New Year, New Mergers Sizzle For Payments Companies

It’s too early into the new year to definitively call a trend. But then again, only two weeks into 2020, mergers and deal-making in payments, specifically within digital payments and FinTech, are sizzling.

In just the past few days we’ve seen announcements of more than $7 billion worth of tie-ups.

The biggest one, so far, of course, has been Visa inking a deal to purchase FinTech firm Plaid for $5.3 billion. The move pushes Visa ever further away from cards and toward its goal of becoming, as management has often described it, a “network of networks.”

Plaid, of course, uses application programming interfaces (APIs) to link FinTech apps with end customers’ bank accounts. The company already has scale, having integrated with 15,000 financial institutions in Canada and the United States and recently made forays into Ireland and Spain.

Separately, in a deal tied to a “blank check” company, Far Point said it had struck a $2.6 billion merger with Swiss firm Global Blue — which in turn will list on the New York Stock Exchange. As part of the deal Ant Financial is investing $125 million. Beyond the mechanics of the deal itself, there’s strategic and financial value for the investors, who want a stake in the international shopping arena, where digital payments are also gaining traction with consumers. Specifically, Global Blue focuses on tourists spending abroad, and offers products that help capitalize on tax-free shopping as they buy luxury goods.

Global Blue handled 64 million transactions for 29 million international shoppers in the fiscal year ending March 2019.

The emphasis of the deal-making, at least thus far, seems to be payments on a grand, global stage, with the consumer firmly in sight. We’re only two weeks in, but off to the races.

Sizzle

Holiday (and Post-Holiday) Shopping: Throughout the month of December helped push retail sales up more than 5.8 percent year on year. Retail sales were up 3.6 percent for the entirety of 2019.

Credit Card Spend: Bank results show continued spending on credit cards. JPMorgan’s latest quarter showed credit card transactions were up 10 percent in the quarter. For Citi, the U.S.-branded cards business grew by 10 percent.

Pinterest: Pinned as the third largest social media platform in the U.S., edging out Snapchat. There are an estimated 82.4 million Pinterest users in the country and forecasts are for the user base to increase by more than 4 percent annually.

Fizzle

Hipmunk: Nearly four years after being acquired by travel/expensing platform Concur, the search engine is shutting down. The company’s founders had sought to buy Hipmunk from SAP Concur (which acquired it in 2016) but the offer was not accepted.

Target: Same-store sales growth in the latest quarter comes in at 1.4 percent, down markedly from a growth rate that had reached 5 percent in previous quarters throughout 2019. Target’s toy sales were flat with 2018 and electronics were actually down.

Wells Fargo: Legal fees and lower interest rates hit the latest earnings results, and management noted that the road is still a long one in satisfying regulatory concerns and leaving various scandals in the rearview mirror. A review of business units is underway, and a possible restructuring may be in the cards for Wells Fargo.