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In the world of financial technology, where startups are the focus of M&A chatter, a $10 billion combination of two back-office processors whose roots date to the 1970s might seem unusual.
But Vantiv Inc's (VNTV.N) plan to acquire Worldpay Group PLC (WPG.L) shows that the sheer size of some legacy players - and the inertia of their customers - makes them more interested in buying one another than newer rivals, bankers and analysts said. The two companies facilitate payments by linking stores to customers' bank and credit-card accounts.
"It's a pretty sticky product," said Thad Peterson, an analyst at Aite Group. "Once merchants find a processor that works for them, they are unlikely to change. Merchants aren't in the business of payments, they are in the business of selling stuff."
Vantiv started as a project inside of Cincinnati-based regional lender Fifth Third Bancorp (FITB.O) during the Nixon era. Worldpay, headquartered in London, was launched by a British lender in 1989 and absorbed into Royal Bank of Scotland (RBS.L).
Both companies were spun out of their banks after the financial crisis and thrived on their own continents. Now they are poised to become the singular middleman for more sales globally than any other wholly-owned merchant payments processor based on the $1.3 trillion worth of transactions they handled in 2016, according to data from The Nilson Report.
Source: Reuters
(Score: 3, Funny) by maxwell demon on Saturday July 08 2017, @04:23PM (4 children)
Add to that: You probably bought the phone with money you borrowed from a bank that didn't actually have it.
The Tao of math: The numbers you can count are not the real numbers.
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @04:45PM (2 children)
And the money needed to pay back the interest on all those loans does not even exist yet. EG https://realcurrencies.wordpress.com/2013/04/01/is-there-enough-money-to-pay-off-debt-plus-interest-a-closer-look/ [wordpress.com]
(Score: 2) by kaszz on Saturday July 08 2017, @04:47PM
The point of debt is not to pay it back but to make people pay rent for their plain existence. At least so it seems.
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @05:55PM
That's because banks and financial institutions are allowed to charge high interest rates, leverage themselves and some assets depreciate.
The interest rates themselves are set based in part on how much of the loan is expected to be written off or uncollectable.
(Score: 2) by kaszz on Tuesday July 11 2017, @05:27PM
So you buy a phone that are new shiny that don't really have any function besides in the cloud and that never become yours with money that you don't own from a bank that don't have them and thinking you give them to a merchant that will only really get money they don't have.
The end game is that people give up real work for nothing.