Indue, a special class of bank that wholesales transaction banking services to niche retailers such as credit unions and mortgage originators, reported a net profit of $2.2 million for the year to June, up 29 per cent on 2006.While a niche provider, with origins serving a minority of credit unions, the firm's processing platforms are often selected by entities looking for an entry into the payments space.While these aspirants are the foundations of Indue's growth the firm is now looking to buy up some of the most promising firms.Writing in the annual report Indue chair Michael Ahern said "over the life of the 2007/09 strategic plan we will add a new distribution channel which we believe will significantly  change the rate at which we acquire scale and lead to exceptional growth over five years."One issue for Indue is the time that new customers take to ramp up their ideas in the payments market. Indue chief exective Manuel Garcia said "by and large all of those businesses are Greenfield operations; people wanting to bolt transaction products on to the back of a product like a mortgage."And that business is great but it does take two or three years before you get scale."So 18 months ago we made the decision to generate scale and generate more revenue for us. We're talking about a more direct model where we go in and try to consolidate businesses."Co-branding is one approach Indue will pursue, with the firm relying on its lower cost base to find profitable markets where bigger banks cannot compete.A different arena in which Indue has chosen to buy new business is in core banking applications and bureau services.Indue two weeks ago agreed to buy Lynx Financial Services Australia off its UK parent. A small business, with only eight or so credit union customers, Indue now offers a service that the firm's main rival in this space, Cuscal, exited several years ago when it sold its equivalent business to Ultradata.Indue has assets of $196 million. The firm earned a return on equity of almost 30 per cent in 2007, consistent with prior years. The firm returns about 60 per cent of earnings as dividends to shareholders (mostly credit unions).Business volumes are growing for Indue well ahead of the market. Transactional business accounts for 47 per cent of the firm's revenues (of about $45 million) while card payment products account for about 36 per cent.The firm's annual report shows the transaction processor reported growth of 12 per cent in direct entry and 19 per cent in BPay. CueCard volumes (credit union ATM and Visa debit cards) increased by 19 per cent while aggregate Visa volumes (taking into account mortgage managers and pre-paid debit) increased 23 per cent.Indue is also investing directly in automatic teller machines with a fleet of 258 devices and growth in transaction volumes of 15 per cent.