Cross-border payment mergers and acquisitions saw a decrease of 35% in 2023.
In an unexpected turn of events, the mergers and acquisitions (M&A) activity in the cross-border payments sector has seen a significant drop of 35% from Q1-Q3 in 2023 compared to the same period in 2022. This decline, however, is not a universal trend across all sectors, as card issuers have managed to buck this trend and continue with their M&A activities.
Joe Baker, a senior copywriter and author of the FXC report, has stated that pinpointing specific factors driving this decline in the cross-border payments space without making generalizations is challenging. Nevertheless, some potential macroeconomic factors that might be influencing M&A activity include global uncertainty, fluctuations in valuations, changes in monetary policy and interest rates, competition, and market dynamics.
According to our platform's analysis of data from various third parties and news outlets, around 33 out of 90 acquiring companies in the cross-border payments sector have their headquarters in the US, while 27 acquirees are based there. The biggest disclosed M&A this year was Worldpay's acquisition by GTCR at $18.5bn, with no other acquisitions achieving multi-billion dollar status aside from this deal.
The decline in M&A activity is observed across B2B payments, consumer money transfers, and payment processors, with card issuers being the exceptions to the decline. Our platform assesses businesses for inclusion based on one or both companies having a substantial business focus in cross-border payments, acquisitions needing to be a significant stake of the acquiree's business, and acquisitions needing to have been publicly reported in established third-party media outlets.
The collapse of Silicon Valley Bank earlier this year may have deterred companies from spending big on acquisitions, contributing to the overall decline in fintech M&A this year. However, more specific insights into the cross-border payments sector would require additional data or research focused on this area.
In conclusion, the cross-border payments M&A market is experiencing a downturn, with a significant decrease in the number of notable deals this year compared to last. While the exact reasons for this decline are not yet clear, potential contributing factors include global economic uncertainty, changes in valuations, and the competitive landscape. Card issuers, however, have managed to maintain their M&A activities, offering a glimmer of hope in an otherwise challenging market.
Investing in the finance sector might be wary for businesses, as the decline in M&A activity, particularly in the cross-border payments sector, suggests uncertainty in the market. The drop in M&A activity is observed across B2B payments, consumer money transfers, and payment processors, with card issuers being the exception to the decline, continuing with their M&A activities.
