- PayPal's recent acquisition of Swedish fintech firm likely first of many more fintech buy-outs
- Legacy payments providers increasingly looking to adopt disruptive fintech to grow existing service models
- Private e-commerce and mobile payments companies present best opportunities
PayPal's recent purchase of Swedish fintech firm iZettle represents a key moment for mergers and acquisitions in the payments industry, with many experts expecting a sharp increase in the number and value of deals between traditional platforms and fintech disruptors.
According to reports, the deal presents a list of growing trends as legacy payment providers seek to improve their reach into the digital space. These include a blurring of the lines between online and offline commerce as well as the increased demand for global retail access for small businesses.
Admittedly, few large public companies would be suited to this type of deal, but there is plenty of opportunity in the private e-commerce and mobile retail market to improve support for cross-border payments.
A number of factors are set to influence this trend, including improved relationships between traditional banks and fintech firms, and increased supply chain globalisation for small businesses. For legacy payments providers, there is also increased interest in leveraging the growth of the international money transfer market.
PayPal reportedly intends to pay $2.2bn to acquire iZettle, about twice the company's projected IPO valuation. Many experts agree this kind of high valuation won't do much to prevent companies going after the deals they want.
"Valuation is in the eye of the beholder based on what you need for your strategic plan," said Mitch Siegel of KMPG, an expert in financial services strategy.
To date, roughly 346 global fintech deals have been announced so far this year. There were 884 deals made in 2017, up from just 575 in all of 2016.
