Between the big news about Libra and the segment-wide spin-up for Prime Day in two weeks, one might have assumed we have hit something of a lull between news events, if for no other reason than to let the big payments and commerce players catch a breather.
But payment and commerce news, like time and tide, wait for no man – and lulls and slowdowns are more the stuff of legend than actual happenings.
And this week, the theme wasn’t just working hard – it was working together, as the major news mostly came from the world of mergers and acquisitions. Some big new ones were announced, while one big old one continues to push, slowly, toward the finish line.
Visa Beefs up Tokenization With a Rambus Buy
Visa announced last week that it has officially made a deal to buy the token services and ticketing business of chipmaker Rambus. Specifically, Visa will be purchasing assets formerly known as Bell ID and Ecebs Ltd. Financial terms were not disclosed. As detailed in the release heralding the acquisition, Visa said the combination of its extant tokenization offerings with the local and account tokenization enabled by Rambus will help secure payments of all types done across the globe.
Tokenization, via Visa Token Service, has been an existing feature of Visa’s card security efforts for almost five years. With the addition of Rambus’ token technology, Visa will extend its security and convenience to transactions done beyond the confines of Visa’s cards, including account-to-account transactions, payments done on domestic card networks and payments done across real-time payment systems. The assets gained in the acquisition help banks control or suspend tokenized bank account numbers, limit token use to specific channels and even set spending limits.
In an interview with Karen Webster, TS Anil, Visa’s senior vice president and global head of payment products and platforms, noted that Rambus will allow Visa to more rapidly scale tokenization beyond the card payments that heretofore have been their focus.
“We’ve been focused on tokenizing Visa card transactions, the need for tokenization, the need to secure digital payments, [which] exists across multiple form factors of payments,” Anil said.
The token services already reach 100 markets, which account for 90 percent of Visa’s total payments volume. The strategy, simply put, is to scale that ever more globally. By purchasing Rambus’ holdings, Anil noted, Visa will be able to build on existing capabilities, “rather than starting from scratch.”
Looking at the short- and medium-term roadmaps, he noted that Visa’s first focus will be to make sure existing clients experience no service disruptions as a result of the acquisition. The second (and concurrent) leg of the strategy will be to tokenize existing transaction flows, notably account-to-account activity, which includes ACH, Same-Day ACH and real-time payment transactions.
Further out, Anil said, Visa will begin to look at the more exotic and creative tokenization uses cases Rambus has been exploring. “These guys have already been experimenting with different types of token use cases, including account-to-account or real-time payment tokens,” he said.
Capital One Snaps up BlueTarp
Capital One Financial Corporation announced it has signed a deal to buy purchase-to-payment and credit management company BlueTarp. The deal will build out Cap One’s B2B finance capabilities, particularly for small- and medium-sized businesses (SMBs).
BlueTarp offers accounts receivable management, cash flow tools, risk mitigation solutions and trade credit financing offerings for SMBs. The move is meant to enhance its card offering for small businesses, and hopefully draw more into its co-branded and private-label credit card offerings. Currently, BlueTarp’s client base is fairly diverse, although they are particularly popular within the construction, equipment and office supply verticals.
The company first launched as a cash flow and credit management company targeting the building material suppliers sector.
“BlueTarp offers a unified purchase-to-payment system, and fosters strong banking relationships with large merchants and small to medium-sized businesses alike,” said Buck Stinson, Capital One senior vice president of card partnerships, in a statement. “We are looking forward to integrating BlueTarp and its innovative technology and services into Capital One’s card partnerships business, enhancing our service capabilities for existing and future partners.”
BlueTarp CEO Scott Simpson noted in a separate release that they were excited for the chance to evolve their firm at a much larger scale. “We look forward to leveraging our fully developed trade credit technology platform and delivering significant value to Capital One’s existing and future partners,” he said.
Capital One said it plans to close the acquisition in the third quarter of this year. The firms did not reveal financial details of the deal.
BB&T-SunTrust Deal Heads to Hearings
It looks like BB&T and SunTrust will have a few questions to answer from legislators before they become a single entity. Given that the meeting is officially titled “The Next Megabank?”, it is fair to assume the two entities could face some tough questions when they meet to discuss the impact of the proposed deal that will create a wholly new financial entity: Truist Financial.
“With the merger of equals, our goal is to create a bold, transformative organization that delivers a smarter and easier client experience through technology and human connection,” said BB&T Chairman and CEO Kelly King, who will serve as the chairman and CEO of the combined company. “True to the heritage of both companies, Truist will reflect what we stand for – a shared belief in building a better future for our clients and communities.”
Truist will be the sixth largest U.S. bank holding company, serving more than 10 million households in the U.S. If it receives regulatory approval and moves forward, the combined bank would control over $440 billion in total assets. As of today, such approval is expected, and the deal is forecast to close in the third or fourth quarter of 2019.
But Congresswoman Maxine Waters has asked regulators to delay approval of the deal until it is examined by Congress. “[T]he proposed merger warrants serious scrutiny from Congress,” Waters wrote in a letter to the regulators. “This is especially true given the rubber-stamping bank merger applications receive from regulators, as demonstrated by the recent data regarding the Federal Reserve’s reviews.”
Waters also raised concerns that the merger could harm community banks and black farmers, as well as lead to layoffs and branch closures.
The House Financial Services Committee has scheduled hearings about the proposed merger on July 24.
So, what did we learn this week? Sometimes the best way to get there faster – whether the destination is tokenization, corporate cards or community banking – is to take it on with a new partner. As long as the regulators like one’s new friends, of course.
See you next week.