Payments giant Visa has acquired a minority stake in one of the most prominent fintech enablers in the world, Global Processing Systems. While details of the exact investment were not revealed, GPS CEO Joanne Dewar stated that no shareholders had left the company to accommodate Visa.
GPS, based in Britain has been partnering with Visa since 2013 on various projects. Actually, it was the preferred issuer processor for its “fintech fast track” programme for the APAC region in 2019.
Speaking on the latest move, GPS stated that with this Visa investment, the companies had deepened their partnership. Also, the collaboration seeks to expand its slew of services across the globe. The two companies had been in talks about this acquisition since the inception of 2020, but mergers were halted due to the Covid-19 pandemic. Fortunately, GPS has withstood the pandemic.
The Brit fintech employs nearly 200 people, and currently handles 130 clients, earning revenues just shy of $100m every year. While this revenue amount seems dainty for a global organization, GPS works with some of the biggest names in fintech, like Revolut and Starling. Specifically, GPS provides the fundamental infrastructure needed by these companies to support their services.
With Visa’s backing, GPS aims to develop its services and curate its leadership while building a larger team. The company’s CFO Richard Hodgson stated that GPS would work on expansion after it had completed the aforesaid development.
Trend of large fintechs acquiring stakes in issuer-processor companies
What is the commonality between Galileo Financial Technologies, Marqueta, and I2C? All three companies are competitors of GPS. Moreover, all three companies received significant investments from big fintech players recently. Mastercard purchased a stake in Marqueta, SoFi agreed to buy Galileo for $1.2b, and Mastercard hired I2C to develop its Digital First Card Programme.
Visa itself is looking for more companies to invest into. These are companies that provide specialized services, which can help global payments leaders rope in more people into the financial sector. Visa’s recent deals with Plaid and GoodData and Mastercard’s deal with Finicity are examples of this trend.