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Payments deals may climb in 2023

PaymentsDive | Featured TSG’s Project Manager Zach Spellman

While the number of deals in the payments industry declined 14% last year, and even more by value, there are reasons to believe 2023 will be more active.

Payment industry acquisitions last year amounted to a whimper, compared to the roars seen in recent years.

The value of payments deals plummeted to $27.2 billion, or about a third of the $76.7 billion in transactions in 2021, according to The Strawhecker Group, an Omaha-based industry consulting firm. The number of acquisitions last year also declined, by 14% to 113, from 132 in 2021, underscoring the smaller size of transactions in 2022.

Economic conditions were the culprit when it came to the blame game for why there wasn’t more merger and acquisition activity in the industry last year, said TSG’s Zach Spellman, who is a project manager at the firm. Higher interest rates threatened to increase debt burdens for companies in buyouts and a looming recession also raised the specter of increased difficulty in digesting deals, he noted.

enerally, companies and investment firms are also less interested in exchanging cash for more risk at the moment, given the economic conditions, Spellman explained. “I think it really just reflects in 2022 people taking less risks,” Spellman said in an interview this week.

The M&A slowdown in payments also echoed a broader downdraft for deals across business, particularly in the second half of the year. Overall, there were about 53,863 transactions worth $3.6 trillion in 2022, The New York Times reported, citing the research firm Refinitiv. While that value is far below the $5.7 trillion worth of deals in 2021, it’s not far off the annual totals in the prior six years, the newspaper reported, pointing to a “normalization” last year.

While the number of deals being done has been somewhat similarly steady in the payments realm, the value of those transactions has fluctuated significantly in recent years. In 2020, 125 payments deals totaled $99.5 billion, but in 2019 there were 113 purchases with a whopping value of $169 billion, largely due to three mega-mergers by Fidelity National Information Services, known as FIS, as well as Fiserv and Global Payments, according to TSG.