Under the deal, TSA will pay EUR17.4 million of the purchase price in cash and the remaining in its common stock.

Founded in 1998, Frankfurt-based eps supplies electronic payment software, testing and simulation tools, chargeback management and outsourced services to companies including Atos Worldline, Citibank, Commerzbank, BNP Paribas, Credit Suisse, Deutsche Bank, Pluscard, UBS and Visa. The firm has operations in Germany, the UK, Romania and Switzerland.

TSA says its research shows that Germany is the third largest electronic payments market in the world, and is expected to grow significantly in the coming years.

Philip Heasley, TSA CEO, says: "With the advent of the Sepa initiative, we believe that the German market, and indeed many other countries in the European Economic Community, are poised for a significant payment systems replacement cycle. The acquisition of eps will position us to take advantage of opportunities in this key market."

TSA says the acquisition will create a platform for it to cross-sell new, value-added payment systems to the eps customer base.

Following the acquisition, eps's development centre in Romania will become part of TSA's offshore development group, and is expected to eventually become part of the US firm's initiative to establish a global product development presence to be headquartered in Ireland.

Eps founder and co-managing director Christian Jaron will take a leadership role within TSA's product development organisation, including assisting with off-shore development plans. Johann Praschinger, co-managing director of eps, will become managing director for TSA's distribution activities in the Germanic countries.

For fiscal 2007, TSA expects the acquisition to contribute $16 million to $18 million in revenue.