Payments giant MasterCard recently agreed to buy Denmark-based payments platform called Nets for 2.85 billion euros ($3.19 billion). This is the largest acquisition in the history of the company.
MasterCard bought Nets to bring faster payments to its userbase and help push it further in the dynamic world of online payments, now populated with fintech startups. With this purchase, the company will get access to Nets’ instant payment services as well as its clearing and electronic-billing services. The company, in its statement, stated that its recent purchase would hit their profits for two years after the deal is completed in the first half of 2020.
The company’s focus is on working on a real-time payment system that helps in speeding up transactions for both individual consumers and businesses. Their chief product and innovation officer, Michael Miebach commented on the acquisition, saying,
“Real-time is real, it’s here and it keeps growing. What we found in Nets is it’s a business that’s deeply ingrained in some of the most innovative and vibrant payments markets in the world.”
Competing in a tough landscape
The market was excited with the news of the acquisition as the shares of MasterCard jumped 2%. However, Nets won’t make the company’s road in this sector any easier. It should be noted that even governments and central banks are interested in capturing the real-time gross settlement payments system. This week, the Federal Reserve also announced that it will create a similar real-time gross settlement payments system for the US.
America’s biggest retail groups- Walmart and Amazon, have also supported the idea of launching such a system. The Federal Reserve will now be in direct competition with several US banks which are building similar systems. It will be working via an association called Clearing House, which will also be using the MasterCard technology to build that network.
MasterCard is making strides into innovative financial services. It has already spent over $1.1 billion in strategic equity investments and acquisitions in realizing this dream. In a note to clients, William Blair & Co.’s Robert Napoli said that the firm is developing additional forms of electronic payments. The Nets business will now be working beyond the primary Nordic market as MasterCard continues to expand its businesses in real-time payments. They will also be looking into data analytics and fraud detection.