Why Europe Must End Its 30-Year Digital Winter to Ensure Its Long-Run Future

Nuvei Sale Hints at Private Deals and Consolidation in Payments’ Future

2019, the year of the payments industry mega-deals, seems long ago and far away.

Before the pandemic, the headlines were awash in waves of verticalization, where large firms scooped up other large firms for tens of billions of dollars. FIS bought Worldpay for a staggering $43 billionFiserv bought First Data for more than $22 billionGlobal Payments added TSYS to its roster for nearly $22 billion.

Much has happened since then. The great digital shift has driven more transactions online at a faster pace than anyone might have expected. Inflation has pinched operating margins. Private equity and venture capital deals have been spotty, to say the least.

Although the scale of mergers and acquisitions and go-private deals may be diminished, at least in terms of the price tag, 2024 is shaping up to have at least some echoes of 2019. Major M&A deals across all sectors — agreements worth at least $10 billion — more than doubled during the first quarter of this year.

Where the Action Is

The biggest deal in the payments arena so far this year has been the $35 billion announcement that Capital One will buy Discover Financial and is on track (should the deal get regulatory approval) to move beyond cards and more firmly into payables and cross-border payments.

Elsewhere, Visa completed its acquisition of Pismo. In that deal, valued at about $1 billion, the payments network bought the cloud-native issuer processing and core banking platform to provide, among other things, card-issuer processing capabilities to financial institution clients.

Most recently, Nuvei announced Monday (April 1) that it would go private in a $6.3 billion deal with private equity firm Advent International. Nuvei, for its part, had been acquisitive in 2023, having bought Paya for $1.3 billion.

The trend, then, seems to be one where expanded product suites, B2B and even cross-border functionality are key considerations in deal-making.

In looking at Nuvei’s most recent earnings results, there’s evidence of two things that would seemingly appeal to an acquirer: a broad-based exposure to some of the key shifts within payments and significant top-line momentum.

The company reported that in the fourth quarter, global commerce revenue increased 12% year over year. B2B, government and independent software vendors revenue increased 19% year over year, and small- to medium-sized business (SMB)-related revenues gained 2%.

Going private affords firms (including payments firms) the strategy of pursuing market opportunities without being marked to market on public exchanges each day.

But no matter the path that is taken — going private or consolidating and remaining publicly traded — the first quarter has given a sign of what might come in the payments space this year, which is still young.