What changed in this filing

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Item 1. Business

2022-03-01 compared with 2021-03-01 · 146 added, 127 removed, 208 unchanged (57% of the section changed)

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Business Overview

Since a significant portion of our revenue is derived from volume-based payment processing fees on card transactions, card payment volume is a key operating metric that we use to evaluate our business.

We are a leading payments technology company.

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We are a payments innovator, differentiated by our proprietary, integrated payment technology platform and our ability to reduce the complexity of electronic payments for businesses.

We intend to continue to strategically target verticals where we believe our ability to tailor payment solutions to our customers’ needs and the embedded nature of our integrated payment solutions will drive strong growth by attracting new customers and fostering long-term customer relationships.

We intend to continue to strategically target verticals where we believe our ability to tailor payment solutions to our clients’ needs and the embedded nature of our integrated payment solutions will drive strong growth by attracting new clients and fostering long-term client relationships.

Since a significant portion of our revenue is derived from volume-based payment processing fees, card payment volume is a key operating metric that we use to evaluate our business.

We processed approximately $20.5 billion of total card payment volume in 2021.

Our year-over-year card payment volume growth was approximately 35% in 2021 and 42% in 2020.

As of December 31, 2020, we had over 15,000 customers.

Our top 10 customers, with an average tenure of approximately four years, contributed to approximately 18% and 28% of total gross profit during the year ended December 31, 2020 and the year ended December 31, 2019, respectively.

As of December 31, 2021, we had over 18,000 clients.

Our top 10 clients, with an average tenure of approximately four years, contributed to approximately 14% and 18% of total gross profit during the year ended December 31, 2021 and the year ended December 31, 2020, respectively.

Our leading competitive position and differentiated solutions have enabled us to realize unique advantages in fast-growing and strategically-important segments of the payments market.

We provide payment processing solutions to customers primarily operating in the personal loans, automotive loans, receivables management, and business-to-business verticals.

We provide payment processing solutions to clients primarily operating in the personal loans, automotive loans, receivables management, and business-to-business verticals.

Our payment processing solutions enable consumers and businesses in these verticals to make payments using electronic payment methods, rather than cash or check, which have historically been the primary methods of payment in these verticals.

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Our receivables management vertical relates to consumer loan collections, which typically enter the receivables management process due to delinquency on credit card bills or as a result of major life events, such as job loss or major medical issues.

The business-to-business vertical relates to transactions occurring between a wide variety of enterprise customers, many of which operate in the manufacturing, wholesale, distribution, healthcare and education industries.

The business-to-business vertical relates to transactions occurring between a wide variety of enterprise clients, many of which operate in the manufacturing, wholesale, distribution, healthcare and education industries.

Our go-to-market strategy combines direct sales with integrations with key software providers in our target verticals.

The integration of our technology with key software providers in the verticals that we serve, including loan management systems, dealer management systems, collection management systems, and enterprise resource planning software systems, allows us to embed our omni-channel payment processing technology into our customers’ critical workflow software and ensure seamless operation of our solutions within our customers’ enterprise management systems.

We refer to these software

providers as our “software integration partners.” An integration allows our sales force to readily access new customer opportunities or respond to inbound leads because, in many cases, a business will prefer, or in some cases only consider, a payments provider that has already integrated or is able to integrate its solutions with the business’ primary enterprise management system.

The integration of our technology with key software providers in the verticals that we serve, including loan management systems, dealer management systems (“DMS”) , collection management systems, and enterprise resource planning software systems, allows us to embed our omni-channel payment processing technology into our client s’ critical workflow software and ensure seamless operation of our solutions within our client s’ enterprise management systems.

We refer to these software providers as our “software integration partners.” An integration allows our sales force to readily access new client opportunities or respond to inbound leads because, in many cases, a business will prefer, or in some cases only consider, a payments provider that has already integrated or is able to integrate its solutions with the business’ primary enterprise management system.

We have successfully integrated our technology solutions with numerous, widely-used enterprise management systems in the verticals that we serve, which makes our platform a more compelling choice for the businesses that use them.

Moreover, our relationships with our partners help us to develop deep industry knowledge regarding trends in customer needs.

Our integrated model fosters long-term relationships with our customers, which supports our volume retention rates that we believe are above industry averages.

Moreover, our relationships with our partners help us to develop deep industry knowledge regarding trends in client needs.

Our integrated model fosters long-term relationships with our client s, which supports our volume retention rates that we believe are above industry averages.

As of December 31, 20 2 1 , we maintained approximately 2 22 integrations with various software providers.

Strategic acquisitions are another important part of our long-term strategy.

Our acquisitions have enabled us to further penetrate existing vertical markets, access new strategic vertical markets, broaden our technology and solutions suite, and expand our customer base.

Our acquisitions have enabled us to further penetrate existing vertical markets, access new strategic vertical markets, broaden our technology and solutions suite, and expand our client base.

We continue to focus on identifying strategic acquisition candidates in an effort to drive accretive growth.

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Increase Penetration in Existing Verticals

We expect to grow meaningfully by continuing to provide innovative payment solutions and customer support to our existing customers as well as new customers in the verticals that we currently serve.

In addition, our business model allows us to benefit from the growth of our customers and software integration partners.

As our customers’ payment volumes and transactions increase, our revenues increase as a result of the fees we charge for processing these payments.

We expect to grow meaningfully by continuing to provide innovative payment solutions and client support to our existing clients as well as new clients in the verticals that we currently serve.

In addition, our business model allows us to benefit from the growth of our clients and software integration partners.

As our clients’ payment volumes and transactions increase, our revenues increase as a result of the fees we charge for processing these payments.

Many of the vertical markets in which we compete are continuing to shift from legacy payment mediums — primarily cash and check — to electronic forms of payment.

