KBW Offers Insight on Recent Move From Mobile Payments Leader Mastercard

August 9, 2019         By: Steven Anderson

Mastercard’s move to acquire Nets Corporate Services has drawn plenty of attention, thanks in large part to the price tag, right around a hefty $3.19 billion. The deal isn’t expected to close until the second half of 2020, but it’s already drawing interest all over. Our friends out at Keefe, Bruyette & Woods (KBW) sent word our way about their own analysis on the topic, which summarized, may be considered risky but potentially quite worthwhile.

For those not already familiar, Nets is a European payments processor, some of whose exploits we’ve discussed here before. It’s built a very successful mobile bill payment operation in Norway and Denmark, and has expanded outward from there to cover portions of the European continent. Its offerings have come to include merchant services, mobile payments acceptance, a domestic debit card operation and more.

With Nets in the fold, KBW notes, Mastercard gets a little extra juice in its real-time account-to-account operations, a point also helped by the recent acquisition of Vocalink. This stance is further supported by recent other Mastercard developments, including the launch of the Bill Pay Exchange. KBW projects that Mastercard believes the Nets platform can quickly be rolled out in to new and smaller markets, a point supported by the fact that Nets, pre-Mastercard, had launched in both Hungary and Slovenia.

In bottom line terms, KBW notes that, while real-time payments are “relatively lackluster” in terms of growth today, that may not be the case forever. With that in mind, Mastercard seems to be building toward a future in which real-time payments are a major market, and Mastercard is one of if not the leaders therein.

We know that there hasn’t been much done with real-time payments yet, so the market is still wide open. With Mastercard putting its collective corporate weight behind things, it may be able to force open that market and take what amounts to first-mover advantage therein. Sure, there will have been some firms in there ahead of Mastercard, but they’ve done so little with the field so far that Mastercard would effectively have the first serious move.

Only time will tell just how the whole thing works out, but it’s clear that if Mastercard goes all-in here, it may well end up making the whole market itself.