As the Federal Reserve embarks upon its journey to becoming a real-time payments provider with its planned FedNow service, Mastercard Inc. on Tuesday announced the biggest acquisition in its history, one the network says will strengthen its real-time, bill-payment, and related services.
Mastercard said it has a deal to buy the account-to-account businesses of Nets Group, a Denmark-based processor that mostly operates in the Nordic and Baltic countries, for €2.85 billion ($3.19 billion). The businesses to be acquired include the clearing and instant-payment services and e-billing offerings in Nets’ Corporate Services unit.
Mastercard already is a major provider in U.S. real-time payments through its 2017 acquisition of Vocalink, a United Kingdom payments company whose technology underlies The Clearing House Payments Co.’s Real Time Payments service—a service with which the new FedNow will compete. In addition, Mastercard this year has enhanced its bill-payment and cross-border payments offerings with its acquisitions of Transactis and Transfast, respectively.
“The global opportunity for real-time payments is accelerating,” Michael Miebach, Mastercard’s chief product and innovation officer, said in a news release. “This deal strengthens our unique position as the one-stop partner for any bank, merchant or government’s payment needs. The combination with existing Mastercard assets such as Vocalink, Transfast, and Transactis delivers real-time payment capabilities, innovation and expertise that are truly differentiated.”
Visa Inc. was rumored to also have been interested in Nets, according payments-industry deal watchers. Visa earlier this year won a bidding war with Mastercard for Earthport PLC, a U.K.-based cross-border payments provider.
Now Mastercard is calling itself a “multi-rail payments company” that offers payments and related services that extend beyond its core credit and debit card network.
“The acquisition for Mastercard does boost non-card area focuses,” Jared Drieling, senior director of business intelligence at The Strawhecker Group, an Omaha, Neb.-based merchant-acquiring consultancy, says in an e-mail to Digital Transactions News.
Nets said in its own release that the sale to Mastercard sale will “unlock the potential” for the account-to-account services to grow globally as Nets concentrates on its payment services in Europe for merchants and processing services for banks. The deal does not include Nets’ so-called “e-ID” and digitization services.
Mastercard expects the acquisition to close in 2020’s first half.