We expect to benefit from this trend as our customers increasingly opt to process payments via the electronic forms of payment in which we specialize.

We expect to benefit from this trend as our clients increasingly opt to process payments via the electronic forms of payment in which we specialize.

New Vertical and Geographic Expansion

We also expect that we will find attractive growth potential in certain verticals in which we currently have limited operations or do not operate.

Though we offer highly customized payment solutions to our customers, our core technology platform is comprehensive and can be utilized to penetrate other strategic vertical markets.

Though we offer highly customized payment solutions to our clients, our core technology platform is comprehensive and can be utilized to penetrate other strategic vertical markets.

Additionally, we envision growing our geographic footprint, as new territories continue to present new business opportunities.

For example, we are focused on expanding our Canadian operations, as the demand for our solutions among existing and prospective Canadian customers remains strong.

For example, we are focused on expanding our Canadian operations, as the demand for our solutions among existing and prospective Canadian clients remains strong.

Strengthen and Extend Our Solution Portfolio through Continued Innovation.

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Strategic Acquisitions

From January 1, 2016 through December 31, 2020, we have successfully acquired eight businesses.

From January 1, 2016 through December 31, 2021, we have successfully acquired eleven businesses.

Given the large size and attractive growth trends of our current addressable market, we are primarily focused on growing our business organically.

However, we may selectively pursue strategic acquisitions as opportunities arise that meet our internal

requirements for the use of capital and return on investment.

However, we may selectively pursue strategic acquisitions as opportunities arise that meet our internal requirements for the use of capital and return on investment.

Some of these opportunities may include those that enable us to acquire new capabilities that may be harder to develop in-house, gain entrance into new segments of the market, enter new markets, or consolidate our existing market.

We provide our customers with comprehensive solutions relating to the following methods of electronic payment:

Credit and Debit Processing — Allows our customers to accept card payments.

We provide our clients with comprehensive solutions relating to the following methods of electronic payment:

Credit and Debit Processing — Allows our clients to accept card payments.

These payments can be made using any of our payment channels, as further described below.

Virtual Credit Card Processing — Our virtual credit card product offering enables our customers to automate their payables transactions by sending single-use virtual credit cards to their suppliers.

Automated Clearing House (“ACH”) Processing — Our ACH processing capabilities allow our customers to send and accept traditional and same-day ACH transactions.

Virtual Credit Card Processing — Our virtual credit card product offering enables our clients to automate their payables transactions by sending single-use virtual credit cards to their suppliers.

Automated Clearing House (“ACH”) Processing — Our ACH processing capabilities allow our clients to send and accept traditional and same-day ACH transactions.

Enhanced ACH Processing — Provides the same functionality as our standard ACH processing capability, but with the added benefit of incremental transaction and reconciliation data.

Instant Funding — Our instant funding capabilities allow our customers to transfer funds directly to a consumer’s debit or prepaid card.

Instant Funding — Our instant funding capabilities allow our clients to transfer funds directly to a consumer’s debit or prepaid card.

We have created a proprietary process that decreases processing delays typically associated with traditional fund disbursements.

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Virtual Terminal — A terminal that provides virtual payment access for processing of ACH or card transactions.

• Hosted Payment Page — A customer-branded terminal that enables ACH and card transaction processing.

• Online Customer Portal — A consumer-facing, merchant-specific website that gives a merchant’s customer the ability to pay online and view account information anywhere, anytime.

• Hosted Payment Page — A client-branded terminal that enables ACH and card transaction processing.

• Online Client Portal — A consumer-facing, client-specific website that gives a client’s customer the ability to pay online and view account information anywhere, anytime.

A Repay hosted website may be stand alone or integrated with any other software application.

Mobile Application — We provide customers the ability to accept payments via a mobile application on a customized, white-label basis.

Mobile Application — We provide clients the ability to accept payments via a mobile application on a customized, white-label basis.

Text-to-Pay — Allows a business’ customer to pay with a simple text message after receiving an SMS alert that reminds such customer when payments are due.

Interactive Voice Response (“IVR”) — A secure and flexible option to pay over the phone, 24 hours a day, 7 days a week, via a 1-800 number with bilingual capabilities.

Point of Sale (“POS”) — We provide payment acceptance at brick-and-mortar locations through POS equipment that requires a merchant’s customer to provide a card.

Point of Sale (“POS”) — We provide payment acceptance at brick-and-mortar locations through POS equipment that requires a client’s customer to provide a card.

Sales and Distribution

Our sales effort primarily consists of two strategies:

first, our direct sales representatives, who focus on each of our core verticals, and second, our software integration partners, which enable the direct salesforce to more effectively access new customer opportunities and respond to inbound leads.

Direct Sales Representatives

Our sales representatives are organized by vertical market and account size.

Direct sales representatives work with our customers and software integration partners to understand our customers’ desired payment solutions and then communicate those desires to our product and technology teams, who build a customized suite of products and payment

channels tailored to our customers’ specific needs.

Direct sales representatives work with our clients and software integration partners to understand our clients’ desired payment solutions and then communicate those desires to our product and technology teams, who build a customized suite of products and payment channels tailored to our clients’ specific needs.

We also maintain a sales support team that supports the onboarding process.

Software Integration Partners

We are currently integrated with approximately 124 software partners that are providers of our customers’ primary enterprise management systems.

Our integrations ensure seamless delivery of our full suite of payment processing capabilities to our customers.

These integrations are also a critical part of our marketing strategy, as many customers will prefer to award their payments business to payments processors who have worked to integrate their solutions into the customer’s enterprise management systems.

We believe that we have developed an effective operations system, including our proprietary onboarding, compliance and customer oversight processes, which is structured to enhance the performance of our platform and support our customers.

