilize our payment processing and product offerings.

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Our market strategy has resulted in a merchant base that we believe is diversified across both industries and geographies resulting in, what we believe, is more stable average profitability per merchant.

No single reseller relationship contributes more than 10% of total bankcard processing volume.

Only one single reseller relationship contributes more than 10% of total bankcard processing volume, and that one relationship represents approximately 17.1% of our total bankcard processing volume.

Security, Disaster Recovery and Back-up Systems

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To register with a card network in the United States, acquirers must maintain relationships with banks willing to sponsor the acquirer's adherence to the rules and standards of the card networks, or a sponsor bank.

We maintain sponsor bank relationships with Citizens Bank, Wells Fargo, Synovus Bank, Pueblo Bank, Sutton Bank, and Axiom Bank.

We maintain sponsor bank relationships with Wells Fargo, Synovus Bank, Pueblo Bank, Sutton Bank, and Axiom Bank.

For ACH payments, the Company's ACH network (ACH.com) is sponsored by Atlantic Capital Bank and Fifth Third Bank.

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Loss Mitigation - In instances where particular transactions and/or individual merchants are flagged for fraud, where transaction activity is resulting in excessive chargebacks, several loss mitigation actions may be taken.

These include charge-back dispute resolution, merchant and reseller funds (reserves or processed batches) withheld, inclusion on Network Match List to notify the industry of a "bad actor", and even legal action.

Acquisitions of Businesses

For information regarding our business and asset acquisitions, see Note 4, Business Combinations, Asset Acquisitions and Asset Contributions , to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

These include charge-back dispute

resolution, merchant and reseller funds (reserves or processed batches) withheld, inclusion on Network Match List to notify the industry of a "bad actor", and even legal action.

Acquisitions and Dispositions of Businesses

Merger with Finxera Holdings, Inc.

On March 5, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Finxera Holdings, Inc.

(“Finxera”), Prime Warrior Acquisition Corp., an indirect wholly owned subsidiary of the Company (“Merger Sub”) and, solely in its capacity as the representative of the stockholders or optionholders of Finxera (the “Equityholder Representative”), Stone Point Capital LLC.

Priority will acquire, through a merger of Merger Sub with and into Finxera, the Finxera business.

Finxera is a provider of deposit account management payment processing services to the debt settlement industry in the United States.

The Merger Agreement provides that, among other things and on the terms and subject to the conditions of the Merger Agreement, (a) Merger Sub will merge with and into Finxera (the “Merger”), with the separate existence of Merger Sub ceasing and Finxera continuing as the surviving entity of the Merger (the “Surviving Entity”);

(b) at the effective time of the Merger (the “Effective Time”) each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Entity;

and (c) the shares of common stock of Finxera designated as “Class A Common Stock”, “Class B Common Stock” and preferred stock “Series C Participating Preferred Stock” issued and outstanding immediately prior to the closing of the transactions contemplated by the Merger Agreement (the “Closing”) will be converted into rights to receive certain cash and stock consideration and a contingent right to receive a portion of any payments made following the determination of the purchase price adjustments (a “Deferred Payment”).

Consideration for the Merger will consist of a combination of cash and stock, with the purchase price comprising of:

(a) $425,000,000, plus (b) the aggregate value of the current assets of the Finxera and each of its subsidiaries (the “Group Companies”) less the aggregate value of the current liabilities of the Group Companies, in each case, determined on a consolidated basis without duplication, as of the close of business on the business day immediately preceding the date of the Closing (which may be a positive or negative number), plus (c) the sum of all cash and cash equivalents of the Group Companies as of the close of business on the business day immediately preceding the date of the Closing, minus (d) the amount of indebtedness of the Group Companies as of the close of the business day immediately prior to the date of the Closing, minus (e) the amount of unpaid transaction expenses, minus (f) 25% of the earnings of the Group Companies during the period between the signing of the Merger Agreement and the Closing.

Each option to purchase one or more shares of Class B Common Stock of Finxera issued pursuant to the Finxera Holdings, Inc.

2018 Equity Incentive Plan (the “Company Options”), vested as of immediately prior to the Closing (the “Vested Company Option”), that is issued and outstanding immediately prior to the Closing will be deemed to be exercised and converted into the right to receive a cash payment with respect to such Vested Company Option and a contingent right to receive a portion of any Deferred Payments.

Support Agreement

In accordance with the terms of the Merger Agreement, Thomas C.

Priore, the Thomas Priore 2019 GRAT, the Thomas C.

