E-commerce Acquisitions Transforming PaymentsSubmitted by Preston Todd Advisors | M&A Advisory, Strategy Consulting on April 12th, 2016
Submitted by Lane Gordon, April 12, 2016
Growth in global e-commerce has had tremendous ramifications for online retailers (e-tailers), payments companies, and the broader software industry. As consumers worldwide continue their rapid adoption of online payments, the lines between e-commerce and payments companies are getting blurred as the two verticals converge. Payments companies are increasingly seen as acquisition targets for enterprising e-tailers, ERP, and SaaS companies, in addition to traditional payments businesses.
Just in the past few months, strategic acquisitions in the payments industry have been transformational:
Amazon acquiring Emvantage:
Amazon is expected to complete the acquisition of Indian based start-up Emvantage for an undisclosed amount in 2016. Emvantage is currently a "Platform-as-a-service" provider for online merchants, banks offering one of the best payment gateways for highly efficient and secure online transactions using credit cards, debit cards, and internet banking. Amazon believes that by providing the best online payment experience to its customers, it can significantly increase its customer base.
Payoneer acquired Armor Payments
When financial services provider Payoneer, acquired Armor Payments, a B2B payment services provider for an undisclosed amount in March 2016, Payoneer was able to add a new mode of payment service to its portfolio – an escrow based payment system. This enabled Payoneer to offer high security and risk-free payment service for high-value B2B payments. For a cross-border online payments provider like Payoneer working in the high-value B2B market, trust is a primary concern, which is now taken care of by Armor's escrow based payment solution.
ACI Worldwide acquired PAY.ON
Electronic payment solutions provider ACI Worldwide acquired PAY.ON, an e-commerce payment gateway solution provider. ACI will be buying 100 percent of PAY.ON's equity which is now valued at $200 million USD. There is increasing demand for cross-border payment solutions due to the rapidly growing global e-commerce market, which has led to this strategic acquisition. By combining the cross-border capabilities of PAY.ON and the universal payment solutions of ACI, ACI plans to provide a state-of-the-art payment experience for its merchants around the world.
PayPal acquired Xoom
PayPal acquired Xoom Corporation, a leading digital money transfer provider for $890 million USD in November 2015. Xoom with its presence in 37 countries including the likes of India, US, Mexico, Brazil and more, would help PayPal to expand its business into new geographies. Xoom, an emerging player in international remittances, will help PayPal in making international payments smooth, secure and economical for its customers.
Global Payments Acquired Heartland Payment Systems
By the end of 2015, Global Payments announced its plan to acquire its smaller rival Heartland Payment Systems for $4.3 Billion USD. By combining Heartland's expertise in technology solutions with its large network and marketing capabilities, Global Payments plans to become a transformative force in the worldwide payments industry. After the acquisition, Global payment is expected to have a customer base of 2.5 million merchants.
Vista Equity acquired Fiverun
Private equity firm Vista Equity acquired Fiverun, a leading mobile point of sale innovator for an undisclosed amount. In addition to the acquisition by Vista, Fiverun merged with MarketLive and Shopatron forming an Omni-channel solution company called Kibo. Services offered range from the point of sale and dynamic payment processing to content management and web-based merchandising.
Flipkart acquired FX Mart
India's largest e-commerce firm, Flipkart has acquired a majority stake in payment services start up FX Mart. Flipkart paid $7 million USD for this purchase. The prepaid wallet license owned by FX Mart will allow Flipkart to offer digital wallet service on its app without depending on other wallet providers.
TSYS acquires TransFirst
TSYS, a leading global payment solutions provider, acquired TransFirst, a leading merchant solutions provider in the US for $2.35 billion USD making it the 3rd largest integrated payments provider in the US. This move strengthens its position in the highly evolving areas of integrated payments, e-commerce, and Omni-channel services.
D+H acquires Fundtech
D+H Corporation acquired global payment services provider Fundtech for $1.25 billion USD in the second quarter of fiscal 2015. With the acquisition of Fundtech, Toronto-based D+H Corporation aims to tap into more markets by offering better technology solutions for safe and secure payments.
PayPal acquired Paydiant
PayPal acquired mobile wallet platform provider Paydiant for $280 million USD. With this acquisition, PayPal plans to create inroads into the mobile commerce sector. PayPal could attract more merchants to its platform by developing their mobile wallet solutions.
As innovative e-commerce, digital goods and payments service providers continue to venture into strategic acquisitions of companies with new and unique payments solutions, we will witness a transformation in payments that will significantly alter the landscape as we know it. Strategy and foresight will be key to determining which e-tailers and payments companies survive the transformation, and which will go the way of the dinosaur.