Customer and Transaction Risk Management

We target customers that we identify as low-risk through the development of underwriting policies and transaction management procedures to manage approval of new accounts and to establish ongoing monitoring of customer accounts.

Effective risk management aids us in minimizing customer losses, such as those relating to chargebacks or similar rejected transactions, and avoiding fraud for the mutual benefit of our customers, our sponsor banks and ourselves.

As of December 31, 2021, we were integrated with approximately 222 software partners that are providers of our clients’ primary enterprise management systems.

Our integrations ensure seamless delivery of our full suite of payment processing capabilities to our clients.

These integrations are also a critical part of our marketing strategy, as many clients will prefer to award their payments business to payments processors who have worked to integrate their solutions into the client’s enterprise management systems.

We believe that we have developed an effective operations system, including our proprietary onboarding, compliance and client oversight processes, which is structured to enhance the performance of our platform and support our clients.

Client and Transaction Risk Management

We target clients that we identify as low-risk through the development of underwriting policies and transaction management procedures to manage approval of new accounts and to establish ongoing monitoring of client accounts.

Effective risk management aids us in minimizing client losses, such as those relating to chargebacks or similar rejected transactions, and avoiding fraud for the mutual benefit of our clients, our sponsor banks and ourselves.

Proprietary Compliance Management System .

We have developed proprietary onboarding, compliance, and customer oversight processes, of which our Compliance Management System (“CMS”) is a part.

We have developed proprietary onboarding, compliance, and client oversight processes, of which our Compliance Management System (“CMS”) is a part.

Our CMS, developed in conjunction with the Third Party Payment Processors Association, is based on four main components — board and management oversight, a compliance program with written policies and procedures and employee training and monitoring, responsiveness to consumer complaints and annual compliance audits from an independent third party — and is inclusive of the Electronic Transaction Association guidelines on underwriting and risk.

Customer Onboarding .

Client Onboarding .

We believe we maintain rigorous underwriting standards.

Prospective customers submit applications to our credit underwriting department, which performs verification and credit-related checks on all applicants.

Each customer is assigned a risk profile based on sponsor bank requirements, as well as additional criteria specified by us.

Prospective clients submit applications to our credit underwriting department, which performs verification and credit-related checks on all applicants.

Each client is assigned a risk profile based on sponsor bank requirements, as well as additional criteria specified by us.

Our sponsor banks periodically review and approve of our underwriting policies to ensure compliance with applicable law, regulations and payment network rules.

Upon approval, the ongoing risk level of a customer is monitored and adjusted on a monthly basis based on additional data relating to such customer.

Customer Monitoring .

Each customer’s file is assigned one of three risk levels (low, medium or high) corresponding to several customer behaviors.

Upon approval, the ongoing risk level of a client is monitored and adjusted on a monthly basis based on additional data relating to such client.

Client Monitoring .

Each client’s file is assigned one of three risk levels (low, medium or high) corresponding to several client behaviors.

We review and adjust these risk levels on a monthly basis and additionally subject them to more in-depth quarterly reviews.

We also engage third parties and rely on internal reporting to identify and monitor credit/fraud risk.

We generate customer-specific reports that compile daily and historical transactions, which may include average ticket, transaction volume, refund and chargeback levels and authorization history, which we utilize in order to identify suspicious processing activity.

We review these reports on a daily basis and suspend any irregular processing activity, which is subject to review, remediation and, as appropriate, suspension of either an individual or batch of transactions or a particular customer, as applicable.

We generate client-specific reports that compile daily and historical transactions, which may include average ticket, transaction volume, refund and chargeback levels and authorization history, which we utilize in order to identify suspicious processing activity.

Investigation and Loss Prevention .

If a customer exceeds the parameters established by our underwriting and/or risk management team or we determine that a customer has violated the payment network rules or the terms of its service agreement with us, one of our team members will identify and document the incident.

We then review the incident to determine the actions taken or that we can take to reduce our exposure to loss and the exposure of our customer to liability.

As a part of this process, we may request additional transaction information, withhold or divert funds, verify delivery of merchandise or, in some circumstances, deactivate the customer account, include the customer on the Network Match List to notify our industry of the customer’s behavior or take legal action against the customer.

We require some of our customers to establish cash or non-cash collateral reserves, which may include certificates of deposit, letters of credit, rolling merchant reserves or upfront cash.

If a client exceeds the parameters established by our underwriting and/or risk management team or we determine that a client has violated the payment network rules or the terms of its service agreement with us, one of our team members will identify and document the incident.

We then review the incident to determine the

actions taken or that we can take to reduce our exposure to loss and the exposure of our client to liability.

As a part of this process, we may request additional transaction information, withhold or divert funds, verify delivery of merchandise or, in some circumstances, deactivate the client account, include the client on the Network Match List to notify our industry of the client ’s behavior or take legal action against the client .

We require some of our clients to establish cash or non-cash collateral reserves, which may include certificates of deposit, letters of credit, rolling merchant reserves or upfront cash.

This collateral is utilized in order to offset potential credit or fraud risk liability that we may incur.

We attempt to hold such collateral reserves for as long as we are exposed to a loss resulting from a customer’s payment processing activity.

We attempt to hold such collateral reserves for as long as we are exposed to a loss resulting from a client’s payment processing activity.

Chargebacks .

The payment networks permit the reversal of a money transfer, a chargeback, up to six months (or in rare cases, a longer time frame) after the later of the date the transaction is processed or the delivery of the product or service to the cardholder.

If the customer incurring the chargeback is unable to fund the refund to the card-issuing bank, we are required to do so by the rules of the payment networks and our contractual arrangements with our sponsor banks.

