Consolidation Is Happening in FinTech – Interesting M&As

FinTech innovation is happening at a breathtaking pace now. There is a great amount of interest in innovative startups. Large FinTech companies and banks are acquiring disruptive startups. We will see this trend going even more forward.

In the payments industry, highly used terms such as "unbanked" and "underbanked" have been the mantra for multiple startups. The FinTech payments sector has seen large rounds of funding and startups catering to niche sectors to get the above sect of people/business into the electronic payments field.

While the innovation space (new technologies enabling new marketplaces, players and customers) has been growing exponentially, there has always been the question of the scale each player could generate. This is where we see a steady consolidation happening in the industry. Below is a list of mergers that we have compiled:

PayPal acquires Xoom:

PayPal acquired Xoom, which is the poster child of modern international remittance using the digital channels. Expected Strategic Benefits of the Xoom acquisition as per Paypal

– Extends PayPal’s offering to its customers: Broadens PayPal’s consumer offering to its 68 million active US customers by cross-selling Xoom’s services.

– Accelerates time-to-market: Xoom’s proprietary and fast funds-out network enables PayPal to enter this growing marketplace with a leading technology solution with a strong presence in key international markets.

– Enables horizontal expansion into new markets: Allows Xoom to expand its portfolio of send-markets by leveraging PayPal’s wider international network.

– Delivers a strong technology platform: Xoom’s compelling and reliable technology platform and consumer experience are coupled with its excellent customer service.

D+H acquires Fundtech:

D+H Corporation has entered into a definitive agreement worth US $1.25 billion to acquire Fundtech, a leading provider of global payments solutions to banks worldwide. Fundtech is a leading provider of financial technology to banks and corporations of all sizes in the Americas, EMEA and APAC regions. Fundtech has approximately 1,200 clients, including global money center banks, mid-sized banks and credit unions, nonbank financial institutions, central banks and corporations.

MasterCard acquires Applied Predictive Technologies (APT):

Cloud-based analytics and big data company, Applied Predictive Technologies (APT), was acquired by MasterCard for $600 million. In February 2015, MasterCard announced $20 million in funds specifically allocated to boosting its cybersecurity technology. Plans to launch a biometric authentication and verification service are already in the works. This move can be seen as part of MasterCard’s plan to expand its technological reach. The recent acquisition will benefit both MasterCard and APT. MasterCard plans to utilize APT’s Test & Learn(™) platform and other services in combination with its own analytics expertise to provide customers with enhanced decision-making capabilities.

Square acquires Kili Technology:

Square acquired Kili Technology, a company that has developed silicon, electronics and software to simplify and optimize payment processing. Square is looking at this acquisition to aid in delivering simple and affordable hardware that gives sellers a smarter and safer way to do business. Kili has been known for its low-cost solution-on-a-chip software for accepting contactless payments while acting as a mobile point-of-sale system.

Samsung Electronics acquires LoopPay:

Samsung acquired LoopPay in February this year. LoopPay is an acclaimed mobile wallet solutions provider that turns existing magnetic stripe readers into secure, contactless receivers with the actual magic on the device side. LoopPay’s technology (MST in the devices) has the potential to work in approximately 90% or more of existing point-of-sale (POS) terminals with no investment in new infrastructure required by merchants. Samsung Pay will use MST tech as a weapon in the ongoing wallet wars when it launches in the US later this year. As per Re/code, the deal was reported to be worth $250 million.

Visa acquires TrialPay:

Visa partnered with TrialPay, a leading payments technology company that was founded in 2006 and now reaches over 500 million users across 20,000 merchants in 180 countries. With TrialPay, Visa will be able to target consumers based on their transaction histories and present them with specific promotions. These promotions will be similar to incentives; the customer will be provided with the option to purchase a desired product or service to receive an additional bonus product or service as a result.

PayPal acquires Paydiant:

Paydiant is a 2010-born, Boston-bred mobile, cloud-based payments platform. Paydiant is the back-end of the technology that offers sellers (retailers) their own personal mobile payment options under their own brands and also within their own applications. This allows merchants to be in control of and offer their own wallet and payment options. The deal was worth $280 million as reported. With Paydiant, PayPal expects to provide a stronger payments service for their existing online and new in-store customers.

paysafecard acquires Ukash:

Following the acquisition of Ukash by paysafecard earlier this year, Ukash is switching to paysafecard. paysafecard, the global market leader in prepaid online payment methods and member of the international Skrill Group, announced that from August 31, 2015 onwards, Ukash vouchers will be replaced by paysafecard vouchers at retailers across the UK. paysafecard has already been available in the UK for many years and offers a wide range of advantages such as innovative online accounts and 24/7 customer service in several languages. Ukash vouchers will still be accepted for redemption at online shops until October 31, 2015.

Blackhawk Network acquires Achievers Corp.:

Blackhawk Network, a leading prepaid and payments network, announced that it has entered into a definitive agreement to acquire Achievers Corp. Achievers is a leading provider of employee recognition and rewards solutions designed to help companies increase employee engagement. The acquisition will broaden the reach of Blackhawk’s already extensive incentive and engagement business.

BBVA acquires Spring Studio:

BBVA acquired Spring Studio for digital banking initiatives. Acquisitions are a part of the overall strategy of BBVA to lead the technology-driven transformation of the financial services industry. Last year BBVA acquired US digital banking service pioneer Simple and Madiva Soluciones, a Spanish big data startup.

Northwestern Mutual acquires LearnVest:

Northwestern Mutual acquired LearnVest, a leading player in online financial planning and client experience technology. This partnership brings together the best of what each company offers—Northwestern Mutual’s world-class financial professionals and best-in-class products combined with LearnVest’s breakthrough technology and innovative financial planning platform. The New York-based startup was acquired for over $250 million, as reported by Fortune.

Capital One acquires Level Money:

Capital One has acquired the San Francisco-based startup which developed the money management app Level Money. Since its inception in October 2013, the app has been downloaded over 700,000 times. Level Money has helped users manage over $12 billion in transactions. The app has helped people make smarter spending decisions, simplify their financial lives, get out of debt and reduce financial stress.

Global Payments acquires Realex Payments:

Global Payments Inc., a leading worldwide provider of payment technology services, has announced the purchase of Realex Payments, one of Europe’s largest and fastest growing payment gateways. Realex provides a range of technology services for businesses selling online. This acquisition furthers Global Payments’ strategy to provide omnichannel solutions that combine gateway services, payment service provisioning, and merchant acquiring across Europe. Under the terms of the agreement, the transaction was valued at €115 million ($125 million).