Highlights from our report
- The global payments sector is worth some €1.9 trillion and is currently expanding at a CAGR 2016-2021 of 7%, supported by the continued displacement of cash and growth in electronic transaction volumes. We are seeing accelerated consolidation in the European market, driven mainly by tech/payments specialists and increasingly private equity (PE). Deals are being used to deliver cost synergies, as most of the market is not operating at critical scale; geographic reach (new markets & customers); and innovative digital capabilities such as cloud services and machine learning (AI).
- In the EU deals are concentrated in Germany, the Nordics, France and the Netherlands, Capitalmind’s core markets, where transaction sizes are growing and the largest platforms are becoming ever larger.
- A number of leading international payments players achieved major exits in Q1 and Q2, including IPO exits by EVO Payments, GreenSky and Adyen; and M&A exits by WorldPay (to Vantiv), Zettle (to PayPal), and Verifone (to Francisco Partners & British Columbia).
- Valuations are high, depending on segment positioning, ranging between 8x and 24x EBITDA for listed players. In terms of Total Shareholder Returns (TSR), payments has outperformed other financial servicescategories by a wide margin over the past 10 years.
- Blockchain has the potential to revolutionize payments services, because the technology behind cryptocurrencies makes payments dramatically faster, cheaper and more secure. It is no surprise to see blockchain being adopted by the mainstream (ie. banks and traditional payments providers). Moreover, this mega-trend is only just beginning.
"Payments has become a hot space for deal-making as traditional incumbents (banks & payments specialists) and new payments players (tech giants & FinTechs) look to tap this high growth and rapidly changing market. Deals are being used to tap new digital capabilities, and to reach new customers and geographic markets. PE has recently become an active player, which is further boosting already high valuations.”