If the client incurring the chargeback is unable to fund the refund to the card-issuing bank, we are required to do so by the rules of the payment networks and our contractual arrangements with our sponsor banks.

During the year ended December 31, 2021, we believe our chargeback rate was under 1% of our payment volume.

Security, Disaster Recovery, and Back-up Systems

We adhere to strict security standards to protect the payment information that we process.

We regularly update our network and provide operating system security releases and virus defenses.

We routinely retain external parties to audit our systems’ compliance with current security standards as established by the Payment Card Industry Data Security Standards (“PCI DSS”), Service Organization Control, and Health Insurance Portability and Accountability Act (“HIPAA”) and to test our systems against vulnerability to unauthorized access.

Further, we use one of the most advanced commercially available technologies to encrypt the cardholder numbers and customer data that we store in our databases.

Additionally, we have a dedicated team responsible for security incident response, which team develops, maintains, tests and verifies our incident response plan.

We adhere to industry security standards to protect the payment information that we process.

We regularly update our network and apply operating system security releases and malware defenses.

We use a third party vendor solution for security education materials.

Every employee and contractor is required to successfully complete annual security awareness training.

We routinely retain external parties to audit our systems’ compliance with current security standards as established by the Payment Card Industry Data Security Standards (“PCI DSS”), Service Organization Control ("SOC1 Type II,” “SOC2 Type II”), Health Insurance Portability and Accountability Act (“HIPAA”) and International Organization for Standardization (“ISO 27001”) and to test our systems against vulnerability to unauthorized access.

We utilize third party vendors for internal and external penetration testing.

Further, we use one of the most advanced commercially available technologies to encrypt the cardholder numbers and client data that we store in our databases.

Additionally, we have a dedicated team responsible for continuous monitoring and security incident response.

This team also develops, maintains, tests and verifies our incident response plan.

Disaster recovery is built into our infrastructure through redundant hardware and software applications hosted in two distinct cloud regions.

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Third Party Processors and Sponsor Banks

We partner with institutions in the payment chain to provide authorization, settlement and funding services in connection with our customers’ transactions.

We partner with institutions in the payment chain to provide authorization, settlement and funding services in connection with our clients’ transactions.

These institutions include third party processors and sponsor banks, who sit between us, acting as the merchant acquirer or payment processor, and the payment networks, such as Visa, MasterCard and Discover.

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Under such processing arrangements, the third-party processors and vendors receive processing fees based on a percentage of the payment volume they process.

In order for us to process and settle transactions for our customers, we have entered into sponsorship agreements with banks that are members of the payment networks.

In order for us to process and settle transactions for our clients, we have entered into sponsorship agreements with banks that are members of the payment networks.

We are required to register with the payment networks through these bank partners because we, as a payment processor, are not a “member bank” as defined by the major payment networks.

Our member bank partners sponsor our adherence to the rules and standards of the payment networks and enable us to route transactions under the sponsor banks’ control and identification numbers (for example, known as BIN for Visa and ICA for MasterCard) across the card and ACH networks to authorize and clear transactions.

Our relationships with multiple sponsor banks give us the flexibility to shift payment volumes between them, which helps us to secure more competitive pricing for our customers and to maintain redundancy.

When we facilitate a customer’s payment to its suppliers or vendors, we typically utilize the services of third party program managers, such as Wex Inc.

Our relationships with multiple sponsor banks give us the flexibility to shift payment volumes between them, which helps us to secure more competitive pricing for our clients and to maintain redundancy.

When we facilitate a client’s payment to its suppliers or vendors, we typically utilize the services of third party program managers, such as Wex Inc.

and Comdata Inc.

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Under such arrangements, the program manager and issuing bank retain a portion of the interchange generated by each transaction.

Under the applicable contractual arrangements, our customers are generally required to prefund these payments.

Because we are not a licensed money transmitter, we have entered into custodial agreements with banks or other financial institutions who will hold our customers’ funds in trust.

Under the applicable contractual arrangements, our clients are

generally required to prefund these payments.

Because we are not a licensed money transmitter, we have entered into custodial agreements with banks or other financial institutions who will hold our c lient s’ funds in trust.

Competitive Conditions and Market Trends

We compete with a variety of payment processing companies that have different business models, go-to-market strategies and technical capabilities.

We compete with a large number of small payments processing companies that provide integrated payments solutions and/or related hardware to customers within our existing verticals.

More broadly in the overall payments industry, our payment and software solutions compete against many forms of financial services and payment systems, including Open Edge (a division of Global Payments), ACI Worldwide, Inc., JetPay Corporation (a subsidiary of NCR Corporation), Electronic Payment Providers, Inc.

BillingTree), Paya, Inc., Paymentus Corporation, AvidXchange, Corporate Spending Innovations (a division of Edenred), Nvoicepay (a division of FLEETCOR Technologies) and Zelis.

We also compete against many traditional merchant acquirers, such as financial institutions, affiliates of financial institutions and payment processing companies in the payment processing industry, including Bank of America Merchant

Services, Elavon, Inc.

We compete with a large number of small payments processing companies that provide integrated payments solutions and/or related hardware to clients within our existing verticals.

More broadly in the overall payments industry, our payment and software solutions compete against many forms of financial services and payment systems, including Open Edge (a division of Global Payments), ACI Worldwide, Inc., Paya, Inc., Paymentus Corporation, AvidXchange, Corporate Spending Innovations (a division of Edenred), Nvoicepay (a division of FleetCor Technologies, Inc.) and Zelis.

(a subsidiary of U.S.

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(2) product offering, including emerging technologies and development by other participants in the payments ecosystem;

(3) service, including product functionality, value-added solutions and strong customer support for both merchants and software integration partners;

(3) service, including product functionality, value-added solutions and strong client support for both clients and software integration partners;

and (4) reliability, including a strong reputation for quality service and trusted software integration partners.

