Mastercard makes its biggest ever deal to acquire real-time payments unit
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Mastercard makes its biggest ever deal to acquire real-time payments unit

Cashless transaction giant Mastercard has made the biggest deal of its life thus far, purchasing the real-time payments unit of Denmark-based Nets Group. The company will use its newfound capabilities in real-time payments to bring it one step closer to its eventual goal: to become a one-stop shop for payments of all stripes. Clocking in at $3.2 billion, the new unit will be a major part of Mastercard’s strategy going forward, and represents the company’s biggest-ever purchase.

Mastercard’s share price has appreciated by 47% year to date

Mastercard Aug 20

Source: Yahoo Finance

As the world speeds up, finances are no different. An increasingly large number of people no longer want to wait overnight for money to transfer between accounts. Mastercard’s acquisition will give it instant functionality across Europe, as well as “a suite of associated applications and services” according to the Financial Times. Mastercard’s chief product and innovation officer, Michael Miebach, described this recent acquisition as part of a strategy to transform the company from a pure-play card payment company into a “multi-rail” payments group. He told the Financial Times:

“About three or four years ago we took a decision that it was important to give [clients] choice in payments — not just cards . . . Half of payments happen directly from one bank account to another, and for our bank partners, we want to be a one-stop shop for all payments.”

Miebach added that the speed at which real-time payments continued to evolve made trying to develop one’s own technology would take too long – hence the blockbuster acquisition. Earlier this year, Mastercard made a couple of smaller (but still sizable) acquisitions that fulfil a similar goal: broadening the company’s capabilities across a wider payments spectrum. The company says the Nets deal will close in the first half of next year.

Disclosure

Dominion holds Mastercard in its Global Trends Ecommerce Fund.


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