Voice of the Industry

Acquisitions and investments in the payments industry: where money goes in 2021 (Part II)

Friday 24 September 2021 10:54 CET | Editor: Anda Kania | Voice of the industry

The first part of the M&As and investments overview regards the ecommece space and Gen Z and Millennials as main targets, and the fast-growing markets to watch, which are India and LATAM 

Ecommerce is a big play, especially for Gen Z and Millennials

Ecommerce merchants aim to build strong customer relationships, strengthen their brands, and earn higher margins, and they can do so by also partnering with the right provider.  NCR Corporation, a provider of retail solutions that run the store, has acquired grocery ecommerce solution Freshop. By integrating an ecommerce feature into its POS software, NCR allows retailers, especially grocery chains, to provide Buy Online, Pick-up In-Store (BOPIS) capabilities. It could be an inspired move for two reasons: BOPIS is likely to grow even more in the next three years, and grocery has become one of the most popular sub-verticals during the pandemic. Apart from this major acquisition, the largest investments in ecommerce companies include South Korea-based Coupang (USD 42 billion), India-based Meesho (USD 300 million), and Indonesia-based Bukalapak (USD 234 million). APAC is by far a region where businesses can unlock ecommerce opportunities, especially in the social commerce and other forms of contextual commerce that emerged in the last 10 years, with SEA gaining more and more ground in this field. 

Social commerce is also on the rise in the US, with an estimated 28% of the US population expected to be social shoppers by 2022. As regards the target group, some recent announcements suggest that Gneration Z and millennials are at the forefront of many investment and development initiatives. For example, Klarna has acquired three ecommerce companies that target young generations: HERO, a social shopping platform that provides consumers with advice and shoppable content directly from retailers' physical stores, Shoptail, a comparison-shopping company that gives consumers access to the best online deals, and Toplooks, a marketing automation platform that helps retailers create shoppable content for their web and social channels by suggesting items that complement each other. 

Square has acquired a majority stake in Tidal, the music streaming service owned by the famous rap artist Jay-Z. According to TechCrunch, Square’s Jack Dorsey expects his company to replicate the success of Cash App in the music sector. Mizuho Securities analyst Dan Dolev shares a similar opinion, saying that that the acquisition of Tidal ‘expands Cash App’s ecosystem, provides new creativity and potential use cases around cryptocurrency, and boosts engagement’. 

Fast-growing markets to watch: India and LATAM


There is prime time for startups in this market to record a surge in 2021. BharatPe, an offline acquirer for merchants, has been involved in an acquisition and a funding round this year. In June, the company bought loyalty platform Payback – these companies have in common a big database of merchants, and now the whole Payback network will be absorbed by BharatPe. In August, the company raised USD 370 million in a funding round, being valued at USD 2.85 billion. 

Walmart-owned Flipkart Group raised USD 3.6 billion allegedly as part of its pre-IPO strategy, although the company said it wants to invest in technology. Walmart led an internal round in which Flipkart raised USD 1.2 billion last year to value it at USD 24.9 billion.  Flipkart is one of the largest ecommece platforms in India with a 39.5% market share. Its main competitors are Amazon, Reliance JioMart, and Tata Digital, and the latter recently acquired a majority stake in BigBasket online grocery store. 

Pine Labs, a commerce platform providing financing and transaction technology to merchants, has secured USD 285 million taking the valuation of the startup to about USD 3 billion. Pine Labs serves over 150,000 merchants in Asia and the Middle East. Recently, it launched its BNPL product in Malaysia, and is planning on expanding it to new markets in Southeast Asia. In April 2021, Pine Labs also announced the acquisition of Fave, a consumer fintech platform operating in Southeast Asia. 

Razorpay, a platform that enables businesses to accept, process, and disburse payments, has raised USD 160 million in Series E funding. This company also aims to expand in Southeast Asia, as well as to scale up their Business Banking suite, and invest in new acquisitions. Since Razorpay's inception in 2014, it has raised a total of USD 366.5 million in funding, and it entered the Unicorn Club in October 2020 when it raised USD 100 million.

