You certainly can’t accuse MasterCard of ignoring FinTech innovators.
In addition to running hackathons with startups all over the globe — the next one is in Mexico City this weekend — MasterCard is acquiring companies left and right. CEO Ajay Banga described what the company is looking for in the M&A space on this morning’s earnings call:
Our M&A focus areas include loyalty, data analytics, processing, and safety and security. Now because these areas are all of strategic importance to us, our belief is that any transaction we do there has to stand on its own in terms of contribution, but it’s also, most importantly, got to provide ways for us to cross-sell their capabilities in a bundled way with existing MasterCard products and services, what we talk about as the multiplier effect.
Banga described two older acquisitions, DataCash and Access Prepaid, both acquired in 2010, as being fully incorporated into MasterCard’s offerings. Both, he said, have contributed positively to revenue and business growth. DataCash was a payment gateway, now part of MasterCard’s international payment processing solutions, while Access was absorbed into MasterCard’s prepaid programs. Banga went on to describe several acquisitions from the last 18 months:
- C-SAM, a mobile wallet service. Acquired Feb. 2014
- Pinpoint, a loyalty provider. Acquired April 2014
- ElectraCard Services, a payment processor. Acquired May 2014
- TNS (Transaction Network Services), a payment gateway service. Acquired Nov. 2014
- APT (Applied Predictive Technologies), a cloud-based analytics provider. Acquired April 2015
Banga put the acquisitions into perspective:
So why am I saying all this to you about acquisitions? Because we recognize that for each acquisition, there’s a certain amount of effort, a certain amount of investment. But we are clearly seeing the benefits that come from them in our engagements with clients, particularly when you look at adding their capacity to the services and capability that MasterCard already provides.
Of course, the most important acquisition in the network space is Visa’s proposed acquisition of Visa Europe. Banga addressed this, too. There will be ramifications for pricing and yield, he said, but hearkened back to MasterCard’s acquisition experience to discuss possible challenges:
We’ve done the Europay acquisition quite some years ago, and integrating that into MasterCard did pose some amount of challenges in terms of the cultures of the two companies. You’ve also got the technology to be brought together. Remember that simple things like V.me and Visa Checkout are two different things, and that goes into their credit and debit technologies, and there’s going to be a lot of stuff to be done.
When asked if more acquisitions could be expected of MasterCard, Banga replied:
We looked at a ton of deals and chucked them out the door because they didn’t fit one of those three criteria that Martina talked about, cultural fit, connectivity to our existing products and services, financial sense. … I just don’t think I could predict that to you. But you should know that we will be acquisitive if it fits those three ideas and if we feel we can absorb it, and that’s what we’re trying to do.
That sounds like a yes.