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This week: Ant Financial, Earthport, Mastercard, MoneyGram, Revolut, Samsung, Spotify, Visa, Wirecard, WorldFirst
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New data, new insights on international payments. Every week.
 

Should you focus on the US market?

Depends whom you ask. The US has a very high regulatory burden; firms may endure the long reach of US government agencies and more than 90% of US cross-border transactions are in dollars. Oh, but "it's a giant market" and will be valued by any future purchaser. Or will it...

As was posted two days ago, WorldFirst has abruptly closed its US business. Little notice was given to customers including automatically closing out all forward contracts yesterday. We assume this move was to help get the Ant Financial deal across line which we covered here.

This deal is a microcosm of the current US-China political relationship. It appears that even a US subsidiary of a foreign financial services firm would not get approved to be Chinese owned or certainly not worth the time and effort trying.

More broadly, for any overseas payment business putting resource into growing their US presence (read Moneycorp, OFX, Transfermate, TransferWise) is it worth all the effort?

If we look at the last 10 years of cross-border M&A in the space, the trends are very clear. 
It's simple. People like to buy British or Canadian and make sure you have a direct line to a banker in the US (or maybe China).

Since most, but not all the companies above had a meaningful US business when acquired, if you're building your US business, stay the course, just don't look east when you want to sell.
Find me M&A opportunities

Mastercard nabs Earthport from Visa 

Just when Visa was popping the champagne, Mastercard offered 10% more and is now leading the race to buy Earthport. We opened the year with the story of this deal and how it looked to be a competitive response by Visa to Mastercard's current strategy. Now Mastercard further strengthens its cross border offering and puts Visa two steps behind.

The market caps of Mastercard and Visa are c. $200bn and $300bn respectively. Since this is a deal worth around 0.1% of Mastercard's total value, paying a small premium to thwart a competitor may be reason enough.

If Visa loses this one, expect a bigger cross-border play next, especially with Visa reporting yesterday a slow down in cross-border growth for Q1 2019.
Get the best international payments data

What Spotify taught Revolut

We love music streaming service Spotify's ad campaigns which go back several years.
As we spotted on the London Underground this week, so do Revolut.

MoneyGram - where's the good news?

Reuters broke the story on the weekend that MoneyGram is in further trouble and looking at "strategic" options. It now looks increasingly likely that the equity in the business may get wiped out, and the future of MoneyGram lies in the hands of the institutions that own around $900m of MoneyGram's debt. 

MoneyGram will be announcing its full year results in a few weeks, and we don't expect that to be pretty. 

Given Visa's likely loss of Earthport and having to compete with the MastercardSend offering, could Visa step in and take over MoneyGram? Just to frame this, as Visa is currently worth around $300bn - this would not be a big acquisition.

We continue to update our Future of MoneyGram report which you can download below.
Access our 40 page report on the Future of MoneyGram
On our radar this week:
Curated by FXC Intelligence's Team 
Fighting financial crime is hot

Regtech ComplyAdvantage raises $30m series B and renames as Mimiro

The Verge
SamsungPay adds remittances

The beta service will be in 17 countries including the US, China, and Japan

Pulse News
Alleged fraud at Wirecard

An FT report into possible forged contracts wipes 25% off the stock price.

Financial Times
Swift looks to the blockchain

And is partnering for a proof of concept with blockchain startup R3 

CNBC

Missed the last few weeks - it's been all M&A and digital banks

N26, Monzo and Starling emerge in the cross-border world (here).
Visa's proposed acquisition of Earthport (here)
Ant Financial's potential acquisition of WorldFirst (here)
Sign up to our newsletter - stay ahead in 2019
Have an amazing week,

Daniel
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