KBW: Mastercard and Visa Look to Acquire Money Transfer Networks
Keefe, Bruyette & Woods (KBW) has recently released a report about some recent acquisitions by payment bigwigs Mastercard and Visa. Due to their failure to acquire Earthport, Mastercard has made another acquisition to compensate. Transfast, a global cross-border account-to-account money transfer network, should make up for what Mastercard was looking to achieve with their deal with Earthport.
Visa, having made the latest and highest offer for Earthport, has a clear shot at acquiring the company. With Mastercard turning to Transfast, Visa taking Earthport is more of a forgone conclusion, even though the ink hasn’t dried on the deal yet.
While the news does revolve around company acquisitions and missed opportunities, it’s also important to understand what these acquisitions will do to bolster their buyers.
With both Earthport and Transfast providing essentially the same service, the benefit to their acquisitions is pretty straightforward. The acquisition companies add the ability to have direct access to banks on a local basis. This bank account access gives both Visa and Mastercard the ability to partake in B2B and/or P2P transactions.
Both Visa and Mastercard have services that handle P2P transactions in a certain capacity (Visa Direct, Mastercard Send). With these acquisitions, the payments leaders look to extend their reach, potentially adding hundreds of companies to their already formidable coverage list.
While the act (and potential act) of acquiring Transfast and Earthport will benefit both Mastercard and Visa respectively, the moves are mainly a way for the two companies to keep up with each other in terms of their global reach. KBW believes that Mastercard will look to focus on P2P interaction, while Visa’s potential Earthport pick up will help to bolster the payments giant on the B2B end. Right now we have to wait and see how these acquisitions pan out, but it looks as though nothing but good things will result for both sides.
View the original report here.