KBW: Mobile Payments Firm Mastercard UK Holdco Limited Buys Earthport

January 30, 2019         By: Steven Anderson

Mastercard is still one of the major names around when it comes to mobile payments, and with plenty of subsidiaries around, there’s a lot to the wide net that Mastercard casts. Recently, Keefe, Bruyette & Woods (KBW) sent word our way about a new addition to that net taken on by Mastercard subsidiary Mastercard UK Holdco Limited (Holdco). Specifically, Holdco picked up Earthport, a move which will give this Mastercard outlet a whole new set of options in a desperately needed field.

Holdco agreed to pick up the company for 33 pence (about $0.44 as of this writing) per share, which meant a grand total of 233 million pounds sterling, about $307.48 million US. This is especially noteworthy in that Visa was poised to pick up Earthport recently, with an agreement poised to close in June 2019. Visa offered 198 million pounds sterling, which left Holdco chipping in for about a 15 percent premium.

So why exactly was Holdco so willing to pick this up? It’s what Earthport does that makes it attractive. Earthport focuses on cross-border, business-to-business (B2B) payments, and it’s already got several clients on hand. Clients including such names as Bank of America Merrill Lynch, Ripple, and even Hyperwallet. Earthport offers a range of other services as well, including FX capabilities and flexible funding options, all of which are now in Holdco’s hands.

KBW, meanwhile, notes that this is reinforcement of the notion that the B2B space is very attractive market territory, and Earthport is offering access that really can’t be had through Mastercard credit cards. Or through Visa, for that matter.

That’s the point that really sells this; Holdco was willing to up the ante significantly to land Earthport, and beat Visa to the punch. Cross-border operations are increasingly important; just look at anyone who’s doing business in Europe, Africa or Southeast Asia. That also includes expats who are sending cash home to their families. By having a cross-border tool in the toolbox, Holdco improves the odds that that cross-border business will stay that much more out of Visa’s hands, and that much more in Mastercard’s.

Only time will tell how well this plan works, but Holdco has certainly helped give Mastercard a leg up on a section of business that’s only likely to improve.