Undoubtedly, the last month has seen some reduction in M&A activity in payments. Yes, Worldline has announced another acquisition by taking a majority stake in GoPay, a Czech-Republic based e-commerce player but we have mainly seen different closures of capital raises and fund raising projects. Stripe took in another $600m from a range of investors, Airwallex raised $160m and there were many more all the way from Series A to Series E funding. Having spoken and listened to many experts in the investment space, we received very opposing perspectives. Some folks were convinced that the increasing level of digitisation will lead to more investment into players that have a strong proposition in this segment of the payments world while others took a far more cautious approach and argued that recent funding rounds were initiated well before COVID-19 really impacted the industry, that we would see a noticeable slowdown in activity and that there will be far more investor focus on proven businesses that are revenue and profit generating. It is probably inevitable that there will be Winners and Losers but there is a strong argument that the current crisis is not just changing things temporarily but that we see significant changes in consumer habits and behaviours that are unlikely to fully revert back to what we were used to in the past. People call it ‘the new normal’ but whatever the right term is, the path towards digital solutions has been accelerated through this crisis and this will provide investment opportunities going forward.

But let’s have a quick look at an interesting deal that was announced in April. Rapyd, a highly regarded UK fintech business acquired Korta, an Icelandic payment service provider / acquirer for an undisclosed sum. Rapyd’s vision is to be an enabler of payments, especially cross-border payments, by using API connections and a set of products to collect & disburse funds internationally. It also has its own wallet, has some issuing processing capabilities and is part of Visa’s Fintech Fastrack programme. It claims to support collection and disbursement of funds in over 100 countries and via more than 900 different payment methods. This network allegedly supports and connects 2bn consumers. Rapyd’s ‘payment-as-a-service platform’ is an attractive proposition offering a one-stop integration to facilitate payment flows across a wide range of jurisdictions without users worrying about regulatory compliance or risk management. But what Rapyd could not do was the acceptance and processing of card payments within its network without using third-party services. And this is where Korta comes in. Korta is by no means a large acquirer having processed $2.5bn on Visa and Mastercard per year but it has the licenses and is able to enhance Rapyd’s proposition by providing online and offline card acceptance capabilities.

This deal is clearly filling a gap in Rapyd’s service proposition. One could speculate that bringing card acceptance capabilities in house implies that Rapyd aims to reduce its cost base by ceasing to pay third-party providers and it certainly highlights the importance of card-based payments in a cross-border environment too. A lot of articles can be found these days on the impact that reduced commercial flights (due to COVID-19) have on cross-border remittance players and their ability to distribute cash across its networks. It is possibly the perfect time to promote cards and other electronic means for cross-border payments.‍

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