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What Does Worldpay’s Power Play Mean for Payments?

  • By Andrew Deichler
  • Published: 3/27/2019

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With a multibillion dollar acquisition and a partnership with the world’s largest retailer, payment processor Worldpay had a pretty good week. But what are the greater implications for the payments industry?

FIS ACQUISITION

On Tuesday last week, Fidelity Information Services (FIS) announced that it is acquiring Worldpay for $35 billion. The result is one of the world’s largest payment companies, with $12.3 billion in pro forma annual revenue in 2019 and $4.9 billion in adjusted EBITDA. The acquisition is expected to close in the second half of the year.

Thad Peterson, senior analyst at Aite Group, told Mobile Payments Today that the Worldpay/FIS deal and Fiserv’s recent $22 billion purchase of First Data reflect a consolidation trend in the payments landscape that has been caused by e-commerce. “Payments used to be geographically driven with unique payment alternatives and processes in many markets,” he said. “With globalization of commerce, payments need to support transactions wherever they occur.” 

This is an opinion shared by FIS COO Bruce Lowthers, who told PYMNTS that "the globe is coming together from a commerce perspective.” He added that the Worldpay acquisition was particularly attractive, given that it is a “dominant player” in the global e-commerce arena.

Magnus Carlsson, AFP’s manager of treasury and payments, also sees the deal as positive for payments in general. “This is not just a consolidation in the payments industry, but a combination of the issuing and merchant services sides of the market with the aim to create new platforms that provide customers a more seamless experience,” he said.

Carlsson advises treasurers whose companies have e-commerce platforms to continue to watch this space. “This development points to more streamlined e-commerce platforms in the future,” he said. “As consumers are looking for less complicated online shopping experiences, retailers need to stay up-to-date on how these mergers can improve their online business.”

AMAZON PARTNERSHIP

A day after the announcement of the acquisition by FIS, Worldpay and Amazon revealed that they were joining forces. Worldpay will become the first acquirer whose U.S. online merchants will be able to use Amazon Pay. According to Amazon Pay Vice President Patrick Gauthier, more than a million merchants will soon enable the service.

Amazon aims to connect its more than 100 million Prime users with Worldpay’s merchants via the web and mobile devices, possibly resulting in new experiences for customers. PYMNTS noted that buy-online/return-in-store processes may be possible in the future, as well as greater access to customer data.

“As merchants connect with Amazon Pay, it is going to make it easier for them to extend the ways in which they interact with their buyer,” Gauthier said. “There is a great potential here for Amazon Pay with Worldpay to set the starting point for a host of new innovations from merchants.”

There is, of course, still a question of how many online merchants are truly asking for this. The treasurer for one online retailer told AFP that while he has been “impressed” by discussions he's had with Worldpay and he’s interested in the deals that the acquirer has made with Amazon and FIS, he still doesn’t know much about the company. “At this time I am not sure that Amazon Pay is a high priority for us–I’m not sure I have heard it discussed recently for our e-commerce businesses,” he said. “Apple Pay is enabled, with GooglePay in the horizon. But I don’t recall a discussion of Amazon Pay recently.”

But if retailers shy away from new payment methods or eschew e-commerce altogether, they put themselves at risk of ultimately being phased out. “Considering also the Worldpay and Amazon partnership, the acquisition by FIS will grow Amazon's reach even further, something that could be an issue for independent retailers,” Carlsson said. “The fact that brick and mortar stores are losing business to e-commerce is certainly no news for retailers, but as the online experience keeps improving, the importance of having a robust online shopping offering available is vital.”

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