As the E-Commerce Gateway Business Heats up, Elavon Strikes a Deal for Sage Pay

U.S. payments companies looking to acquire properties in key markets like e-commerce and merchant acquiring have found a willing seller in Sage Group PLC. Early Monday, the company announced it agreed to sell its payments gateway, Sage Pay Europe Ltd., to Atlanta-based Elavon for $300 million. The deal will bring to the U.S. Bancorp unit a key player in e-commerce processing at a time when major rivals like Stripe Inc. and Adyen N.V. are making major strides.

The deal was signed Sunday and is subject to regulatory approval, according to a news release from Elavon, which says it is the fourth-largest acquirer in Europe.

With Sage Pay, Elavon will not only be a bigger player in the fast-growing business of handling e-commerce transactions, it will also own gateway technology that could position it to compete more effectively with rivals that have leveraged the ability to connect small and mid-size sellers with thousands of buyers and with key marketplaces.

Amsterdam-based Adyen, for example, is taking over processing duties from PayPal Holdings Inc. for business sellers are generating on eBay Inc. While PayPal has processed for the big e-commerce marketplace for years, Adyen’s gateway will funnel transactions to a mix of processors that will include PayPal. Meanwhile, companies like Stripe and Shopify Inc. have grown rapidly serving the needs of smaller online sellers—a fact investors have noted. In September, a new funding round valued San Francisco-based Stripe at $35 billion, catapulting the 10-year-old company into the ranks of the largest processors by market valuation.

That kind of value has not escaped the attention of merchant-acquiring operations like Elavon. “This acquisition brings tremendous talent and leading technology to Elavon, which can be leveraged across the European market,” said Hannah Fitzsimons, president and general manager of Elavon Merchant Services for Europe, in a statement. The United Kingdom-based Sage Pay, which also handles point-of-sale transactions, claims more than 50,000 merchant clients.

Sage Group has sold off payments assets before. U.S. investment firm GTCR LLC bought Sage Payment Solutions, an acquiring operation, in the summer of 2017 for $260 million. Seven months later, GTCR rebranded the company as Paya.

For the immediate future, its deal for Sage Pay will expand the European reach for Elavon, which operates in 10 countries overall.