Visa and Mastercard Battling for Cross-Border Capability

22nd March 2019
Contributor:
Robbie MacDiarmid
Robbie MacDiarmid

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Visa originally made a surprise bid of £198 million in December of 2018, offering 30p per Earthport share: four times the share price at the time of the bid.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.

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