Our competitors include large and well-established companies, including banks, credit card providers, technology and ecommerce companies and traditional retailers, many of which are larger than we are, have a dominant and secure position in the markets in which they operate or offer other products and services to consumers and customers which we do not offer.

Moreover, we compete against all forms of payments, including credit cards, bank transfers, and traditional payment methods, such as cash and check.

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Many of the vertical markets in which we compete are continuing to shift from legacy payment mediums — primarily cash and check — to electronic forms of payment.

In addition, the COVID-19 pandemic has led to an accelerated shift to electronic payments.

We expect to benefit from this trend as our customers increasingly opt to process payments via the electronic forms of payment in which we specialize.

In addition, the COVID-19 pandemic and the resulting changes in consumer behavior has led to an accelerated shift to electronic payments.

We expect to benefit from this trend as our clients increasingly opt to process payments via the electronic forms of payment in which we specialize.

We have experienced in the past, and may continue to experience, seasonal fluctuations in our volumes and revenues as a result of consumer spending patterns.

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Our current acquisition strategy focuses on integrated payments companies serving attractive vertical markets and opportunities to broaden our product offerings.

Since 2016 through December 31, 2020, we have completed eight acquisitions, which are described below.

From January 1, 2016 through December 31, 2021, we have completed eleven acquisitions, which are described below.

These acquisitions were of payment companies and are representative of the acquisitions we envision consummating in the future.

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The transaction marked our expansion into the automotive finance space.

We have benefitted greatly from Sigma’s deep integrations with automotive finance software platforms, or dealer management systems (DMS).

We have benefitted greatly from Sigma’s deep integrations with automotive finance software platforms, or DMS.

PaidSuite Acquisition

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PaidSuite was an electronic payment solutions provider to the accounts receivable management industry.

The transaction accelerated our growth into the accounts receivable management space via customer and software integration partner relationships.

The transaction accelerated our growth into the accounts receivable management space via client and software integration partner relationships.

Paymaxx Acquisition

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The acquisition of CPS enhanced our business-to-business accounts payable automation offerings and introduced our solutions to new verticals including education, government, and media sectors.

BillingTree Acquisition

On June 15, 2021, we acquired all of the equity interests of BT Intermediate, LLC (together with its subsidiaries, “BillingTree”).

The acquisition of BillingTree further expanded our position in the healthcare, credit union, and accounts receivable management industries and significantly enhanced our scale and our client diversification.

Kontrol Acquisition

On June 22, 2021, we acquired substantially all of the assets of Kontrol LLC (“Kontrol”).

The acquisition of Kontrol grew our accounts payable automation business and enabled us to leverage our existing B2B technology infrastructure to increase our virtual card volume.

Payix Acquisition

On December 29, 2021, we acquired Payix Holdings Incorporated (together with its subsidiary, “Payix”).

The acquisition of Payix expanded our position in the large and growing automotive finance market and provided further access to software integrations with leading loan management system and DMS integrations.

Government Regulation

We operate in an increasingly complex and ever evolving legal and regulatory environment.

Our and our customers’ businesses are subject to a variety of federal, state and local laws and regulations, as well as the rules and standards of the payment networks that we utilize to provide our electronic payment services.

While in some cases payment processors such as Repay are not directly regulated by governmental agencies, because of the rules and regulations enacted at the state and federal level that affect our customers and sponsor banks, we have developed and continually evaluate and update our compliance models to keep up with the rapid evolution of the legal and regulatory regime our customers and sponsor banks face.

We are also subject to legal and regulatory requirements which govern the use, storage and distribution of the information we collect from our customers and cardholders while processing transactions.

Our and our clients’ businesses are subject to a variety of federal, state and local laws and regulations, as well as the rules and standards of the payment networks that we utilize to provide our electronic payment services.

While in some cases payment processors such

as Repay are not directly regulated by governmental agencies, because of the rules and regulations enacted at the state and federal level that affect our client s and sponsor banks, we have developed and continually evaluate and update our compliance models to keep up with the rapid evolution of the legal and regulatory regime our client s and sponsor banks face.

We are also subject to legal and regulatory requirements which govern the use, storage and distribution of the information we collect from our client s and cardholders while processing transactions.

Dodd-Frank Act

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The Dodd-Frank Act and the Federal Reserve’s implementing regulations require that such interchange fees be “reasonable and proportional” to the cost incurred by the issuer in processing the transactions.

Federal Reserve regulations implementing this “reasonable and proportional” requirement have capped debit interchange rates for card issuers operating in the United States with assets of $10 billion or more at the sum of $0.21 per transaction and 5 basis points multiplied by the value of the transaction to reflect a portion of the issuer’s fraud losses plus, for qualifying issuers, an additional $0.01 per transaction in debit interchange for fraud prevention costs.

In addition, the regulations contain non-exclusivity provisions that ban debit card networks from prohibiting an issuer from contracting with any other card network that may process an electronic debit transaction involving an issuer’s debit cards and prohibit card issuers and card networks from inhibiting the ability of merchants to direct the routing of debit card transactions over any network that can process the transaction.

Beginning April 1, 2012, most debit card issuers in the United States were required to participate in at least two unaffiliated debit card networks.

On April 1, 2013, the ban on network exclusivity arrangements became effective for prepaid card and healthcare debit card issuers, with certain exceptions for prepaid cards issued before that date.

On May 1, 2013, the ban on network exclusivity arrangements became effective for all reloadable general use prepaid cards.

Effective July 22, 2010, merchants were allowed to set minimum dollar amounts (not to exceed $10) for the acceptance of a credit card (while federal governmental entities and institutions of higher education may set maximum amounts for the acceptance of credit cards).

