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Mastercard announced plans to acquire cross-border account-to-account money transfer platform Transfast for an undisclosed amount.
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This news comes shortly after the firm retracted its $305 million offer to acquire Earthport, a UK-based firm that provides an application programming interface (API) to remittance firms and banks to streamline their cross-border money transfers, effectively ending an ongoing bidding war with Visa.
Transfast already supports Mastercard Send, the card network’s business-to-business (B2B) and peer-to-peer (P2P) payment platform that allows for instant bank-to-bank payments, and under Mastercard, the firms will support digital firms and financial institutions (FIs) that provide B2B and P2P payments. The acquisition is expected to close in the second half of 2019.
Building out several segments of cross-border payments can aid in Mastercard’s global ambitions, while opening up new streams of revenue. The acquisition will open up more revenue-generating opportunities for Mastercard beyond its core card offerings, which could be especially important a time when interchange and network fees — important sources of revenue for the firm — are being met with regulatory barriers globally.
Transfast’s capabilities in the account-to-account space can enhance Mastercard’s existing offerings and ultimately accelerate its volume; Mastercard’s cross-border volume grew 17% annually in Q4 2018, and acquiring Transfast could accelerate that growth and give Mastercard a quick advantage in the cross-border payments and remittance space.
Further, access to Transfast’s network of over 125 countries across Asia, Europe, Africa, the Americas, Australia, and over 300 partner FIs can complement Mastercard’s efforts in different areas of cross-border payments.
This acquisition can allow Mastercard to build out Mastercard Send’s network, while capitalizing on growing remittances, cross-border P2P payments, and B2B payments. The firm launched Mastercard Send in the UK last year, and acquiring Transfast can allow the firm to grow its presence to become a market leader beyond cards.
Additionally, the ability to offer real-time cross-border payments can allow Mastercard to position itself at the forefront of the remittance space amid the space’s rapid growth: Business Insider Intelligence expects digital remittances to grow at an 11.5% compound annual growth rate (CAGR) from $225 billion in 2018 to $387 billion in 2023.
Further, Mastercard can tap into the rapidly growing B2B payments space, which is expected to reach over $218 trillion in volume by 2022, up from $150 trillion in 2017.
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