Mastercard announces its largest acquisition yet

Company is buying assets from European payments company Nets for almost $3.2bn

In its biggest acquisition to date, Mastercard will buy Nets for 2.85bn euros ($3.19 billion). With the purchase of the Denmark-based payments platform, Mastercard is picking up an electronic billing platform that offers clearing and instant payment services, continuing its efforts to move beyond plastic, according to a statement on Tuesday.

Mastercard also confirmed that the purchase will take a bite out of its profits for up to two years after the deal closes, which is expected to happen sometime in the first half of 2020.

The move comes 24 hours after the Federal Reserve announced the US would be the latest nation to develop and launch a nationally available real-time payments system. The system, which will be called FedNow, is designed to bring real-time payments capability to the market as a whole, and pick up the pace of money flows nationwide (and beyond).

“Real time is real, it’s here and it keeps growing,” Michael Miebach, Mastercard’s chief product and innovation officer, said in an interview. “What we found in Nets is it’s a business that’s deeply ingrained in some of the most innovative and vibrant payments markets in the world.”

Miebach sees the Nets assets as a way to strengthen Mastercard’s offerings in Europe, where Vocalink has already allowed the company to build up a presence in the UK’s real-time payments landscape. The Nets businesses give Mastercard positioning in areas like the Nordic countries, Hungary, and Slovenia. According to reports, Mastercard plans to expand the Nets businesses beyond their primary markets in the Nordic nations. The company has also confirmed its intention to seek additional acquisition opportunities in the real-time payments space and other areas.

“We are a multi-rail company – this deal further demonstrates the strength of our strategy, staying ahead of the changing landscape, delivering essential choice to banks, businesses and consumers,” said Miebach.

The market thus far has liked the announcement: Mastercard shares picked up 2% in early trading on Wall Street, adding to its 36% gain in 2019 thus far.

Though the largest in Mastercard's history, the newly announced acquisition is not the first one for the company this year. So far it has spent roughly $1.1bn on acquisitions and strategic equity investments as it has looked to expand its reach and offerings. This year’s purchases have included Ethoca, which helps merchants identify fraud; Vyze, a point-of-sale payment provider; Transactis, which focuses on bill payments; and Transfast, a cross-border payments network.

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