Mastercard buys Transfast, ending Earthport bidding war with Visa

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Mastercard has dropped out of a recent bidding war with Visa to acquire Earthport, announcing it will instead buy Transfast, a different cross-border payments firm.

The move means Mastercard and Visa are both likely to have their own subsidiaries for account-to-account cross-border payments soon, bolstering their ability to stay relevant as real-time payments expand globally.

New York-based Transfast supports cross-border payments to 125 countries through bank account transfers, and the firm already supports the debit push payments service Mastercard Send, Mastercard said in a Friday press release announcing the deal.

Mastercard’s acquisition of Transfast ends a bidding war with Visa that erupted over the last couple of months, when the two giants were wrestling over Earthport, a London-based cross-border payments firm whose stock had been sagging in recent years.

Visa in December 2018 offered to buy Earthport for $250 million, and a month later Mastercard jumped in with a higher offer.

Last month Visa raised its offer for Earthport to $320 million, driving Earthport shares up 500 percent from when the bidding war began.

“Both networks are very interested in expanding their capabilities in cross-border payments. Currently they can do international transfers on card, but not on bank accounts,” said Zilvinas Bareisis, a senior analyst with Celent.

Transfast brings Mastercard the ability to support business, government and consumer payments that originate with bank accounts, rounding out its offerings to cover B2B and P2P payments through all channels, Mastercard said in the release.

Transfast also has been active in driving financial inclusion in developing markets. Last year Transfast partnered with Indonesia’s post office, enabling consumers receiving inbound remittances to pick up cash at any post office in the country.

“We believe Transfast gives us the strongest platform to immediately enhance our cross-border capabilities and further deliver on our strategy,” said Michael Miebach, Mastercard’s chief product officer, in the press release.

“Over the past 12 years, we have grown our capabilities to connect, track and settle transactions with almost every bank around the world via our curated and extensive network,” said Samish Kumar, CEO of Transfast, in the release.

The push to support instant payments across all channels—including banks—has become essential, said Talie Baker, a senior analyst with Aite Group.

"This acquisition of Transfast keeps Mastercard positioned to stay relevant as real-time payments become the new reality around the globe," Baker said.

Mastercard did not disclose financial terms of the deal, which is set to close in the second quarter of this year.

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Faster payments P-to-P payments Cross border payments B-to-B payments ACH Visa Mastercard U.S. U.K.