During the last few years, Mastercard has relied on acquisitions and fintech investments to bolster its skills and competencies.
And, according to its company president, it has no plans to slowing down this strategy. Its tactic of acquiring fintechs in all spheres of payment has helped it gain new deals and increase its revenues.
In April, Mastercard announced that it had acquired the POS-lending platform for merchants, Vyze Inc. This deal came about a month or so after the credit card brand announced it was acquiring payment security services provider, Ethoca Inc., and B2B cross-border payment provider, Transfast.
These acquisitions blend with Mastercard’s approach to embrace all forms of payments not just credit card transactions. Currently, Mastercard has more than 20 possible deals on the table, as well as small investment and beginning-state funding for new businesses.
To date, Mastercard’s most significant acquisition was its $920 million purchase of the London-based provider, Vocalink Holdings Ltd. Vocalink’s technology was first used in the United Kingdom’s faster-payments system, and it also has crept into systems in the U.S. and other countries.
Some of MasterCard’s Past Fintech Acquisitions
It acquired Applied Predictive Technologies, a cloud-based analytics provider that assists businesses in optimizing marketing and merchandising companies, for $600 million in 2015. For example, a merchant can use the platform to determine the results of moving a product to a different area of the store.
In 2017, Mastercard announced the acquisition of the software company Brighterion, Inc., which uses AI to protect against real-time fraud and cyber threats. It was acquired to help Mastercard’s AI-based program make better real-time decisions when it comes to fraudulent purchases.
What its Strategy Does for its Numbers
Mastercard’s tactic of using many valued-added extras to augment the services it accounts for in revenues beyond credit cards has proven valuable for the company. Stakeholders believe their value-added services and other innovative solutions differentiates its company from competitors. Mastercard’s “other revenues” rose by 21% thanks due to their acquisitions and investments.
Mastercard posted net income of $1.86 billion, a 25% increase from $1.49 billion in 2018’s first quarter, on net revenues of $3.89 billion, up 13% on a currency-neutral basis from the year-ago period’s $3.58 billion.
Other Major Payment Industry Acquisitions
Mastercard isn’t the only company to realize the potential of fintech partnerships and acquisitions. The payments industry is on the brink of seeing two of its biggest deals in the industry.
Fiserv Inc. is expected to buy out First Data Corp. and the buyout of Worldpay Inc. by Fidelity National Information Services Inc. (FIS) is set to acquire WorldPay Inc.
Since FIS has a presence in more than 130 countries, the deal with allow Worldpay to speed ahead with its global international business. Also, this will launch FIS into the area of merchant acquiring, which is a much higher growth market.
Combining FIS and Worldpay creates a new major player in the global fintech space. Many experts in the sector believe this merger came together in response to the January announcement that Fiserv and First Data were making a deal.
The fintech industry expected Fiserv’s deal to buy First Data for $21.79 billion to nudge others in the sector to make their own moves to stay competitive.
As more businesses in the payment industry recognize the value of fintechs, expect more to look for ways to merge, acquire, or invest in their technologies. They see the growth potential, and most know that is the only way to remain leaders in the industry.