FIS-Worldpay's $43 billion merger a sure sign scale is paramount in payments
Consolidation is due in the fintech payments sector as new specialized companies begin to build scale.
The closure of a $43 billion deal between FIS and Worldpay last week – the biggest deal in the payments M&A space to date – is a sign that consolidation pressure is building in the space.
“With the introduction of instant payments, electronic payments have exploded,” says Jerry Norton, vice-president, financial services, at IT and business process services company CGI.
“But to gain market share, payment providers require scale. One of the quickest and cheapest ways of doing this is to acquire or merge with a company as opposed to developing new and expensive technology themselves.”
Just two days before the FIS-Worldpay merger was finalized on July 31, payments and technology company Fiserv and US financial services company First Data finalized their merger for $22 billion.
And in June, online payments giant PayPal acquired iZettle for $2.2 billion after the deal was cleared by the UK’s Competition and Markets Authority.
In August, Mastercard announced the $3.2 billion purchase of the real-time payments unit from Nets Group – the biggest acquisition for the company to date.