The Great M&A Realignment

A sharper focus on strategic deals and carve-outs is changing the mergers-and-acquisitions landscape in payments.

Mergers and acquisitions activity gets more attention with mega deals like the $35-billion Capital One/Discover and $22.7-billion Global Payments/Worldpay combos, but in payments, as with any other business, deals like these are happening all the time. Changes in economic conditions affect large and small M&A deals.

“The Global Payments/Worldpay deal is a bellwether, not just because of its scale, but because of what it signals: the era of inorganic growth is very much alive, but the rules are changing,” Scott Boyer, founder and owner of National Document LLC, a Phoenix-based firm that offers business services such as registered agent, due-diligence reviews, and other corporate services.

Atlanta-based Global Payments Inc. is buying Worldpay LLC from FIS Inc., which owned 45% of Worldpay, and GTCR, a Chicago-based private-equity firm that acquired a 55% stake in Worldpay in July 2023 from FIS, which acquired it in 2019. The new Global/Worldpay deal also sees Global selling its issuer-processing business, TSYS, to FIS for $13.5 billion.

The other big acquisition lately is Capital One Financial Corp’s deal for Discover Financial services. This combination is poised to shake up the issuing side of the payment card industry.

That’s just the start. Opportunities for other payments M&A deals abound. Boyer views independent software vendors (ISVs), regulatory-tech and fraud-prevention providers, and cross-border entities with business-to-business payments capabilities as likely acquisition candidates.

These deals and others are and will be designed to help buyers build scale. But that is not the sole or overwhelming criterion for combinations in today’s economy. Now, observers say, fulfilling critical needs has taken on more importance, and at a strategic level.

‘A Capability Scale’

“Scale remains important, but has evolved beyond simple transaction-volume considerations,” says Dave Glaser, chief executive of Dwolla Inc., a Des Moines, Iowa-based payments provider. “Today’s payment ecosystem values strategic scale—the ability to serve specific market segments comprehensively rather than just processing more transactions.”

Looking ahead, Glaser says companies with payment-orchestration capabilities could be acquisition candidates. So too might embedded-finance providers and, on the acquirer side, companies that can extend their reach across the payment-value chain.

Regional payment processors with a strong customer base could be active buyers, “particularly those looking to expand their technological capabilities without building in-house,” he says. “These firms benefit from established customer relationships and can leverage acquisitions to deepen these connections through expanded service offerings.”

What has evolved is an assessment of deals based on their ability to address capabilities— a “capability scale,” Glaser says. “This means acquiring complementary technologies that allow [buyers] to offer end-to-end solutions within specific verticals or payment types. The ability to deeply serve particular market segments often delivers more sustainable competitive advantage than simply being bigger.”

This trend isn’t displacing all deal criteria. Many payment segments still benefit from larger scale, Glaser says, particularly in the processing arena. “But even here, the calculus has shifted toward strategic positioning rather than size alone,” he says.

Others agree. “Yes, there is still a premium for size and scale. [Private-equity] firms and strategics know that the amount of effort it takes to complete a transaction with a [$3 million] revenue company versus a [$30 million] revenue company is more or less the same, so, from an allocation-of-resources standpoint, a strategic or private-equity firm is going to prioritize the larger asset, unless the smaller company is filing a product gap that is a ‘must have’ for the strategic,” says Andrew Fox, a director at Leonis Partners, a New York City-based M&A advisory firm.

National Document’s Boyer argues a result yielding a profitable scale is much desired now. “Buyers want platforms that can bring not just volume but margin. That’s why we’re seeing more carve-outs and targeted tuck-ins over mega-mergers,” he says.

One of the factors affecting today’s M&A climate in payments and fintech is that acquirers are looking for interoperability and speed to market, Boyer says, adding, “It’s no longer just about acquiring customers. It’s about acquiring infrastructure that reduces integration friction.”

Another factor is regulatory scrutiny. That means compliance capabilities are weighed as heavily as revenue when vetting targets, Boyer says. And yet another factor is private-equity pressure. “PE firms are sitting on record dry powder, but rising interest rates and tighter due diligence are making them more cautious. They’re backing fewer, more strategic plays,” he says.

Capital raising by private fintechs picked up in the first quarter, the Financial Technology Partners’ first-quarter fintech deal report found. Financing volume totaled nearly $14 billion, a 50% year-over-year increase, San Francisco-based FT Partners says. The number of M&A and initial public offering deals in the report in the quarter, at 1,386, was up 50% year-over-year.

“Q1 2025 was certainly not quiet or business as usual,” the report says. “Fintech M&A came roaring back, capital raising activity significantly picked up compared to the first quarter of last year, and several prominent fintech companies lined up to go public, all amidst initial rumbling ahead of tumultuous global public markets.”

tariff impact

While conversations about payments M&A might not find many listeners outside of payments, everyone knows about tariffs and the ups and downs of the U.S. economy. As with consumer transactions, these factors also affect payment deals. For many, a more judicious review process is critical.

“Top of mind for many organizations exploring their options right now is the current economic headwinds, including tariffs and interest rates,” says Deven Monga, vice president of sales at Ideals Solutions Group, a London-based firm that provides data services for mergers and acquisitions. “There’s still a lot of uncertainty around U.S. economic policy, which means a lot of companies and funds will be pausing their M&A plans while they wait for more clarity.”

