The payments industry was the most active financial technology market for mergers and acquisitions during the first half of 2014, according to a report from investment bankers Berkery Noyes.

Payments companies were involved in 56 deals in the past six months, says Berkery Noyes, which tracked M&A trends for the financial technology and information industry.

Payments is likely to stay in the forefront of M&A activity as the industry invests in emerging security technology, says John Guzzo, managing director for Berkery Noyes.

Payments providers were involved in the two largest deals during the reporting period.

Bain Capital, Advent International and ATP Private Equity Partners obtained Nets Holding A/S, a provider of payments, information and digital identity software in March for $3.14 billion.

Advent International also had a hand in the second largest deal, supporting payment processor Vantiv in its $1.65 billion acquisition of Mercury Payments Systems. Vantiv officially closed its deal with Mercury June 13.

Other notable transactions in payments included corporate payments provider Wex Inc.'s $533 million purchase of cloud-based health care payments provider Evolution1, which closed July 16, as well as Global Payments Inc. acquiring Payment Processing Inc. for $420 million in March.

Intuit entered an agreement in May to obtain Check Inc. for $360 million, a deal Intuit expects to close later this year. And just this week, Twitter entered a deal to buy the payments company CardSpring.

As companies continue to pursue electronic bill payment and online payments to eliminate paper bills, the payments industry may see more mergers in that space in the future, Guzzo says.

"It's not something that is being taken on with lightning speed," Guzzo says. "People like making payments online, but they still like getting paper bills for the big documents, like the mortgage bill or loan bill."

Payments companies may also be on the lookout for acquisition targets that provide compliance or security for card-not-present transactions, particularly as the U.S. shifts to EMV cards at the physical point of sale, Guzzo adds.

"Having technology to verify and authenticate the person on the phone or initiating an online transaction is going to be a huge area," Guzzo says.

The most active acquirers so far this year have been MasterCard Inc., Rubik Financial Limited and Charge Payment LLC, each with three transactions, Berkery reports.

MasterCard entered an agreement to acquire ElectraCard Services, a unit of Opus Software Solutions Pvt. Ltd. and a software provider for electronic payment and card system payment processing.

In addition, the card network on July 1 completed its deal to acquire Australia-based loyalty and rewards service provider Pinpoint Pty. Ltd., and entered an agreement to acquire mobile wallet provider C-Sam Inc., a company in which MasterCard had a minority stake. Chicago-based C-Sam provides mobile wallet technology in Asian, Mexican and Australian markets, but worked with the Isis mobile wallet venture in the U.S.

Charge Payment acquired biweekly payments provider Payments System; education and payments software provider Data Business Systems; and independent sales organization Advanced Payment Solutions.

Total transaction volume in the financial technology and information market decreased by 11% in the first half of 2014 to 166 deals, falling from 187 in second half of 2013, Berkery Noyes reports. Transaction value also fell to $11.07 billion, a 27% drop from $15.5 billion in second half of 2013.

There were also deals among the investment banks that execute M&A transactions in payments and financial technology sectors. Blackstone Group LP and Goldman Sachs Merchant Banking acquired Ipreo Holdings LLC for $975 million in April, the third largest deal taking place, followed by Verisk Analytics Inc. purchasing EagleView Technologies Inc. in January at $637 million.

"It's definitely a seller's market today," Guzzo says. "Valuations are up across the board, especially in payments and financial technologies, which are recurring-revenue sort of businesses."

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