They were also allowed to provide discounts or incentives to entice consumers to pay with an alternative payment method, such as cash, checks or debit cards.

In addition, the regulations contain certain prohibitions on card brand network exclusivity and merchant routing restrictions of debit card transactions.

As a result of the Dodd-Frank Act, merchants are also allowed to set minimum dollar amounts (within certain parameters) for the acceptance of a credit card, and they are allowed to provide discounts or incentives to entice consumers to pay with an alternative payment method, such as cash, checks or debit cards.

The Dodd-Frank Act also created the Consumer Financial Protection Bureau (the “CFPB”), which has rulemaking authority over consumer protection laws, including the authority to regulate consumer financial products in the United States, including consumer credit, deposit, payment, and similar products.

The CFPB may also have authority over us as a provider of services to regulated financial institutions in connection with consumer financial products.

Any new rules or regulations implemented by the CFPB, and other similar regulatory agencies in other jurisdictions, or pursuant to the Dodd-Frank Act that are applicable to us or our customers’ businesses, or any adverse changes thereto, could increase our cost of doing business or limit our current offerings of integrated payment solutions.

Any new rules or regulations implemented by the CFPB, and other similar regulatory agencies in other jurisdictions, or pursuant to the Dodd-Frank Act that are applicable to us or our clients’ businesses, or any adverse changes thereto, could increase our cost of doing business or limit our current offerings of integrated payment solutions.

Privacy and Information Security Regulations

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The Health Information Technology for Economic and Clinical Health Act and its related rules and regulations extended the privacy and security provisions of HIPAA to “Business Associates” of “Covered Entities” (each as defined by HIPAA).

Some of our customers are Covered Entities.

In providing certain services for our Covered Entity customers, we receive, maintain, and transmit Protected Health Information on their behalf, and we are a Business Associate.

As a Business Associate, we are subject to HIPAA rules and regulations regarding privacy and security of Protected Health Information.

We enter into Business Associate Agreements with our Covered Entity customers, requiring compliance with HIPAA rules and regulations, and defining permissible uses and disclosures of Protected Health Information.

Some of our clients are Covered Entities.

In providing certain services for our Covered Entity clients, we may receive, maintain, and transmit Protected Health Information on their behalf, and we may be a Business Associate.

To the extent we are a Business Associate, we are subject to HIPAA rules and regulations regarding privacy and security of Protected Health Information.

In connection with certain services, we may enter into Business Associate Agreements with

our Covered Entity client s, requiring compliance with HIPAA rules and regulations, and defining permissible uses and disclosures of Protected Health Information.

Anti-Money Laundering and Counter-Terrorism Regulation

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Unfair or Deceptive Acts or Practices

We and many of our customers are subject to Section 5 of the Federal Trade Commission Act prohibiting unfair or deceptive acts or practices and various state laws similar in scope and subject matter thereto.

In addition, laws prohibiting these activities and other laws, rules and or regulations, including the Telemarketing Sales Act, may directly impact the activities of certain of our customers, and in some cases may subject us, as the customer’s payment processor or provider of certain services, to investigations, fees, fines and disgorgement of funds if we are deemed to have aided and abetted or

otherwise provided the means and instrumentalities to facilitate the illegal or improper activities of a customer through our services.

We and many of our clients are subject to Section 5 of the Federal Trade Commission Act prohibiting unfair or deceptive acts or practices and various state laws similar in scope and subject matter thereto.

In addition, laws prohibiting these activities and other laws, rules and or regulations, including the Telemarketing Sales Rule, may directly impact the activities of certain of our clients, and in some cases may subject us, as the client’s payment processor or provider of certain services, to investigations, fees, fines and disgorgement of funds if we are deemed to have aided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal or improper activities of a client through our services.

Various federal and state regulatory enforcement agencies, including the Federal Trade Commission (“FTC”) and the states attorneys general, have authority to take action against payment processors who violate such laws, rules and regulations.

To the extent we are processing payments or providing services for a customer suspected of violating such laws, rules and regulations, we may face enforcement actions and, as a result, incur losses and liabilities that may adversely affect our business.

In addition, the Dodd-Frank Act gave the CFPB broad authority to prohibit “unfair, deceptive or abusive acts or practices” in connection with the provision of consumer financial products and services.

The CFPB recently issued a policy statement providing a framework for how it defines “abusive” conduct and how it will enforce the prohibition against abusive acts or practices in enforcement actions against financial services companies and their service providers (including payment processors).

UDAAP violations include omissions or misrepresentations of important information to consumers or practices that take advantage of vulnerable consumers, such as elderly or low-income consumers.

The CFPB has left open the possibility of engaging in a future rulemaking to further define the abusiveness standard and it is uncertain how future rulemaking may impact our business operations and risk.

To the extent we are processing payments or providing services for a client suspected of violating such laws, rules and regulations, we may face enforcement actions and, as a result, incur losses and liabilities that may adversely affect our business.

In addition, the Dodd-Frank Act gave the CFPB broad authority to prohibit “unfair, deceptive or abusive acts or practices” (“UDAAP”) in connection with the provision of consumer financial products and services.

The CFPB has extended certain UDAAP-related provisions of the Dodd-Frank Act to directly apply to payment processors.

Indirect Regulatory Requirements

Certain of our customers and our sponsor banks are financial institutions that are directly subject to various regulations and compliance obligations issued by the CFPB, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and other agencies responsible for regulating financial institutions, which includes state financial institution regulators.

While these regulatory requirements and compliance obligations do not apply directly to us, many of these requirements materially affect the services we provide to our customers and us overall.

Certain of our clients and our sponsor banks are financial institutions that are directly subject to various regulations and compliance obligations issued by the CFPB, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and other agencies responsible for regulating financial institutions, which includes state financial institution regulators.

