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: 0) by Anonymous Coward on Saturday July 08 2017, @03:47PM (8 children)
These companies can reverse any transfer into your accounts at any time and then tell *you* to file a police report to stop it. Read the fine print and you will see there is no timeperiod after which a transfer can be considered really complete.
(Score: 3, Funny) by kaszz on Saturday July 08 2017, @04:13PM (5 children)
Move the money immediately to another bank?
Interesting world where you buy phones that never become yours with money that you don't own to a merchant that don't really get paid. Nothing is real.
Soon fake money will take a whole new meaning ;)
(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.
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @04:27PM (1 child)
Is this important for customers or for merchants/sellers?
Thinking about PayPal, where customers can often reverse a transfer after receiving goods from a seller -- and the seller often has very little recourse (at least in my limited experience).
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @04:47PM
Yes, it is the same. Paypal is just particularly egregious about this.
(Score: 3, Funny) by Gaaark on Saturday July 08 2017, @04:35PM (6 children)
Let them merge: the world needs less competition, not more. Right?
Isn't that the whole thing? More competition? The more competition, the lower the prices will be?
Ahhhh, unless you're thinking about those poor rich people who need that extra buck or two, then less competition makes sense, 'cause what's good for the rich is good for the poor. The poor pay more, so they have to work harder which makes the rich richer so they can buy up more competition which, in the long run, is good for the poor.
Right?
right??
--- Please remind me if I haven't been civil to you: I'm channeling MDC. ---Gaaark 2.0 ---
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @05:07PM (1 child)
Doesn't seem to work for interest rates on consumer credit cards, does it?
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @05:29PM
Sorry, but if you use credit cards for a consumer loan (by not paying your bill immediately), then you are a sucker. If you really need to borrow money there are better ways.
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @05:25PM (2 children)
Yes, I think that's the general idea of golden shower economics.
Since we've established that it's start-ups and bankers who are doing all the sexual harassment in tech, can we get these companies investigated? We need to empower their female employees to publicly accuse these companies in the media.
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @05:58PM (1 child)
No, we don't. We live in a society where we have laws and the accused have rights. They can already do that if they wish, it's just that they can be sued for libel or defamation of character as appropriate. Which is a good thing.
(Score: 0) by Anonymous Coward on Saturday July 08 2017, @06:40PM
The accused have no rights in the media.
(Score: 1, Insightful) by Anonymous Coward on Saturday July 08 2017, @05:51PM
This is one of the consequences of the move to focus on the cost of services back in the '80s. Consumer choice isn't a consideration anymore, as long as the price doesn't change. And to make matters worse, when mergers are approved, the promises they make aren't usually enforced. So, they'll promise not to abuse their larger size and there's usually nothing done when it screws over the customers.
Really, there should be a policy of considering the reduction in competition from these mergers and actually enforcing Clayton. When all the companies offering a service have the same anti-customer terms of service, it's rather dishonest to suggest that the customer has a viable choice if he needs the service.