This post appears in a news section of Nasdaq and is contributed by a member of The Motley Fool, an investment advisory of sorts. The piece is commentary about the recent Visa acquisition of YellowPepper, the Miami-based fintech that specializes in mobile banking and payments application for the LAC region.
The acquisition was actually announced in October and closed about a month later. There are no terms mentioned (nor were they in the original announcements) but one source had YellowPepper’s valuation at between $100-500 million as of late 2018.
As readers paying attention to the payments industry (and surely members of CEP) will know, the major cards networks have been expanding their roles into the broader payments space (most notably in B2B uses) now for several years through strategic acquisitions, partnerships, product development, value added services and positioning as a fintech. Their primary distribution channel remains banks but given the ‘network of networks’ goal, partnerships with other fintechs is core to the effort as well. So this move fits directly into that strategy.
‘In November 2020, Visa completed its acquisition of YellowPepper, a fintech company that enables real-time payments between card, account, and blockchain networks through a set of application programming interfaces (APIs). In other words, the company provides software that makes it easy for clients to send and receive various types of payments. YellowPepper CEO Serge Elkiner has explained the company in this way: “We’re a fintech helping banks keep an edge against big tech firms.” ‘
The author goes into some of the overall strategy and recent connective moves, such as the acquisition of Earthport in 2019. Two of the Visa products touted are Visa Direct, mostly a P2P and B2C play but applicable for small business uses cases as well, and Visa B2B Connect, a pure cross-border business payments play. Look for more of this going forward. Readers should browse the article.
‘Visa’s CEO also said the acquisition would allow for easier integration with Visa Direct and Visa B2B Connect. If that pans out, Visa could more aggressively target opportunities in B2B payments, disbursements (business- or government-to-consumer), and P2P transfers in Latin America — an $8 trillion market opportunity, according to management. In 2020, Visa Direct facilitated 3.5 billion transactions around the world, but this acquisition could drive that figure upwards in the years ahead. Likewise, Visa B2B Connect currently reaches 80 markets globally, but YellowPepper’s platform could help the product gain traction in new markets.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
