top of page

66 Payments-Related M&As in the First Half of 2022 Outpaced 2021

There were 66 mergers and acquisitions in the payments space in the first half of this year, with several more occurring in the past few months such as Global Payments’ $4 billion acquisition of EVO. This exceeds the 59 mergers and acquisitions among payments companies in the first half of 2021, and economic uncertainty may be a driving force encouraging more consolidation.


While the first six months of 2022 saw more mergers and acquisitions than the first half of 2021, the second-half of last year saw an acceleration in this activity. There were 127 payment-related mergers and acquisitions in 2021 totaling $76.6 billion. 2021 was one of the busiest years in terms of payments M&A activity, but far behind the recording setting $169.4 billion worth of M&A activity in 2019. This was largely driven by two megadeals: FIS’ $35 billion acquisition of Worldpay and Fiserv’s $22 billion acquisition of First Data. Those two acquisitions in 2019 equate to nearly 75 percent of the dollar value of all payments M&As in 2021.


It may seem counterintuitive that, in a time of economic uncertainty with many predicting a recession in 2023, M&A activity would increase rather than decrease. However, there are three key reasons why these macroeconomic conditions might be encouraging more M&A activity in the payments space.


First is that valuations have come back down to earth. Low interest rates and high liquidity inflated equity prices on both publicly traded and private markets from 2020 through early 2022. This has been most apparent with buy-now-pay-later companies. Take Affirm, for example, a publicly traded company with a stock price that peaked at around $165 dollars per share in late 2021 but now trades around $16 per share.

Second is that strategic acquisitions of companies with complementary service offerings can make larger payment companies more robust and more sticky with their clients. Once an acquisition is integrated, there may be efficiencies and cost-savings which improve business efficiency.


Third is that inflation helps topline revenue for acquiring banks and others in the payments space. When fees are collected as a percentage of gross transaction volume, as things cost more money, consumers spend more money – even if that means buying fewer things. Larger payments companies are better positioned to weather the short-run business cycle fluctuations as prices adjust, and come out on the other side with topline revenue growth.


While inflation and wages or salaries are tightly linked, and inflation will also increase labor costs for the payments firms, operating costs related to technology and capital will not a grow at the same rate. This provides the opportunity to maintain stable costs, or at least costs that do not grow as fast as gross revenue. A medium- to-large payments company, especially one that did not invest as much in capex when borrowing money was inexpensive, is now a great acquisition target for an enterprise payments firm, who sees the benefit of topline growth on the other side of a potential recession while being able to weather the storm on the way there.


For more information:


Recent Posts

See All
bottom of page