As competition rises in the fintech space and the market becomes increasingly saturated with digital payment firms, the industry has shifted its focus from core payments processing technology to new value-add services.
As a result, the market has experienced heightened M&A, as companies try to diversify their businesses through comprehensive platforms offering services such as cybersecurity, information and analytics and mobile solutions.
Focus on Innovation
Chief Executive Officer (CEO) Frank Bisignano of merchant services provider First Data Corp. (FDC) spoke with CNBC regarding the Atlanta-based company’s new innovative push. Bisignano says that in light of competition from payments companies such as Visa Inc. (V) and MasterCard Inc. (MA) and Silicon Valley players including Jack Dorsey’s Square Inc. (SQ) and industry pioneer PayPal Holdings Inc. (PYPL), he is prepared to continue investing heavily in commerce-enabling technology outside of core payments technology, particularly cryptocurrency.
The CEO says that over the past four years at the helm, the company has watched innovation intently and has worked to support “any currency that has real traction.” Bisignano said, “we have applications that we run today that enable Bitcoin, and we feel really good about that.”
As long as there remains organic growth potential from bringing technology to business, the executive says the industry will continue to benefit high growth and investment.
Payment Giant Buys CardConnect for $750M
The remarks from the fintech CEO come as First Data, with more than $2.2 trillion in transactions a year, buys out integrated payment solutions company CardConnect for $750 million, or $15 per share. In acquiring the Pennsylvania-based business, First Data will enhance its integrated payment solutions, which link to companies’ enterprise resource planning (ERP) systems. The acquisition could open up a new market for First Data, improve its cash management and expand its suite of client services. Bisignano says the transaction is “consistent with our strategy of integrating and scaling innovative technologies across our distribution footprint.”
The global card payment and ecommerce processing company has seen its shares gain about 36% in the most recent 12-month period, propelled by strength of its financial sector, ecommerce and credit card clients. Bisignano also added that the firm hopes it can provide some help to dying brick-and-mortar retailers. (See also: First Data, Silicon Valley Bank Form Accelerator.)