25 January 2019

Payments technology M&A shows no sign of slowing down yet

The value of mergers and acquisitions targeting the global payments technology industry announced over the last three and a half weeks is already on its way to reaching the USD 37,172 million-worth of deals announced in the whole of 2018, according to Zephyr, the M&A database published by Bureau can Dijk.

It appears the wave of consolidation that has been sweeping through the industry, which includes merchant acquirers to back-end infrastructure developers, in recent years is showing no signs of abating, as yet, especially as already there have been 20 M&A deals worth a combined USD 23,831 million targeting the sector announced in 2019 to date, and this figure does not include the just-announced-today USD 304 million acquisition of Earthport by Mastercard, which has nicely scuppered Visa’s USD 250 million recommended proposal tabled in December that represented the sector’s 29th largest deal announced in 2018.

Regardless, this takeover will hardly match the all-scrip USD 22,000 million acquisition of First Data by Fiserv announced last week that will combine a provider of point-of-sale hardware, enabling merchants to accept electronic and digital payments, with one that offers financial technology to institutions and banks. The proposed amalgamation is a sign of the fast-changing times where new players are popping up to disrupt the traditional way things have been done by providing innovative services prompted by the significant shift in consumer behaviour towards contactless payments and online shopping, among other things, which are pushing societies, as a whole, towards a cashless way of living.

Established players need to get with the game or risk being phased out; PayPal, for instance, has carried out several acquisitions recently, including the sector’s fourth-largest by value of 2018, in order to evolve from being purely a “checkout solution”, the words of chief executive Dan Schulman in July 2018, to “an end-to-end, one-stop” shop for digital commerce. At the end of May, PayPal pulled off its largest acquisition ever by sealing a USD 2,200 million deal for iZettle in order to gain an established presence in countries where it has not previously had a footprint. Oh, and just weeks later it announced the purchase of artificial-intelligence-powered platform Jetlore for an undisclosed value, not to mention the proposed additions of Hyperwallet, which was the 18th-biggest deal targeting the payments technology sector announced in 2018, and Simility. All these deals are aimed at increasing competitiveness by expanding capabilities beyond the checkout to include fraud prevention and real-time risk management tools through machine learning and big data analytics.

© Zephyr