$34 billion FIS-WorldPay deal to impact fintech

Chennai: In one of the biggest global deals in the payments sector, which can also influence India’s e-commerce and payment landscape, Fidelity National Information Services (FIS) has agreed to acquire Worldpay for about $34 billion in cash and stock.

FIS, which focuses on the software behind payments for retail and banking, will assume payment processing company Worldpay’s debt, bringing the enterprise value of the deal to about $43 billion, the companies said on Monday. Current shareholders of FIS will own about 53 per cent of the combined company, while Worldpay investors will hold 47 per cent.

The transaction is expected to expand FIS’s capabilities by enhancing its payments offerings while increasing WP’s distribution footprint and accelerating its entry into new geographies.

In India, FIS has a significant client base that includes Bandhan Financial Services, FINO Payments Bank, ESAF Small Finance Bank, Fincare Small Finance Bank, North East Small Finance Bank (NESFB), Suryoday Micro Finance, RGVN (North East) Microfinance and Karnataka Bank. Some of the leading banks in India, including IndusInd Bank, are Worldpay’s clients.

The mega deal, when completed, will make the combined company the biggest in the processing and payments industry, according to data compiled by Bloomberg.

“We have been seeing such consolidation happening in this space for some time now. The trend will continue. The deal will see the entity having considerable presence in developed markets like the US and Europe along with emerging market like India,” said Navin Surya, Chairman Emeritus, Payments Council of India and Chairman, Fintech Convergence Council.

According to Mandar Agashe, founder and vice chairman of Sarvatra Technologies, the merger will benefit the Indian clients as they will get end-to-end services that include banking technology, payment and acquisition of transaction, on a single platform.

Payment companies earn fees from charging to service billions of dollars of purchases made by consumers and businesses and many have been turning to deals to grab market share. The rise of contactless payments, and the need to update back-end infrastructure, also have spurred mergers. Both FIS and WP provide the technological infrastructure that lets consumers securely pay an overseas vendor, on an e-commerce site or while making a card payment.

FIS and WP have complementary solutions and services for banks as well as retailers, and also offer loyalty programmes and anti-fraud products. The combined firm will serve the high-growth e-commerce industry.

“The merged entity can also make it big in e-commerce as Worldpay already has a presence in the sector,” said Agashe.