Priore Irrevocable Insurance Trust U/A/D 1/8/2010 (the “Stockholders”) and Finxera have entered into that certain Support Agreement, dated as of March 5, 2021 (the “Support Agreement”), pursuant to which each of the Stockholder (a) agrees to execute and deliver the Stockholders’ Agreement and the Registration Rights Agreement on the date of the Closing and (b) after the date of the Support Agreement and prior to the date of the Closing, shall not sell, assign, transfer or otherwise dispose of any of such Stockholder’s Company Common Shares, unless as a condition to such sale, assignment, transfer or other disposition, each such transferee executes and delivers a joinder agreement to the Support Agreement in a form reasonably acceptable to Finxera, provided, that such Stockholder shall be permitted to sell up to an aggregate of 5% of such Stockholder’s Company Common Shares upon written notice to Finxera.

Debt Commitment Letter

On March 5, 2021, Priority Holdings, LLC (“Holdings”) entered into that certain debt commitment letter (the “Debt Commitment Letter”) with Truist Bank and Truist Securities, Inc.

(collectively, the “Debt Commitment Parties”), pursuant to which, among other things, the Debt Commitment Parties have committed to provide Holdings with (a) $300,000,000 of term loan commitments (the “Initial Term Loan Facility”);

(b) $290,000,000 of delayed draw term loan commitments (the “Delayed Draw Term Loan Facility”);

and (c) a $40,000,000 revolving credit facility (the “Revolving Credit Facility” and together with the Initial Term Loan Facility and the Delayed Draw Term Loan Facility, collectively, the “Debt Financing”), in each case on the terms and subject to the conditions set forth in the Debt Commitment Letter.

The proceeds of the Initial Term Loan Facility and the Revolving Credit Facility will be used, among other things, to refinance certain of Holdings’ existing indebtedness, to pay fees and expenses in connection with such refinancing and for working capital and general corporate requirements.

The proceeds of the Delayed Draw Term Loan Facility will be used to finance a portion of the cash consideration in connection with the Merger and to pay fees and expenses in connection therewith.

Equity Commitment Letter

On March 5, 2021, the Company entered into that certain preferred stock commitment letter (the “Equity Commitment Letter”) with Ares Capital Management LLC (“ACM”) and Ares Alternative Credit Management LLC (“AACM” and together with ACM, the “Equity Commitment Parties”), pursuant to which, among other things, the Equity Commitment Parties have agreed to purchase perpetual senior preferred equity securities (the “Preferred Stock”) of the Company (a) to be issued in connection with the refinancing and repayment in full of certain Credit and Guaranty Agreements as described in the Equity Commitment Letter (the “Closing Date Refinancing”) (the “Initial Preferred Stock” and the issuance and sale thereof and certain warrants representing 2.50% of the fully diluted Company Common Shares at the Closing, the “Initial Preferred Stock Financing”) in an amount equal to (i) in the case of ACM, $90.0 million and (ii) in the case of AACM, $60.0 million, (b) to be issued in connection with the Merger (the “Acquisition Preferred Stock” and the issuance and sale thereof, the “Acquisition Preferred Stock Financing”) in an amount equal to (i) in the case of ACM, $30.0 million and (ii) in the case of AACM, $20.0 million and (c) available to be issued in connection with one or more acquisitions by the Company or its subsidiaries as permitted by the Equity Commitment Letter (the “Delayed Preferred Stock” and the issuance and sale thereof, the “Delayed Preferred Stock Financing” and together with the Initial Preferred Stock Financing and the Acquisition Preferred Stock Financing, the “Preferred Stock Financing”) an amount equal to (i) in the case of ACM, $30.0 million and (ii) in the case of AACM, $20.0 million.

The Company has also agreed to issue to the Equity Commitment Parties warrants to purchase shares of common stock of the Company equal to an aggregate of 2.5% of the outstanding shares of common stock at a nominal exercise price.

The Preferred Stock will require quarterly dividend payments initially equal to a LIBOR rate plus 12% per annum of the liquidation preference, of which at least LIBOR plus 5% is to be payable in cash and the remainder paid in kind.

In certain circumstances, including if the Company does not pay the minimum cash dividend, the required dividend may be increased.

The Preferred Stock will be redeemable beginning two years after the first issuance of Preferred Stock at a price equal to 102% of the liquidation preference of the Preferred Stock plus any accrued and unpaid dividends or, beginning three years after the first issuance of Preferred Stock, at a price equal to the liquidation preference plus any accrued and unpaid dividends.

Prior to two years after the first issuance, the Preferred Stock is redeemable at a make-whole rate.

In the event of a change of control or liquidation event, the Company will be required to redeem the outstanding Preferred Stock.

