The Monday mindset: 4 September 2017
Fintech zeitgeist! Every Monday, we might look back at last week; look ahead to this week; share a few thoughts (our own or others); or discuss anything that catches our eye.
This week Loraine DeBonis, editor-in-chief of Banking Technology’s sister site Paybefore, muses on all the money changing hands in the payments industry.
US tech giant Fiserv shelled out £75 million to buy UK-based mobile banking tech firm Monitise last week. In August, Indian e-commerce site Flipkart raked in $2.5 billion from Japan’s SoftBank, which has made a slew of other recent fintech investments. Coinbase announced a $100 million funding round, and Vantiv and Worldpay agreed to a $10.4 billion merger.
Paysafe in July made one of the most compelling announcements yet, saying it was buying Merchants’ Choice Payment Solutions for $470 million the same day it announced it was considering its own buyout bid from Blackstone and CVC Capital Partners. The latter deal has since been accepted and is valued at nearly $4 billion.
That’s a lot of Benjamins. I’m starting to think I’m in the wrong business.
What strikes me about the examples above, along with the deluge of other capital infusions and M&A deals from the past few months, is the variety.
It’s not one type of business that’s attracting attention, nor a single geography. This is a global phenomenon.
If you’re operating in payments, e-commerce or the broader fintech space right now, there’s a good chance you’ll be raising or spending a significant chunk of change to expand your reach, take on complementary services or delve into machine-learning or biometrics.
Square is Prime
We recently asked visitors to Paybefore which company will be the next acquisition target in payments. Square was the heavy favourite at 44%. Stripe was a distant second at 19%. Although not a statistically significant sample size, the survey results could be on the money.
Square Q2 revenues were up 26% over the same period last year and the company now has a market cap of $9.59 billion.
Loop Capital analyst Joseph Vafi thinks PayPal should do the honours. Buying Square would help PayPal expand its brick-and-mortar reach to become a “true, two-sided network,” Vafi wrote in an analyst note following Square’s Q2 earnings report.
What I’m wondering as I watch all of this unfolding is whether I need to keep my head on a swivel.
For the time being, Mercator Advisory Group’s Tim Sloane thinks so.
Although the vice-president of payments innovation doesn’t believe this pace will continue indefinitely, he does expect to see a lot of activity over the next few months.
“As the economy starts to move again, banks and VCs are more confident and you’re seeing a lot of consolidation plays. Opportunities will continue, but as we begin to see some companies in payments and fintech fail, investors will start to become more cautious,” he says.
If there’s a lesson in all of this, it could be something I used to hear after the dinner table was set.
Get it while it’s hot.
Last week was a UK public holiday, but two weeks ago our Monday mindset asked whether insurtech is losing its lustre.
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Deadline for submitting the nominations has been extended to 8 September 2017.