Fidelity National Information Services Inc (FIS) is set to buy payments solution Worldpay for $35bn (£26bn/€31bn), marking the biggest deal to date in the digital payments industry.
Global payments are reportedly set to hit $3trn a year in revenue by 2023 as digital payments replace cash for online sales in industries such as live entertainment and ticketing, and high street sales via POS systems.
The move towards digital payments defines a huge structural shift in financial services, which has become the driving force behind the record-breaking run of mergers and acquisitions.
“Scale matters in our rapidly changing industry,” said FIS chief executive Gary Norcross, according to the Reuters news agency.
The agreement comes just a year after US firm Vantiv dished out $10.63bn to buy Worldpay, which was founded in the UK as a spin off from the Royal Bank of Scotland in 2010 following the financial crash.
FIS and Worldpay will gain annual revenue of about $12bn, Reuters reports, and adjusted core earnings of about $5bn.
“Vantiv had yet to realise all the synergies from the Worldpay merger but FIS’s offer was too good to be refused,” a source close to the deal told Reuters.
Russ Mould, investment director at AJ Bell, added: “Parking the two companies together gives the enlarged business a very strong position by which to play the structural growth in digital payments. They will be able to provide clients a wider portfolio of services.”
Worldpay connects both online and brick and mortar retailers across many industries, including live entertainment, to payment networks such as Visa and Mastercard.
FIS provides software for banks and asset managers, as well as outsourcing its financial services to businesses to help process transaction requests from those payment networks.
Worldpay shareholder Michael Schaefer, portfolio manager at Union Investment, said: “FIS should accelerate its revenue growth, significantly expand its position in the merchant acquiring space and generate many synergies.”
Once dominated by traditional banks, the payments industry is now seeing a fast-growing introduction of financial technology companies from PayPal in the US to Alipay in China competing for their space in the market.