Sign up for The Paypers newsletter Follow The Paypers on LinkedIn Follow The Paypers on Twitter Follow The Paypers on Facebook
The Paypers, paypers, Insight in payments, News, Reports, Events
 advertisement
Expert opinion

Mergers and acquisitions activity in the payments space

Wednesday 5 December 2018 | 10:13 AM CET

The Paypers presents an overview of the most relevant strategic and financial buys in the payments industry, of last year

Payment Service Providers’ market is highly diversified, but we’re witnessing a change in this state of affairs, mainly as a result of two factors. On one hand, merchants expect ever-increasing service levels as they go through their digital transformation while having to comply with regulations. With new technology (APIs, AI, cloud-based platforms, etc.) in the market, merchants expect greater flexibly, faster innovation and new ways to comply with existing and new regulations. For this reason, PSPs acquire companies that add capabilities and speed up product innovation.

On the other hand, the ability of PSPs to leverage their fixed-cost platforms and increase volumes is particularly important for the acquiring segment of the payments market, where we see a high level of pressure being put on pricing. This leads to consolidation in the acquiring market.

The Paypers has analysed the most notable acquisitions that took place starting with 1 October 2017 until 1 November 2018. If we’re looking at what has been driving the surge of M&A deals in the payments space in the analysed time frame, we roughly notice two strategies: scale (geographical expansion, consolidation) and (adding) capabilities. Companies aim to expand into new markets, where they see new opportunities, or establish a global presence (Banking Circle, Ingenico – Airlink, Ingenico – Paymark, Paysafe – iPayment).

In terms of capabilities, we see companies whose acquisition strategy is aimed at speeding up innovation to meet customer demand, entering new market segments, strengthening digital innovation initiatives, developing new products, enhancing the overall product suite, expanding the range of services, or strengthening technology capabilities. Some of the companies engaged in this type of M&A are First Data and BluePay, TSYS and Cayan, Finastra and Olfa Soft and others. Certain acquisitions have as a main purpose innovation, e.g., offering a unified payments solution (NMI – Creditcall, PayPal – iZettle), or verticalisation, e.g., payment service providers move towards more vertical solutions, exploring options before, during and after payment to provide the merchant full-service offering (e.g., PayPal – Simility, Flywire – OnPlan Holdings, NCR – JetPay).

In 2019, we expect a continuous consolidation and diverse motivations for companies to pursue deals. As a main driver, the M&A strategy will be focused on providing full service offering, cross-border acquiring and omnichannel capabilities. Banks that want to tap into ecommerce growth opportunities will continue to acquire (or invest in) PSPs to expand merchant services for business customers (ING – Payvision, Deutsche Bank – Modo Payments). Banks will continue to acquire or partner with third-party fintech players to begin offering value-added services enabled by open APIs (PSD2).

This editorial was first published in our Payments and Commerce Market Guide 2018-2019. The Guide presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.

 

 advertisement
 advertisement
 advertisement
 advertisement