"Omnichannel" isn't just a buzzword to describe marketing and payments in different formats—it also applies to corporate dealmaking as merchant acquirers catch M&A fever.

The impact of smartphones on payments technology innovation is tangible—there are simply hundreds more companies selling payments technology than there were just five years ago. Companies like Affirm, Adyen, Stripe, Dwolla, Klarna, Olo (and the unrelated Ola) are either new or have much more funding. The growth in funding for payment startups has increased more than 400% in yearly deals from 2010 to 2015, according to CB Insights.

It’s a dizzying array of options for merchants that suggests consolidation is on the horizon as well-funded but old school acquirers seek a path to relevance through bundled technology.

"[Mobile driven] changes in behavior like this create big opportunities for startups to specialize in specific transaction types, but there's only so many specialists that merchants can manage before they want consolidation of services into a smaller number of vendors," said Rick Oglesby, a senior analyst and consultant at Double Diamond. "Technology is a key differentiator, particularly during times of rapid evolution."

For a company like CardConnect, which changed its name from Financial Transaction Services in 2013 to reflect its pivot away from being a traditional independent sales organization, there's a lot of disruptors in the market—or a lot of acquisition targets.  

FTS initially bought Princeton Payment Solutions, and took the name of PPS' payments gateway, CardConnect. That early acquisition helped launch technology evolution that has attracted a group of payments technology hedge funds and equity investors, who have purchased CardConnect through a "blank check" company called FinTech Acquisition Corp.

FinTech Acquisition Corp. will acquire CardConnect for $100 million, and will take on the CardConnect name. CardConnect will also become a public company—FinTech Acquisition Corp. is already listed on Nasdaq. CardConnect has long sought to go public, but had not reached the size that would have allowed it to do so.

"Being public will allow us to do more and larger acquisitions," said Jeff Shanahan, CEO of CardConnect. "It provides credibility in the payments space and puts us in a different category than we've been in the past decade."

With the new financial structure in place, CardConnect will go from being the hunted to the hunter, seeking to buy companies that specialize in emerging payments technology such as integrated, cross channel payments, tokenization and security. One of its goals is to target these services to small to medium sized businesses, a traditionally underserved segment that's threatened by the scale of larger retailers.

CardConnect finds itself in competition with companies like Vantiv, First Data and Visa, which have all invited developers to build new merchant technology.

"The big players aren't standing still," said Raymond Pucci associate director of research services for Mercator Advisory Group. "The trend toward mobile and omnichannel payments will require capabilities across all platforms."

Companies that will be in particular demand for M&A are those that can offer innovative security solutions, or that allow merchants to quickly build their own digital wallet, given the influence of Apple Pay and its use of biometrics and tokenization to protect transactions, said Joe Walent, senior analyst for emerging technologies for Mercator. Emerging security and compliance companies are among the top targets for financial technology investment in startups.

"Acquirers are going to be looking at any kind of security technology that can be integrated into the point of sale," Walent said. "And anything that can offer a 'just add water' flowthrough would be a worthwhile acquisition."

CardConnect is also not operating in a vacuum.

First Data recently went public to bolster its diversification strategy. And Global Payments is buying Heartland Payment Systems, partly to boost integrated payments technology for small businesses. And across the larger market, CB Insights reports "exits" among payment startups are increasing, suggesting an uptick in acquisitions.

"We have gone all in in buying companies and investing around technology, and other companies that are doing well are in that same vein," Shanahan said.

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