Digital Adds New Flavor to M&A in Payments Space

Navigator Edition: May 2013
By: John Grund and Jenny Yi

There is little doubt that digitalization is defining the next stage of payments industry evolution. New concepts, alliances and companies are flooding the market faster than most end-users can vet them. Legacy players are assessing both the risk of disruption as well as potential opportunities to leverage existing assets – huge customer bases, merchant relationships in issuing and/or acquiring, and deep pockets. At the same time, it is apparent that the pace of change is driving larger institutions to consider acquiring early stage firms to accelerate product development, lure management talent, and build out potential new businesses in a manner that is unencumbered by existing infrastructure. It is clear that digitalization is driving a different type of M&A activity. Banks, better known for executing large asset-based transactions, have been quite active in acquiring or investing in smaller companies with specialized capabilities. At the same time, payment networks are acquiring or partnering with companies that can enhance their value-added service offering or expand their footprints on the acceptance and issuing side of the business.

While the table below is not a comprehensive list, it is representative of the types of transactions that are being consummated as players across the payments value chain stake out their positions in areas such as mobile payments, rewards, data analytics, social media, and other digital spaces.

 Figure 1: Sample of Acquisitions / Investments by Payments Players


Note: * Investments or partnerships.
Source: Company press releases, Reuters, Bloomberg Businessweek, TechCrunch.


For more information, please contact John Grund, Partner, ​​; or Jenny Yi, Analyst, Both specialize in Card Issuing.

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