What's going on?
On Monday, US financial services tech firm Fidelity National Information Services (FIS) announced a $43 billion deal to buy payments processing company Worldpay.
What does this mean?
Worldpay processes card payments for merchants of all shapes and sizes – you’ve almost certainly chipped, tapped, or swiped on one of its branded machines. That fits in nicely with FIS’s retail and banking transaction software – and expands its physical payment capabilities. The takeover will see Worldpay shareholders receive both cash and a stake in the new, combined company – and values Worldpay at 14% above its stock price on Friday.
Today’s Worldpay results from a 2017 merger with US firm Vantic. But the company has British origins: it used to be owned by the Royal Bank of Scotland, which was forced to sell Worldpay in 2010 as part of a post-financial crisis bailout. Nine years on, Worldpay is now worth more than its former parent.
Why should I care?
For markets: Payments is an arms race.
The payments processing market is exploding as people spend ever less cash – currently valued at $1.4 trillion, it’s expected to top $2.4 trillion by 2027. Payments companies are busy clubbing together to increase their coverage and offerings (tweet this): PayPal bought iZettle last year, and Fiserv bought First Data in January. Size matters when it comes to payments processing, and acquisitions are one way to get bigger quickly. Perhaps Italy’s Nexi could be next: the payments company is going public, but may soon feature on a few shopping lists.
For you personally: Paying is paying.
No matter whose card terminal you use, payments companies typically charge the merchant, not the buyer, a percentage fee for processing them – so you’re not paying for the privilege of paying (most of the time). As the industry expands, the only thing likely to change in the near future is faster processing times… fingers crossed.