On 27 December last year, VISA started a bidding war when it offered 30 pence a share for UK-based payments company Earthport. Mastercard made a counter offer but was outbid by VISA. On Friday Mastercard’s offer of 33 pence lapsed and it announced it has acquired another money transfer network Transfast.
The market thought that VISA’s February 8th offer of 37 pence a share wouldn’t be the last, as the stock price reached 47 pence on Thursday. The closing price on Friday was 36.4 pence.
VISA’s current cash offer of 37 pence valued Earthport at £247 million ($321 million) and is almost five times the stock price before the first bid.
The appeal for both VISA and Mastercard is to extend their cross border payment reach. Earthport can settle directly via local bank clearing arrangements in over 87 countries. Transfast says it covers 125 countries.
Without an Automated Clearing House (ACH) network like Earthport’s, it’s common for cross-border payments to go through one or more intermediate banks which is costly and slow. That’s a sector that blockchain protocols Ripple and Stellar target.
One of the first high profile banks to use Ripple was Santander UK, and its first app was powered by Earthport using Ripple technology. Earthport also designed a hub to integrate with other DLT payment platforms.
Mastercard said its deal with Transfast will provide greater transparency and certainty about transactions.
“We believe Transfast gives us the strongest platform to immediately enhance our cross-border capabilities and further deliver on our strategy,” said Michael Miebach, chief product officer for Mastercard. “The addition of Transfast adds to our leading position in meeting business, government and consumer payments needs – whether B2B, P2P or other flows. Today’s news cements our collaboration and sets the stage to provide our customers a unique, ready-to-go solution upon closing.”