The Preferred Stock will not have any voting rights except as required under Delaware law, but certain actions by the Company will require the consent of holders of a majority of the Preferred Stock.

In addition, the Preferred Stock will include certain covenants restricting, among other things, restricted payments, the incurrence of indebtedness, acquisitions and investments.

For information regarding our business and asset acquisitions, see Note 4 , Asset Acquisitions , Asset Contributions , and Business Combinations , to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

For information regarding our business disposal, see Note 2, Disposal of Business .

acquiring industry is highly competitive, with several large processors accounting for the majority of processing volume;

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(i) set minimum dollar amounts (not to exceed $10) for the acceptance of a credit card (and allows federal governmental entities and institutions of higher education to set maximum amounts for the acceptance of credit cards) and (ii) provide discounts or incentives to encourage consumers to pay with cash, checks, debit cards or credit cards.

The rules also contain prohibitions on network exclusivity and merchant routing restrictions that require a card issuer to enable at least two unaffiliated networks on each debit card, prohibit card networks from entering into exclusivity arrangements and restrict the ability of issuers or networks to mandate transaction routing requirements.

restrict the ability of issuers or networks to mandate transaction routing requirements.

The prohibition on network exclusivity has not significantly affected our ability to pass on network fees and other costs to our customers, nor do we expect it to in the future.

The Dodd-Frank Act also created the FSOC, which was established to, among other things, identify risks to the stability of the United States financial system.

The Dodd-Frank Act created the Consumer Financial Protection Bureau (“CFPB”), which has assumed responsibility for enforcing federal consumer protection laws, and the FSOC, which was established to, among other things, identify risks to the stability of the United States financial system.

The FSOC has the authority to require supervision and regulation of nonbank financial companies that the FSOC determines pose a systemic risk to the United States financial system.

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Given that a number of our clients are financial institutions that are directly subject to U.S.

federal anti-money laundering

laws and regulations, we have developed an anti-money laundering compliance program to best assist our clients in meeting such legal and regulatory requirements.

federal anti-

money laundering laws and regulations, we have developed an anti-money laundering compliance program to best assist our clients in meeting such legal and regulatory requirements.

We are subject to certain economic and trade sanctions programs that are administered by OFAC of the United States Department of Treasury, which place prohibitions and restrictions on all U.S.

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We continue to enhance such programs and policies to ensure that our customers do not engage in prohibited transactions with designated countries, individuals or entities.

Debt Collection and Credit Reporting Laws

Portions of our business may be subject to the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and similar state laws.

These debt collection laws are designed to eliminate abusive, deceptive and unfair debt collection practices and may require licensing at the state level.

The Fair Credit Reporting Act regulates the use and reporting of consumer credit information and also imposes disclosure requirements on entities that take adverse action based on information obtained from credit reporting agencies.

We have procedures in place to comply with the requirements of these laws.

Telephone Consumer Protection Act

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In addition to these contractual measures, we also rely on a combination of trademarks, copyrights, registered domain names, and patent rights to help protect the Priority brand and our other intellectual property.

Human Capital Management

As of December 31, 2020, we employed 479 employees, of which 472 were employed full-time.

None of our employees are represented by a labor union and we have experienced no work stoppages.

We have employees residing in 30 states across the country.

None of our employees are represented by a labor union or covered by a collective bargaining agreement.

Growth and Development

Our strategy to develop and retain the best talent includes an emphasis on employee training and development.

We promote our core values of ownership, innovation, camaraderie, service, authenticity and trust as an organization and offer awards to colleagues who exemplify these qualities.

We require a mandatory online training curriculum for our employees that includes annual anti-harassment and anti-discrimination training.

Well-being and Safety during COVID-19 Pandemic

The success of our business is connected to the well-being of our employees.

Accordingly, we are committed to the health, safety and wellness of our employees.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees and the communities in which we operate.

This included enabling all of our employees to seamlessly shift to work from home.

Over the past few years, we have made investments in our operating environments and technology that support day-to-day execution by employees working from home which allowed for the smooth transition.

Additional health and safety measures have been implemented for employees who have elected to work within office locations.

Inclusion and Diversity

Our inclusion and diversity program focuses on our employees, workplace and community.

We believe that our business is strengthened by a diverse workforce that reflects the communities in which we operate.

We believe all of our employees should be treated with respect and equality, regardless of gender, ethnicity, sexual orientation, gender identity, religious beliefs, or other characteristics.

As part of this goal, we launched a Diversity and Inclusion roundtable series for all employees to participate.

Inclusion and diversity remains a common thread in all of our human resource practices so that we can attract, develop, and retain the best talent for our workforce.

Availability of Filings

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business