PayPal deals headlined 2018 M&A in payments

Mergers and acquisitions in the payments segment rose 16 percent in 2018, fueled in part by PayPal closing two large deals.

PayPal closed its acquisition of mobile payments company iZettle for $2.43 billion in 2018, as well as its $400 million purchase of Hyperwallet, a digital payout provider serving gig economies, according to research from investment banker Berkery Noyes.

Berkery Noyes recorded 963 financial technology, payments and information industry mergers and acquisitions in the past two years, citing those making acquisitions as increasingly seeking products to round out solution offerings or to gain customers and market share.

Of those transactions, Berkery cited a vast majority as "strategic transactions" to bolster product offerings immediately as opposed to "financial transactions" to obtain customer databases and increase market share.

In payments, other high-profile transactions included SilverLake and P2 Capital Partners acquiring Blackhawk Network, a physical and digital gift card and prepaid payments network, for $3.62 billion.

Edenred acquired Corporate Spending Innovations, which provides automated corporate payment software, for $600 million; and GrubHub acquired LevelUp, an analytics, loyalty, and rewards-based mobile platform for restaurants, for $390 million.

Visa landed a significant deal in acquiring Fraedom, a payments and transaction management software provider for banks and their corporate customers, for $200 million.

"The return on investment for financial technology and information customers can be high," the Berkery report noted. "It encourages users to view these technologies as not only productivity solutions, but also profit generators."

Another growing M&A segment is in companies providing technology for governance, risk and compliance, Berkery noted.

Among the transactions in that market, Prime Trust acquired FundAmerica, which builds SEC-compliant solutions for technology-based securities offerings, while Equifax acquired DataX, a credit reporting agency and alternative data provider.

The payments acquisition momentum continued into 2019, when FIS announced its $43 billion deal for WorldPay, and Fiserv landed a deal with First Data to acquire the processor for $22 billion.