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Atlanta Business Chronicle: Fintech industry seeking state tax incentives
April 22, 2016
Atlanta Business Chronicle: Fintech industry seeking state tax incentives April 22, 2016 By Urvaksh Karkaria
Georgia’s 30 percent film tax credit has turned the Peach State into a television and movie production hub that’s nipping at Hollywood’s well-groomed heels. Now, lawmakers are considering similar state-backed incentives to further boost Georgia’s financial technology industry.
A joint study committee, comprised of appointees from both the Georgia House of Representatives and Senate, will meet this summer and fall to consider industry incentives for the financial technology and payments processing industry. These incentives could include corporate innovation center grants, a film industry-type tax credit, and/or incentives for education and training.
All incentive options will be on the table and could look very different than what we have seen done in the past, said H. West Richards, executive director of the Atlanta-based American Transaction Processors Coalition (ATPC).
“The two biggest problems fintech and payments companies have is workforce development and innovation,” Richards said. “Any incentive that benefits either ... is going to be a win.”
Unlike the state’s film industry prior to the tax credit, Georgia is already a global financial technology and payments hub. The state is also home to more than 60 percent of the financial transactions industry.
But being strongest in fintech also has put a target on Georgia’s back, said state Sen. Brandon Beach, R-Alpharetta, chairman of the Senate Science and Technology Committee and chief sponsor of the resolution creating the study committee.
According to industry insiders, Atlanta’s financial technology and payments companies are being wooed by Texas, Florida and North Carolina.
“These companies are portable. They can pick up and leave,” Beach said. “We need to do everything we can to make sure this industry stays in Georgia.”
For now, however, the momentum is on Atlanta’s side. Atlanta is among the top four sites eyed by payments companies looking to relocate or expand, Richards said, noting a half-dozen fintech companies are considering the city for headquarters relocation or expansion. The ATPC is working on economic development projects — one of which is a HQ relocation.
An attractive incentives package would lower the cost of doing business in the state and make Georgia competitive in swaying businesses on the fence, said Sean Banks, a partner at TTV Capital, a fintech-focused venture capital firm.
“More importantly, it signals that the state government is in favor of furthering our lead as the fintech capital of the world,” he said. “It suggests the state considers the fintech industry a priority from a policy perspective.”
Georgia has a robust and self-sustaining fintech cluster, said Brian Mahony, chief strategy officer at Elavon Inc.
“It’s surprising that the industry has grown to the size it has without much in the way of local and state government involvement,” he said. “Just imagine the accelerator effect a little pressure could have by adding even more to a pretty strong flywheel.”
State-backed incentives toward R&D investment, improving workforce quality, fostering internship programs and lowering relocation costs add up during the site selection process, Mahony said.
While state-backed financial incentives would help drive business to Georgia, any tax credit would have to be revenue favorable for the state, said Tino Mantella, president of the Technology Association of Georgia.
“[Legislators] are not going to approve something that delivers a net-negative return,” Mantella said.
Banks said a successful incentives program also would have a snowball effect as more fintech talent is attracted to Georgia.
“The more fintech jobs you have, the more likelihood of fintech industry employees spinning out of big companies to start new companies in the place they already live,” he said.
GEORGIA FINTECH BY THE NUMBERS Over 90 Georgia fintech companies
118 billion Worldwide payment transactions that pass through the computer systems of Georgia-based fintech companies
Over 40,000 Georgia-based employees in the fintech sector
Sources: Technology Association of Georgia, Georgia Tech, Raymond James
Read the original story from the Atlanta Business Chronicle, here.