While these regulatory requirements and compliance obligations do not apply directly to us, many of these requirements materially affect the services we provide to our clients and us overall.

The financial institution regulators have imposed requirements on regulated financial institutions to manage their third-party service providers.

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and conducting ongoing monitoring, diligence and audit of the performance of third-party service providers.

Accommodating these requirements applicable to our customers imposes additional costs and risks in connection with our relationships with financial institutions.

We expect to expend significant resources on an ongoing basis in an effort to assist our customers in meeting their legal requirements.

Additionally, our customers, particularly those in the consumer finance market, are subject to various federal, state and local laws and regulations that impose restrictions and requirements on their businesses, such as limitations on interest rates and fees, maximum loan amounts and the number of simultaneous or consecutive loans, imposition of required waiting periods between loans, loan extensions and refinancing, requiring payment schedules (including maximum and minimum loan durations) or repayment plans for borrowers claiming inability to repay loans, mandating disclosures, security for loans, licensing requirements and, in certain jurisdictions, database reporting and loan utilization information.

Accommodating these requirements applicable to our clients impose additional costs and risks in connection with our relationships with financial institutions.

We expect to expend significant resources on an ongoing basis in an effort to assist our clients in meeting their legal requirements.

Additionally, our clients, particularly those in the personal loans, automotive loans and receivables management verticals, are subject to various federal, state and local laws and regulations that impose restrictions and requirements on their businesses.

For personal lenders and automotive lenders, these laws and regulations could include limitations on interest rates and fees, maximum loan amounts and the number of simultaneous or consecutive loans, imposition of required waiting periods between loans, loan extensions and refinancing, requiring payment schedules (including maximum and minimum loan durations) or repayment plans for borrowers claiming inability to repay loans, mandating disclosures, security for loans, licensing requirements and, in certain jurisdictions, database reporting and loan utilization information.

For receivables management companies, these laws and regulations could include laws and regulations (including the federal Fair Debt Collection Practices Act (“FDCPA”) and comparable state laws) regarding the time, place and manner of communications

with consumers regarding debt collection and prohibitions or limitations on certain debt collection practices .

Lastly, some of our clients are subject to various state laws and regulations that prohibit or limit the imposition of a surcharge or convenience fee in connection with their customers use of a payment card or other form of electronic payment.

Payment Network Rules and Standards

Payment networks, such as Visa, MasterCard and American Express, establish their own rules and standards that allocate liabilities and responsibilities among the payment networks and their participants.

These rules and standards, including the Payment Card Industry Data Security Standards, govern a variety of areas, including how consumers and customers may use their cards, the security features of cards, security standards for processing, data security and allocation of liability for certain acts or omissions, including liability in the event of a data breach.

These rules and standards, including the Payment Card Industry Data Security Standards, govern a variety of areas, including how consumers and customers may use their cards, whether (and the terms under which) convenience fees or surcharges may be imposed in connection with the use of their cards, the security features of cards, security standards for processing, data security and allocation of liability for certain acts or omissions, including liability in the event of a data breach.

The payment networks may change these rules and standards from time to time as they may determine in their sole discretion and with or without advance notice to their participants.

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The networks may fine, penalize or suspend the registration of participants for certain acts or omissions or the failure of the participants to comply with applicable rules and standards.

In order for us to process and settle transactions for our customers, we have entered into sponsorship agreements with banks that are members of the payment networks.

We are required to register with the payment networks through these bank partners because we, as a payment processor, are not a “member bank” as defined by the major payment networks’ rules

and standards governing access to those networks.

In order for us to process and settle transactions for our clients, we have entered into sponsorship agreements with banks that are members of the payment networks.

We are required to register with the payment networks through these bank partners because we, as a payment processor, are not a “member bank” as defined by the major payment networks’ rules and standards governing access to those networks.

Our bank partners sponsor our adherence to the rules and standards of the payment networks and enable us to route transactions under the sponsor banks’ control and identification numbers (known as BIN for Visa and ICA for MasterCard) across the card and ACH networks to authorize and clear transactions.

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These restrictions place the settlement assets and liabilities under the control of the member bank.

Our sponsorship agreements give our sponsor banks substantial discretion in approving certain aspects of our business practices, including our solicitation, application and qualification procedures for customers and the terms of our agreements with customers, and provide them with the right to audit our compliance with the payment network rules and guidelines.

Our sponsorship agreements give our sponsor banks substantial discretion in approving certain aspects of our business practices, including our solicitation, application and qualification procedures for clients and the terms of our agreements with clients, and provide them with the right to audit our compliance with the payment network rules and guidelines.

We are also subject to network operating rules and guidelines promulgated by the National Automated Clearing House Association (“NACHA”) relating to payment transactions we process using the Automated Clearing House Network.

Like the payment networks, NACHA may update its operating rules and guidelines at any time, which can require us to take more costly compliance measures or to develop more complex monitoring systems.

Similarly, our ACH sponsor banks have the right to audit our compliance with NACHA’s rules and guidelines, and are given wide discretion to approve certain aspects of our business practices and terms of our agreements with ACH customers.

Other Regulation

We are subject to U.S.

federal and state unclaimed or abandoned property (escheat) laws, which require us to turn over to certain government authorities the property of others we hold that has been unclaimed for a specified period of time, such as account balances that are due to a software integration partner or customer following discontinuation of its relationship with us.

federal and state unclaimed or abandoned property (escheat) laws, which require us to turn over to certain government authorities the property of others we hold that has been unclaimed for a specified period of time, such as account balances that are due to a software integration partner or client following discontinuation of its relationship with us.

