This year, the market has seen big news about real-time payments and big news about payment company acquisitions. Yesterday, we had news about a big acquisition in real-time payments.
Just a day after the Federal Reserve announced that they will provide a real-time payments platform, Mastercard has announced that it has agreed to buy a Danish company, Nets, which offers non-card based instant payments and bill pay services. Mastercard must be really sure of the market potential for these services as it paid $3.2 billion for the company and expect that the acquisition will have a negative impact on profits for years.
Bloomberg reported on the rationale for the acquisition:
“Real time is real, it’s here and it keeps growing,” Michael Miebach, Mastercard’s chief product and innovation officer, said in an interview. “What we found in Nets is it’s a business that’s deeply ingrained in some of the most innovative and vibrant payments markets in the world.”
Mastercard has already spent $1.1 billion this year on acquisitions and strategic equity investments as the firm sought to push into new markets and develop additional forms of electronic payments, Robert Napoli, an analyst at William Blair & Co., said in a note to clients on Monday.
Mastercard plans to expand the Nets businesses beyond their primary markets in the Nordics, Miebach said. The company will continue to look for acquisition opportunities in the real-time payments space, as well as in fraud detection and data analytics, he said.
While part of the reason for the acquisition may be to gain access to more non-U.S. markets, there may also be some synergies with bill pay solutions that Mastercard is developing in the U.S. that will integrate solutions from yet another acquisition made a few months ago, Transactis.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