PayU has acquired the payment gateway BillDesk for USD 4.7 billion – this news was pushed by Prosus Group, a Netherlands-based technology investor that owns PayU. BillDesk aggregates multiple banks, billing companies, and other corporations onto one standard-based platform for delivering digital payments and collection services. Since 2005, Prosus has invested approximately USD 6 billion in Indian technology companies. Through the latest transaction, its investments in India will surpass USD 10 billion. PayU, which has already acquired three other companies besides BillDesk – CitrusPay, Paysense and Wibmo – has a solid presence in India since 2014, serving more than 450,000 merchants in the country. 


Investors continue to see the potential of this region, while PSPs continue to expand their capabilities and scale up their businesses by entering or strengthening their presence in LATAM. 

EVO Payments has closed an agreement to acquire Pago Fácil, an ecommerce payment gateway in Chile, seeking to enhance its acquiring services. Pago Fácil offers a variety of digital payment solutions, such as acquiring services, and ecommerce software integration. EVO plans to further leverage Pago Fácil's gateway capabilities in Mexico and other markets across Latin America. In Chile, the ecommerce potential could be considered greater than that in Mexico, due to its lower rate of unbanked people and a higher rate of online spending. 

Another company looking to scale in LATAM is Payafe that has announced the acquisition of SafetyPay, an A2A payments enabler, which operates primarily in LATAM, but also in Europe and the US. Paysafe gains a foothold in Latin America with this latest deal, following its acquisition agreement with Peru's PagoEfectivo payment platform. With this acquisition, Paysafe probably aims to build its reputation as a provider of open banking solutions just like it has become very well-known for its eCash solution.

Nuvei continues its expansion into LATAM with Paymentez, a US-based PSP that serves only businesses in Mexico, Brazil, Colombia and Ecuador, and that has a business model very similar to the one of Nuvei’s. Paymentez’s payment solutions include gateway, white-labelling, card acquiring, and prepaid card options, in verticals such as online games, delivery platforms, mobility, transportation and sports. Nuvei has la larger portfolio of verticals and services, but this acquisition would rather help the company to stay more relevant in a fast-growing market such as LATAM. 

EBANX, a cross-border commerce platform connecting global merchants with local consumers, has announced an investment of USD 400 million and an additional commitment of USD 30 million to the company's planned IPO in the US. The company wants to expand further in LATAM via several acquisitions, so we should keep an eye on this. 

DLocal, an Uruguay-based payments startup, raised its valuation to USD 5 billion after getting USD 150 million in April this year. In the meantime, the company’s share price jumped at 48%, and now it is valued at approximately USD 9 billion. dLocal has global coverage, handling online payments in emerging markets across APAC and EMEA as well. With the raised capital, it plans on expanding geographically and enhancing its technology. 

The bottom line

This concludes our review of all the events, where we identified the trends to watch for at least the next 12 months. In most cases, one BNPL company purchases another to expand into more markets or to extend the merchant network, which appears to be a closed-loop acquisition strategy in this space. If we look at the growth of this market, one can be almost sure that there will be more M&As and investments in the upcoming months. And the same goes with A2A payments and open banking services. The surge and potential of real-time payments is the result of sustained investment in reliable and secure platforms. A lot of money goes and will continue so in real-time payments and Buy Now, Pay later. 

Unicorns invest in new capabilities in payment processing to scale new opportunities on how to choose a future-proof payment solution. As we look at startups and unicorns, we can see a shifted perspective - no longer does a 'big fish eat little fish' scenario exist, but a collaborative effort that takes months and even years to plan and negotiate. Overall, the rise of ecommerce and contactless payments, and the evolving customer expectations have triggered some of the investments and acquisitions here. 

When it comes to fast-growing markets, in the last months, the focus in India was on growing the fintech landscape and startups, while LATAM nurtures the opportunities for alternative payment methods, and open banking capabilities. 

Ecommerce companies are also looking to strengthen their position in the ecommerce value chain by focusing on customer loyalty and in-store experience. Several deals had the Gen Z and Millenials in mind, by further focusing on social commerce and interactive experiences. 

All things considered, either we are talking about M&As or investments, we may observe that companies are looking to access new markets, strengthen product suites, and gain fast scalability. 

About Anda Kania

Anda is doctor in Political Sciences, currently exploring her research skills to discover the latest trends in the payment and commerce industry. At the Paypers she is in the wonderful position to analyse the hottest topics, and to discuss them with thought leaders in order to get the pulse of the payments environment. 

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Keywords: merger, acquisition, investment, ecommerce, Gen Z
Categories: Payments & Commerce
Countries: World
This article is part of category

Payments & Commerce