October 19, 2022

Market Spotlight: Changing Consumer Behaviors Propelling Paytech M&A

M&A in the TMT sector has, in many respects, been the defining feature of dealmaking over the last couple of years, with the pandemic supercharging technology-related growth strategies as organizations sought to bring their operations up to speed with the changing times. The confluence of TMT and the financial services industry has been especially noteworthy, and under that broader fintech banner now sits another standout subsector—paytech.

Services such as Apple Pay, Google Pay and Ali Pay illustrate the rapid adoption of paytech solutions as businesses look to facilitate non-cash transactions. According to the Capgemini Research Institute, new digital payment methods accounted for around 17% of non-cash transaction volume in 2021, with that share expected to climb to 28% of total volume by 2026. Despite the slowdown in the world economy and looming threat of recession, Capgemini forecasts that non-cash transactions will see 16.5% compound annual growth between 2021 and 2026.

This growth is amplifying the development of alternative payment products, ranging from QR codes and mobile wallets to instantaneous payments and e-money. Evidence of this can be found in recent M&A transactions in the Americas.

In September, financial services giant JP Morgan announced that it was acquiring Renovite Technologies, a cloud-based payments technology firm. Renovite will be folded into JP Morgan Payments, supporting the banks transition to the cloud and bolstering its merchant acquiring platform. This transaction is illustrative of the types of deals that large, traditional players in the financial services space are striving to make to keep up with the pace of technology innovation.

Latin America, which is enjoying a fintech boom, has also produced several noteworthy paytech deals of late. In August, payments solutions provider Kushki moved to acquire Mexican paytech Billpocket, which enables businesses to accept card payments. Kushki has said the deal will help it grow its paytech business threefold in Mexico.

Consumer behaviors have changed remarkably quickly, and technology innovators are more than happy to continue meeting that demand. With regulators increasingly catching up with the high rate of growth in this space, paytech M&A is likely to go from strength to strength.

Datasite Deal Drivers: Americas HY 2022

Deal Drivers: Global Dealmaking Trends

How has M&A fared around the world? Read our latest Deal Drivers reports from the Americas, EMEA, and APAC to gain the latest insight into dealmaking trends.

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