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  • Thierry Spanjaard

European payments consolidation on its way

The European payment processing landscape is undergoing a series of acquisitions that are deeply changing its structure, while new European payment standards are looming. Now, both Nexi-SIA-Nets and Worldline-Ingenico claim to be the #1 payment processor in Europe!

Nexi just announced the acquisition of Nets, in an all-share EUR 7.8 billion deal. Nets is a major payment processor operating essentially in Northern Europe and also in Germany, Austria, Switzerland, Poland and the Balkans. The transaction aims at creating a group with pro-forma 2020 revenue of EUR 2.9 billion and core profit of EUR 1.5 billion. The newly created organization says it will surpass Worldline-Ingenico for the number of payment cards managed and retail outlets served.

Headquartered in Denmark, Nets provides processing services to more than 250 banks and more than 700,000 merchant outlets. Nets claims it processes instant payments in 0.02 seconds, one of the fastest implemented solutions. Originally owned by Danish and Norwegian banks, the company had been acquired by Advent International, Bain Capital and ATP in July 2014, and then by a consortium led by Hellman & Friedman in September 2016.

In October 2020, Nexi (the evolution of Servizi Interbancari, also known as CartaSi) and SIA (Società Interbancaria per l'Automazione, originally created by Banca d’Italia), both of them payment processors headquartered in Milan region, in Italy, announced their merger, creating a EUR 15 billion-valued payments giant in Europe. The merged organization announced a pro-forma aggregated revenue of EUR 1.8 billion for 2019. This merger led Nexi to announce they were Europe’s largest payments provider, with around 2 million merchants, 120 million cards, and a total amount of processed annual transactions of EUR 21 billion. Nexi processes transactions for 150 financial institutions while SIA worked for 50 of them, essentially in Europe.

Meanwhile, the acquisition of Ingenico by Worldline has been completed in October 2020, creating a payment company valued at EUR 7.8 billion. Worldline, after Ingenico’s acquisition, is anticipated to generate a EUR 5.3 billion pro-forma combined turnover. However, right after the acquisition was completed, Worldline has announced a strategic review of its payment terminals activity, that could lead the group to divest from it.

Analysts have diverging opinions on the outcome of these megamergers on the European payment scene. Some consider the economies of scale and expect larger organizations to gain in efficiency, thus, to reduce their cost of operations and eventually their prices. While others such as Alex Reddish, chief commercial officer at Tribe Payments, says in Fintech Futures: “merchants need a competitive market to bring them choice and drive costs down”.

This consolidation happens in anticipation of EPI, the European Payments Initiative a European project aiming at more integration in the European payment landscape. Last month, both Worldline and Nets announced they are becoming shareholders of the EPI Interim Company, the organization in charge of paving the way for EPI’s project: a unified pan-European payment solution leveraging Instant Payment/SEPA Instant Credit Transfer (SCT Inst), to offer a card for consumers and merchants across Europe, a digital wallet and P2P payments. The solutions are expected to go live in Q1/2022. Worldline and Nets organizations are the first third-party acquirers to join the initiative, as EPI had been launched by a group of 16 major European financial institutions.

Photo credits: Blake Wisz on Unsplash - Mark Oflynn on Unsplash - Steve Buissinne on Pixabay - Sara Kurfess on Unsplash

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