That factor may not adversely all deals, however. “That said, the U.S. trade tariffs might also cause companies with global supply chains to pursue cross-border joint ventures or acquisitions. This could help them reduce their exposure to tariffs and also ensure they can maintain access to other global markets,” Monga says.

Others see that impact, too. “The uncertainty created by on-and-off-again U.S. tariffs is creating both investment and mergers and acquisitions challenges and opportunities,” says Mark Williams, chief revenue officer at Datasite, which also provides data services for dealmaking.

New deals on Datasite are up 5% globally year-over-year and year-to-date, Williams says. “On the other hand,” he adds, “there is also growing caution among dealmakers. U.S. tariffs were identified in a recent Datasite poll as the single largest blocker to M&A activity in 2025, surpassing heightened scrutiny under antitrust regulations, and government spending cuts. Global deal hold-rates on Datasite have also increased nine percentage points year-to-date, year-over-year.”

And, as others say, buyers are now conducting more thorough due diligence, Williams says, and “increasingly using question-and-answer tools in the virtual data room to interrogate the deal information. Additionally, tariff risk analysis is in just about every valuation model.” Policy changes also need review. “This unpredictability means dealmakers must be vigilant about policy changes that could accelerate, or drag out, deal timelines,” Williams says.

The shifting activity on tariffs cannot be discounted. “As mentioned, tariffs have had perhaps the most significant impact on M&A for the better part of the past month,” Monga says. “This is particularly true when evaluating cross-border deals, as companies must factor in the potential costs of maintaining or adapting supply-chain operations if the organization they are looking to acquire or merge with has an extensive global supply chain.”

Recent political moves are a factor now, too, but that hasn’t diminished other M&A elements, such as interest rates.

“The cost dynamics of payments M&A have shifted substantially. Rising interest rates have fundamentally changed the calculus for debt-financed acquisitions, forcing more creative deal structures and increasing the importance of post-merger integration efficiency to justify higher capital costs,” Glaser says.

‘strategic realignments’

Along with these macro factors, the Global/Worldpay deal may also have an impact beyond itself.

“The Global Payments/Worldpay transaction signals a fundamental reshaping of how the industry views the optimal configuration of payment capabilities. The deal demonstrates that even the largest players are reassessing which parts of the payment value chain they want to own versus where they prefer partnerships,” Glaser says.

A significant ripple effect of the deal is a renewed focus on core competencies, he says. “The transaction suggests that breadth of offerings may be giving way to depth of capabilities in specific segments. This could trigger a wave of similar strategic realignments as competitors reassess their own portfolios.”

Leonis’s Fox suggests the deal also could simplify the competitive landscape because Global Payments will be focused on the integration of the companies and transition of Global’s issuing business, TSYS, to FIS.

“The transaction will require major integration work, and with much of Global Payments’ focus being on internal operations, integration work should take place immediately to recognize cost synergies as soon as possible. This could very well provide more nascent merchant-acquiring startups the ability to take more market share from Global Payments and scale faster than otherwise” Fox says.

“The same can be said for smaller, rapidly growing issuer-processing platforms that can plan to capitalize on the market with WorldPay distracted with the transaction,” he adds.

Boyer echoes Fox. “This will likely accelerate consolidation among mid-tier players who can’t compete on the breadth of services. It also pressures acquirers to move quickly, or risk becoming targets themselves. The divestiture of Global’s issuer business signals a realignment. Streamlined, vertically integrated models are winning,” Boyer says.

Glaser, too, sees opportunities for deals. “For mid-size players like Dwolla, this creates interesting opportunities. As large conglomerates refocus, they may divest non-core assets that represent significant growth opportunities for specialized providers,” he says. “The ecosystem benefits from having both comprehensive providers and focused specialists.”

“Another effect worth watching,” Glaser adds, “is how this impacts innovation velocity. Historically, major consolidations have sometimes slowed product development as organizations focused on integration. The market will be monitoring whether the combined entity can maintain the pace of innovation that fintech customers increasingly expect.”

critical criteria

Still, well-honed criteria for deals aren’t lessening in importance. “Building scale is still a primary driver of M&A, particularly as we see new technology lead to the convergence of specific sectors and services within industries like financial services,” Monga says.

As Williams explains, valuation and price have grown in importance. “Whether you’re the buyer or the seller, there are generally several categories to consider, including strategic fit, financial performance, valuation and price, cultural compatibility, customer and market access, talent, technology or intellectual property, operational synergies, and legal and regulatory matters,” he says.

“Yet, right now, dealmakers are most concerned with valuation and price. Changing U.S. trade policies are making it harder to evaluate company market valuations and they are affecting global supply chains. Because of this, some investors are including protection clauses for market downturns, while others are improving terms to secure deals. Still others are taking a ‘wait and see’ approach, which might help explain why deal-hold rates are higher.”

With these added factors, the challenge is to prepare as well as possible, whether the buyer or seller.

“The key is preparation, anticipating increased levels of review, longer review processes, and leveraging technology to expedite diligence,” Williams says. “And while this could create a drag, pent-up demand and opportunities will likely drive dealmakers to continue with transactions.”

“So,” he adds, “the question isn’t if M&A will happen—it’s when.”