Global Payments Inc. Eyed as Potential for the Next Major FinTech Merger

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Category: Fintech
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In a market where multiple startups keep popping up on a day to day basis, major FinTech corporations may find it smart to collaborate and merge corporations in order to both combine resources and consumers and beat out the remaining existing competition.

Two mega-mergers among payment processing companies have happened so far. Amidst all the discussions about it, investors are asking: Why is this happening and who is merging next?

According to Lisa Ellis, a MoffettNathanson analyst, the "why" behind the two mega-mergers is incredibly simple. The digitization of payments in Europe, Latin America and Asia, rapid e-commerce growth, and consumer demand for capabilities such as “order ahead” are causing deals to bloom and succeed. This means that in order for corporations to meet the demands of their consumers, they need more power. A merger not only gives them this power but also allows them to combine their resources and markets, granting the companies that merged access to markets that they may not have access to previously.

As for who’s next, Global Payments Inc. is the most likely target by multiple companies.

According to David Ritter, a Bloomberg Intelligence analyst, the recent merger wave in payments has extremely lowered the possibility for more mega-deals. The only remaining viable companies to do a mega-merge are TSYS and Global Payments. Ellis called this partnership the “obvious, but true” alternative, given that they are the two remaining large independents. Another possible outcome would be for Global Payments to combine with U.S. Bancorp’s Elavon. However, Elavon’s ranking, which stands at fifth or sixth in the U.S., may affect Global Payment’s decision-making process.

Global Payments could also be a viable and strategic fit for JPMorgan Chase & Co. They may also work very well with the new Fiserv-FDC. The company could even merge with Square Inc. or Stripe Inc. However, the company also has the capability to be a buyer and try and grab a company outside the United States’ market such as Worldline or PagSeguro.

Global Payment’s choices could very well define the future of the corporation. Many startups are looking for consumers in the same market where Global Payment has its clients. Given that startups have the tendency to be more personalized and cater to the users more, there is a big possibility that Global Payments might lose valuable clientele to them if they do not merge or acquire a company that improves their services. However, Global Payments cannot just choose any corporation to merge with. Taking into account compatibility, market interests, and consumer bases, Global Payments has to choose a corporation that could benefit from their existing systems as much as Global Payments can benefit from them. Furthermore, it has to ensure that the transition of the clients and the company itself is smooth. Merging is not a simple thing to do, and Global Payments has to do everything right in order to assure that the company stays afloat and flourishes in the future.

With all the new financial systems popping up here and there, Global Payments has a very tough job ahead of them. As a big financial company, it needs to improve its services to entice new users as well as keep its current clients happy with the services they provide. Whether Global Payments chooses to merge or becomes a buyer and acquires multiple companies both inside and outside the US market, it needs to do something fast in order to stay relevant in the field of FinTech. If it remains as it is right now, it surely will be overpowered by companies that chose to merge and combine their capabilities.