March 22nd 2019
Visa and Mastercard Battling for Cross-Border Capability
Visa appears to have won a bidding war for cross-border payments enabler Earthport after Mastercard dropped their bid for the firm, but both the card schemes have now bolstered their cross-border capabilities.
Earthport – regulated by the UK Financial Conduct Authority – boast being able to facilitate ‘payments to almost any bank account in the world’, while operating in over 200 markets.
Visa originally made a surprise bid of £198 million in December of 2018, offering 30p per Earthport share: four times the share price at the time of the bid. Earthport’s directors had scheduled a shareholder meeting to discuss the offer, but were forced to cancel after Mastercard’s subsidiary Bidco trumped the bid with an offer of £233 million in late January 2019.
Visa responded on 8th February 2019 with a final offer of £247 million, a 23% premium to its original bid and equivalent to 37p in cash per share.
Mastercard have now allowed their bid to lapse, and instead have secured a deal with another cross-border account-to-account money transfer network in Transfast for an undisclosed amount.
Transfast cover over 125 countries across Asia, Europe, Africa, the Americas and Australia, with direct integrations into 300+ banks and other financial institutions to enable person-to-person, business-to-person and business-to-business payments services.
Timeline
- Visa bids £198 million for Earthport
- Mastercard bids £233 million
- Visa ups bid to £247 million
- Mastercard let their bid lapse and acquire Transfast for undisclosed amount
As the two firms to be acquired do not operate in the consumer-to-business space, merchants are unlikely to be immediately impacted by the deals. What we may see, however, is a continued expansion of Visa and Mastercard’s market share in the payments industry as a whole, further increasing the schemes’ dominance.