The Housing Assistance Tax Act of 2008 requires certain merchant acquiring entities and third-party settlement organizations to provide information returns for each calendar year with respect to payments made in settlement of electronic payment transactions and third-party payment network transactions occurring in that calendar year.

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Certain of our products and services are based on proprietary software and related payment systems solutions.

We rely on a combination of copyright, trademark, and trade secret laws, as well as employee and third-party non-disclosure, confidentiality, and other contractual arrangements to establish, maintain, and enforce our intellectual property rights in our technology, including with respect to our proprietary rights related to our products and services.

technology, including with respect to our proprietary rights related to our products and services.

In addition, we license technology from third parties that is integrated into some of our solutions.

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We also own a number of domain names, including www.repay.com.

For additional information regarding some of the risks relating to our intellectual property see “ Risk Factors — Risks Related to Our Business — We may not be able to successfully manage our intellectual property and may be subject to infringement claims.

” in Part I, Item 1A of this Annual Report on Form 10-K.

For additional information regarding some of the risks relating to our intellectual property see “Risk Factors — Risks Related to Our Business — We may not be able to successfully manage our intellectual property and may be subject to infringement claims.” in Part I, Item 1A of this Annual Report on Form 10-K.

Human Capital

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During 2021, we added 266 new employees (including 161 through acquisitions).

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

We strive to create and maintain a special culture at REPAY that focuses on empowerment, driving performance, collaboration, and transparency.

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We participate in an annual employee engagement and feedback survey which allows all full-time employees to anonymously give us feedback on our workplace culture, employee programs, and more.

In 2020, we had a 96% participation rate, with 94% of participants saying we are a great place to work.

Our employees’ feedback from the annual surveys have

allowed us to be certified as a Great Place to Work ® for the last four consecutive years.

In 2021, we had 90% of participants say we are a great place to work.

Our employees’ feedback from the annual surveys have allowed us to be certified as a Great Place to Work® for the last five consecutive years.

In 2021, we were recognized by Fortune® as a Best Workplace in Financial Services and Insurance.

We take employee feedback seriously and share the results of the survey, along with an action plan of how we can continue to improve, to all employees.

Our dedicated human resources team focuses on talent acquisition, development, and retention.

Our virtual new hire onboarding experience, which consists of at-home equipment, welcome gift packages and human resources orientation, ensures our new hires have the support they need when starting with a new company.

Attracting, developing, and retaining top talent is a priority at REPAY and we have a dedicated human resources team that focuses on these initiatives.

To ensure we stay competitive in the current talent market, we strive to make it clear to our people that we value and appreciate them.

The majority of our workforce is offered flexible or fully remote work flexible schedules.

We foster a culture of rewards and recognition and incentivize our people with opportunities for growth within the company.

Our compensation strategy gives us competitive advantages by offering competitive salaries, bonus potential and employee ownership opportunities for a meaningful portion of our employees through equity incentive grants.

New employees are welcomed through our virtual new hire onboarding experience, which consists of at-home equipment, welcome gift packages, consistent communication, and human resources orientation, and ensures our new hires have the support they need when starting with a new company.

Additionally, every one of our new employees has the opportunity to meet with our CEO for a “coffee chat” within their first month of employment.

Over the past year, we have evaluated and enhanced our Diversity and Inclusion program and plan to implement several initiatives, including partnering with diverse organizations and higher education programs, to identify a more diverse pool of qualified candidates, which we believe will help us to cultivate a more diverse workforce and inclusive environment.

We offer a comprehensive benefits package which includes 100% coverage of employee healthcare premiums and several benefits at no cost to our employees, including life insurance, disability insurance, and work-life balance resources.

The financial future of our employees is important to us, which is why we have a generous 401(k)-employer match, performance-based bonus program and employee ownership opportunities for a meaningful portion of our employees through equity incentive grants.

We value diverse backgrounds, perspectives, and experiences, and we are committed to providing an inclusive environment where all individuals are heard and respected.

In 2021, we implemented an Employee Resource Group aimed at connecting and creating a network for women at REPAY.

This group meets several times throughout the year to discuss relevant topics and connect with others at the Company.

We have also partnered with diverse organizations and higher education programs, to identify a more diverse pool of qualified candidates for recruitment.

We offer a comprehensive benefits package which includes 100% coverage of employee healthcare premiums and several benefits at no cost to our employees, including life insurance, telehealth, mental health, and work-life balance resources.

We perform a thorough review of our benefits package annually.

In 2021, we made changes to our benefits package including offering lower insurance premiums for family coverage, offering a more generous time off policy, and implementing an Employee Stock Purchase Plan (“ESPP”).

The ESPP is highly valued because it gives our employees the opportunity to become shareholders in REPAY at a discounted price.

The financial future of our employees is important to us, which is why we have a generous 401(k)-employer match and performance-based bonus program.

To promote personal and professional growth, we encourage our employees to pursue ongoing training and career development opportunities, and we provide tuition assistance and reimbursement for certain pre-approved continuing education programs and professional certifications.

Throughout the COVID-19 pandemic, our employees’ health and safety continuously remained a high priority for us.

Due to our multiple offices across the country and the investments we had previously made in strengthening the remote capabilities of our employees, we believe we were well-prepared to shift to a primarily digital presence and remote environment.

At the onset of the pandemic in March 2020, we implemented our business continuity and pandemic response plans and remained fully operational during and after the transition.

As we continue to navigate the COVID-19 pandemic, our employees’ health and safety continue to remain a priority for us.

We understand the pandemic impacted all our employees’ personal lives in different ways.

Because of this, we provide flexible work schedules.

We have also enhanced our employee benefits package to increase the quantity of free mental health support, telehealth options and provided hazard pay for essential workers who were unable to work from home.

We have also enhanced our employee benefits package to increase the quantity of free mental health support and telehealth options.

Available Information

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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