Partnerships / Acquisitions

Mastercard Buys Nets For $3.19B

Mastercard Buys Nets For $3.19B

In its biggest acquisition to date, Mastercard will buy Nets for 2.85 billion euros ($3.19 billion). With the purchase of the Denmark-based payments platform, Mastercard is picking up an electronic billing platform that offers clearing and instant payment services, according to a statement on Tuesday (Aug. 6).

Mastercard also confirmed that the purchase will take a bite out of its profits for up to two years after the deal closes, which is expected to happen sometime in the first half of 2020.

The move comes 24 hours after the Federal Reserve announced the U.S. would be the latest nation to develop and launch a nationally available real-time payments system. The system, which will be called FedNow, is designed to bring real-time payments capability to the market as a whole, and pick up the pace of money flows nationwide (and beyond).

“Real time is real, it’s here and it keeps growing,” Michael Miebach, Mastercard’s chief product and innovation officer, said in an interview. “What we found in Nets is it’s a business that’s deeply ingrained in some of the most innovative and vibrant payments markets in the world.”

The market thus far has liked the announcement: Mastercard shares picked up 2 percent in early trading on Wall Street, adding to its 36 percent gain in 2019 thus far. According to reports, Mastercard plans to expand the Nets businesses beyond their primary markets in the Nordic nations. The company has also confirmed its intention to seek additional acquisition opportunities in the real-time payments space and other areas.

“We are a multi-rail company – this deal further demonstrates the strength of our strategy, staying ahead of the changing landscape, delivering essential choice to banks, businesses and consumers,” said Miebach.

The newly announced acquisition is Mastercard’s largest, though the company has spent roughly $1.1 billion this year on acquisitions and strategic equity investments as it has looked to expand its reach and offerings. This year’s purchases have included Ethoca, which helps merchants identify fraud; Vyze, a point-of-sale payment provider; Transactis, which focuses on bill payments; and Transfast, a cross-border payments network.

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Social distancing has changed eCommerce from a ‘want to have’ to a ‘must have’ for businesses, yet retailers could struggle to create convenient payment and refund experiences for their apps and websites, says Abdul Raof Latiff, head of DBS Bank’s digital institutional banking group. In the April 2020 B2B API Tracker, Latiff explains how banks can provide a timely assist via application programming interfaces (APIs) that integrate payments into those eCommerce platforms.

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