Payments Technology

PAYMENTS TECH

April 2020

Dear Clients and Friends,

Please find here our latest report on the values and m&a trends in the Payments Tech industry during the Covid-19 Pandemic.

Over the past several weeks, a lot of us have gained a new appreciation for Payments Tech as we maintained social distance while attempting to perform vital tasks. We paid for essential purchases by tapping our smart phones at the POS – trying hard not to touch anyone or anything personally. We got accustomed to ordering household goods (including groceries) from various eCommerce platforms and paid via a mobile app or a digital wallet without stepping out of our homes. We paid other bills via Zelle and sent money to friends via Venmo. The list goes on. It seems as if Payments Tech has never been as useful – or as taken for granted – as in the time of COVID-19.

In February, shortly before the full impact of the coronavirus hit New York, we released our debut report on m&a values and trends in the Payments Tech industry. See here for that previously published report.

Our debut report highlighted some of the trends driving positive momentum and increased interest in the sector. We discussed ubiquitous and built-in payments capabilities becoming more integral, B2B payments getting digitized, financial inclusion remaining front and center, and innovation continuing around new payment flows and rails. We noted that m&a and financings were robust. The first part of that all remains valid. But COVID-19 has changed a lot in the m&a and financing world over the past 60 days.

As COVID-19 has spread worldwide it has led to government mandated lockdowns, and the closing of many businesses, resulting in massive job losses. It has also led to tremendous transaction volume growth for eCommerce platforms like Amazon, Walmart/Jet and others who have mastered the use of embedded payments as part of their overall business model. Meanwhile, overall transaction volumes have dropped precipitously at brick and mortar stores as many have been forced to close and their customers ordered to shelter in place. Some firms successfully leveraged payments enabled technologies like mobile order ahead and online ordering for delivery or pick-up services. Meanwhile m&a and financings slowed while the global equity markets dropped 20% and more. The Payments Tech industry has not been immune.

As you will see in our latest report, m&a values and trends in the Payments Tech industry have taken a hit but it won’t last forever. There is a silver lining. Our latest report focuses on what this current dislocation means in the short term, as well as our sense of the many opportunities the industry offers. Among other things we discuss:

  • Consumer and corporate actions that will experience permanent shifts, some much needed such as accelerated transitions to digital payments and omni-channel experiences, contactless payments becoming mainstream, shift to the cloud
  • A permanently changed landscape may act as a litmus test for incumbents and innovators and help differentiate the strong from the weak
  • The opportunity for forward thinking companies to leverage innovation such as AR/VR, AI, and contactless as they align with the new normal, and will accelerate opportunistic consolidation

Our full report is here.

Please feel free to reach out, we would love to hear from you and share our insights on what we are witnessing in the markets and how that relates to your platform.

Marlin & Associates is one of the most active investment banking and strategic advisory firms providing trusted counsel to worldwide buyers and sellers of middle-market firms that offer enterprise and vertical application software, services, data and analytics – including firms that offer FinTech, Payments Tech, WealthTech, InsurTech, BankTech, LegalTech, GRC, Business Intelligence, and Market Intelligence. Over the course of 18+ years we have advised more than 200 companies in 27 countries. Over the past 12 months we have advised on 14 successful m&a transactions including the recently announced sale of Strands. When you are ready, we would be pleased to discuss how we may be able to advise your firm.

Kind regards,

Aalap Merchant

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