Thursday , March 21, 2019

Mastercard Bails on Bidding War With Visa for Earthport, Plans To Buy Transfast Instead

Mastercard Inc. has called a halt to its bidding war with Visa Inc. over cross-border business-to-business payments processor Earthport PLC and instead plans to acquire another company in the space, Transfast Remittance LLC.

Mastercard announced a tentative deal to buy New York City-based money-transfer provider Transfast Friday. Transfast is a portfolio company of the New York-based private-equity firm GCP Capital Partners. Terms of the deal, which is expected to close in 2019’s second half, weren’t disclosed.

Transfast provides B2B and person-to-person payment services through a network it says covers more than 125 countries and includes direct integrations with more than 300 banks and other financial institutions. The company also supports Mastercard Send, Mastercard’s near real-time payment service. Transfast is licensed by state banking departments in 35 states and the District of Columbia and the Virgin Islands.

“We believe Transfast gives us the strongest platform to immediately enhance our cross-border capabilities and further deliver on our strategy,” Michael Miebach, chief product officer at Mastercard, said in a news release. “The addition of Transfast adds to our leading position in meeting business, government, and consumer payments needs—whether B2B, P2P or other flows. Today’s news cements our collaboration and sets the stage to provide our customers a unique, ready-to-go solution upon closing.”

Mastercard made only a brief mention that it was abandoning its pursuit of Earthport. “Prior to this announcement, Mastercard lapsed its offer for Earthport in order to focus on the integration and expansion of Transfast,” the release says.

Visa last month upped its offer to $320.4 million for London-based Earthport in a contest that started after Mastercard topped Visa’s original price. Visa’s latest offer was 12% above Mastercard’s Jan. 25 bid and 23% higher than its original offer.

Eric Grover, a consultant who is familiar with the international payments scene, says he suspects Mastercard didn’t want to go further in a bidding war with Visa and instead went looking for a partner with similar capabilities. “If the platform is adequate, and I assume Mastercard thinks it is, and it’s an alternative [to Earthport], then why not,” says Grover, principal of Minden, Nev.-based Intrepid Ventures. “My biggest takeaway is the two most powerful payment networks on the planet are really keen to bolster their cross-border B2B bona fides.”

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