Open banking has been a big trend in payments for some time, and now traditional payment processors are getting in on the action. Paysafe Group Holdings Ltd. early on Monday announced it has agreed to pay $441 million to acquire Miami-based SafetyPay, a 15-year-old provider of digital payments for cash-paying users in 19 countries, chiefly in Latin America and Europe.
The deal will bolster Paysafe’s position in processing for payments related to online wagering and digital goods. And, with SafetyPay’s banking links, it will also propel Paysafe’s strategy to expand into open banking, according to Philip McHugh, Paysafe’s chief executive. Calling open banking a major trend, McHugh told equity analysts during a call Monday to present Paysafe’s second-quarter results that “SafetyPay gives us a position in open banking in the Latin American market.”
Open banking involves the ability via digital connections to verify the ownership and funding of bank accounts, a function vital for the increasing business of facilitating online non-card transfers. A number of neobanks and fintechs, along with Visa Inc. and Mastercard Inc., have over the past year become increasingly active in the business, with both card networks making major acquisitions.
The deal for SafetyPay isn’t Paysafe’s first in the Latin American market. It follows an agreement earlier this month to acquire Peru-based payments processor PagoEfectivo for about $110 million. The price for PagoEfectivo wasn’t announced, but McHugh on Monday said the total outlay for both companies came to “about $550 million overall.”
Both SafetyPay and PagoEfectivo are active in online gaming, a key market for Paysafe globally and a key to the deal for both companies, McHugh said. “The clients we have in Europe and North America, they have Latin American strategies. We can provide that [coverage] now,” he said.
As for the online-gambling market, or iGaming, as Paysafe calls it, the company has operations in 15 states and expects to be operating in 20 by year’s end, McHugh said. He also pointed to cryptocurrency as an emerging opportunity. The company now processes for 37 digital currencies, with 22 added in the quarter. “We see crypto as a major growth driver,” McHugh told the analysts. Paysafe’s digital-wallet segment, one of three operating units in the company, ended the quarter with 3.4 million active users and $4.7 billion in payment volume, up 3% year-over-year.
The company’s largest unit, integrated payments, processed volume of $26.4 billion, up 54%. Three-quarters of the unit’s volume stems from its U.S. acquiring operation. In October, the unit divested its Pay Later deferred-payment service. With that business excluded, the operation’s volume grew 57%. Paysafe’s eCash division, the smallest of the three, generated volume of $1.4 billion, up 35%. This division includes the mypaysafecard product.
Overall, Paysafe generated $384.3 million in revenue for the quarter, up 13%, on $32.3 billion in processing volume, up 41%.