Payments companies are posting ‘for sale’ signs and big companies are pursuing acquisitions at a rate that suggests an increase in industry deal-making this year.

Over the past month, the embedded payments and card company Green Dot and software payments firm Flywire both announced that they’re undertaking strategic reviews, indicating the possibility of selling those businesses. Also, vending payments software firm Cantaloupe is reportedly pursuing such a review, according to the news outlet Reuters, which cited unnamed sources.

While those companies grapple with challenges unique to their businesses, addressing their problems has been made more difficult by U.S. stock market volatility in recent weeks, with Flywire, Green Dot and Cantaloupe seeing their stock prices drop in recent weeks.

Meanwhile, larger companies are gobbling up peers and rivals. Processor Shift4 Payments agreed to buy Swiss travel fintech Global Blue last month; American Express said this week it would acquire expense management firm Center; Flywire said it would pay $330 million to purchase hospitality payments firm Sertifi; Canadian fintech Nuvei said it would buy Paywiser Japan; and embedded payments and digital card company Marqeta agreed to buy the European electronic payments provider TransactPay for $47 million.

Through February, there has been a “slight uptick” in global industry deals this year, with 15, compared to 13 for that period last year, said Sam Wares, director of client success at industry consulting firm The Strawhecker Group. Those deals, especially the larger ones, “are going to resonate across the industry,” Wares said.

The buyers are using their acquisitions to expand their geographic footprints, and to add more software services, or ancillary services, to their offerings, Wares said, noting that his firm is advising several clients seeking to sell businesses. Wares said he expects merger and acquisition activity for the sector to increase for the full year, relative to last year. 

Another deal was announced Thursday, with New York-based Bilt Rewards, led by CEO Ankur Jain, saying it would buy merchant data firm Banyan. Bilt Rewards had a market valuation of $3.25 billion as of last August, according to a report from the publication FinTech Futures.

While investors in both the public and the private markets were eager to buy into payments players a few years ago when the COVID-19 pandemic supercharged the businesses, they’re less eager to invest now in such fintech companies as industry growth – for even some of the biggest players – has slowed. So, businesses are under increasing pressure to demonstrate profitable growth amid talk of a potential recession this year.

Sellers become more “realistic”

When there was more capital available, a variety of payments businesses sprung up and competition ensued, but now more of those companies are seeing the sense of merging and being able to pitch broader offerings, Papaya Global CEO Eynat Guez said in an interview earlier this month.

“The market has become more, I would say, mature in terms of expecting companies to do M&A, but also the acquirers and the buyers’ side understand that they need to make (it) a win-win in order to understand how to make this deal happen and how to work together,” Guez explained in describing what’s driving the consolidation.

The decline in public market valuations will affect private market valuations, she noted, lowering target companies’ prices. In the majority of cases, company valuations are “becoming very realistic,” she said.

While the value of acquisitions globally across the fintech realm, including payments, jumped nearly 80% last year to $184.3 billion, that was still lower than the $350.7 billion value in 2021, according to an annual report from sector specialty advisers at Financial Technology Partners. Global venture investment in fintechs has declined in each of the past four years, dropping to $50.2 billion last year, from a 2021 peak of $150.5 billion, the report said.

As far as fintech predictions for 2025: “The data paints a picture of steady early-stage investment activity, a modest return of late-stage fundraising, a definitive swell of M&A activity, and an IPO market poised for action,” FT Partners wrote this month in its “FinTech Sets its Sights on 2025” report.

Seeking acquisitions

Executives at other payments companies have said they’ll be on the hunt for acquisitions.

Mastercard Chief Financial Officer Sachin Mehra told investors attending the Wolfe FinTech Forum conference this week that his card network company would continue to be acquisitive this year, after purchasing cybersecurity outfit Recorded Future last year. 

Payoneer CEO John Caplan said in an interview this month that his cross-border, business-to-business payments company will continue to seek tuck-in acquisition options this year to add to the company’s suite of services, for instance in spend management. 

Likewise, Global Payments Chief Financial Officer Josh Whipple told investors at the Wolfe conference Wednesday that the processor has budgeted for some smaller acquisitions this year.

Similarly, PAR Technology restaurant payments software company is intent on continuing the company’s acquisition spree and has a “very active pipeline,” CEO Savneet Singh said in an interview this month. He has been increasingly expanding the company’s back-office software capabilities.  “I absolutely think we will continue to be acquisitive,” Singh said.