Visa is among the companies sizing up Nordic payment firm Nets for a potential acquisition, according to people familiar with the discussions. If consummated, a deal for the payment processor would add to the bonanza of mergers and acquisitions in the digital payments sector in recent months.
The world’s second-largest card payment company is considering buying part of the Copenhagen-based company’s operations, but probably not the entire company, said the people, who declined to be identified because they weren’t authorized to speak publicly about the talks. Nets, which provides payment services to 400,000 merchants across Europe, was taken private for 33.1 billion Danish kroner ($4.9 billion) in 2017 by a consortium led by US private equity firm Hellman & Friedman. Other companies are also said to be in the mix to make a deal for Nets.
“We do not comment on market rumors and speculation,” Povl Rasmussen, a spokesperson for Nets, said in an email. A spokesperson for Visa also said the company doesn’t comment on speculation.
Visa is focused on the parts of Nets’ business that handle things like bank-to-bank payments and automatic billing, which are seen as particularly profitable segments of its operations, the people said. While Visa runs the dominant card payment network outside of China, bank-to-bank transactions represent a vulnerability for the Foster City, California-company, should those types of payments that take place outside the card network catch on widely.
As more and more transactions take place digitally and online (Quartz member exclusive), payment company assets are in hot demand. Financial technology provider Fiserv said earlier this year that it was buying payment processor First Data for $22 billion. China’s Ant Financial agreed to buy UK-based WorldFirst in February for a reported $700 million, and the next month FIS said it was buying Worldpay for $35 billion.
Nets offers Visa a chance to match its main rival: MasterCard bought London-based VocaLink—which enables direct payments between bank accounts—for about $920 million in 2016. Companies that handle these types of transactions are seen as harder to find, which could make Nets, a best-in-class operator, particularly valuable to some buyers.
At the same time, other parts of Nets’ business, particularly its card payment operations, may be facing more competition than expected when it was taken private, as fintechs like Amsterdam-based Adyen gobble up market share. Adyen CEO Pieter van der Does said earlier this year that “we don’t lose customers to anyone.”
As for Visa, the company has splurged on deal making. In March, it said it acquired control of cross-border payment company Earthport, and last month it said it was buying a payments portfolio from a company called Rambus.
The card network has also been busy in the startup and fintech arena. It invested in Gojek, a Southeast Asian ride-hailing service and payments platform earlier this month, and joined a funding round for PayMate, a business-to-business payment company in India.
“We’ve gotten our act together as it relates to fintechs,” Visa CEO Alfred Kelly said this week on an earnings call with analysts. “We were a little bit slow out of the chute a year and a half ago, but over the last five quarters or so, we’ve been very, very focused on fintechs.”