The payments industry is never short of mergers and acquisition (M&A) activity. It is an exciting market full of innovation and change. And it’s no wonder M&A activity is frequent when the industry touches every one of the ever-increasing number of digital transactions happening around the world.
In the Australian market in the most recent years we’ve witnessed, among other M&A:
IP Payments was acquired by Swedish company Bambora Enterprise
Global Payments (parent of Ezidebit who itself was picked up in 2014) acquired eWay, an Australian payment processing firm
Canadian firm, DirectCash Payments acquired the Australian ATM assets of First Data Corporation
MYOB bought Paycorp Payment Solutions
There are lots more and if we expanded this list to include the Asia Pacific market, FinTech investments and associated technologies it’d be much, much longer. But you get the picture.
It goes without say there are always many reasons for a company to acquire others or let itself be acquired. Often the real reasons are never articulated publicly. But it’s frequently a mix of the owners wanting to cash in for some profit, a larger company spinning off a business unit or subsidiary to become more agile or focus on core operations, a company needing to capture new technology or IP, or to capture a customer base, or to mitigate competitive threats.
In the Australian payments market the only one of these acquisition drivers not really present is the spin off by a larger firm. Most organisations want to get into payments, not out. In each of the above cases the acquisitions have offered the buyer complementary IP and technology to take to market along with a new or expanded customer base where they didn’t have one before.
So what does this all mean for your business as a consumer of payments solutions? In some cases, not much. Business will continue as usual. In other cases, it could disrupt what you do significantly.
If you have any payment suppliers that have been involved in acquisitions in the past 24 months, regardless of whether your first thoughts are that nothing or everything will change, you should be doing the following things as a start:
1 Ask for roadmaps and prepare for change. Having a heads up on the expected integration of the acquired company and what the impact will be is just smart. The question is, can you adapt if things don’t continue the way you want or expect?
2 Do some discovery. What can the new situation offer you? There may be some technologies or services becoming available that you previously didn’t use or hadn’t thought of using.
3 Ensure you know what your contracts say. Getting a lawyer to look over your contracts in these situations is recommended.
This is, of course, just a starting point. Do your proper due diligence. TRA expects more M&A activity along with start-up investment in the payments space both within Australia and around the world. That is almost guaranteed considering the central role this industry plays in digital economies and lives. The drivers for M&A will be familiar, but the outcomes for you as a business leader are really up to how well you can adapt and take advantage of the opportunity the activity presents.