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February 11, 2020

Recent fintech M&A activity shows rapid change in consumer payment habits

By GlobalData Financial

With the proliferation of payment options for consumers, merchants are forced to accept more and more tools in order to meet their customers’ needs – especially in online payments, as consumers shop internationally more often.

Worldline will acquire Ingenico in a cash and share deal for €7.8bn ($8.5bn), marking the biggest global deal of the year so far. Outside of online transactions, another threat could be the fact that consumers are increasingly comfortable using various challenger bank apps and peer-to-peer payment methods that are different from the more classical card-oriented incumbent bank solutions.

This shift in consumer behavior has not gone by unnoticed, as a handful of big mergers and acquisitions have been happening in the payments industry these last few years. In order to serve a more diverse and rapidly changing customer base both in store and online, Fiserv has bought First Data Corporation. The highly complementary fusion will combine First Data’s merchant base of over six million in the US with Fiserv’s broad range of clients comprising banks, credit unions, leasing companies, and retailers.

Similarly, Worldpay’s acquisition by FIS in 2019, in a $35bn stock-cash deal, will integrate Worldpay’s payment processing technology with FIS’ diverse range of financial services products for both commercial and corporate clients.

The third mega-deal of 2019 was concluded by the merger of payment processor Global Payments Inc. and merchant and payment services provider TSYS. The $21.5bn deal will allow the two companies to reach more merchants and consumers while scaling up their payment solutions.

Each of the mega deals in payment processors shows that consumers are adapting to the benefits of having more diverse payment methods. This trend is happening on a global level and payment processors are racing towards having all of the infrastructure and offers for these tools in place as soon as possible in order to not lose customers to competitors and challengers.

As for the big 2020 Worldline and Ingenico deal, this is sure to cause ripples in the industry as both French companies have quite a lot to gain from the acquisition. Worldline is heavily consolidating its European presence by accessing Ingenico’s roughly 550,000 merchants. One of the more impressive feats of this deal, however, is Worldline now tapping into the Chinese market, where Ingenico has quite a foothold. In 2018, Ingenico partnered with WeChat Pay, Alipay, and China UnionPay, becoming one of the first global payment service providers to fully integrate with Tencent’s payment ecosystem and over 1.1 billion users.

As people get more comfortable with fintech innovations and having different payment methods, more similar M&A deals are poised to happen in the near future.

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