Deeper FinTech for MasterCard

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Mastercard is buying another fintech, this time scooping up Finicity in a transaction valued at nearly $1 billion.

Mastercard (ticker: MA) has agreed to pay $825 million for the data aggregator. Finicity’s shareholders also have the potential to receive $160 million in earn-outs if performance targets are met, according to a statement.

The company says its acquisition of Finicity will strengthen its open-banking platform, giving consumers more control of their financial data. Open banking allows fintech apps to provide services using a consumer’s existing financial and banking credentials, MarketWatch said. Finicity has partnerships with thousands of banks and fintechs, Mastercard said.

“It’s through the use of next-generation open-banking APIs and clear consumer approvals that this financial information can deliver streamlined loan and mortgage processes, rapid account-based payment initiation, and personal financial management solutions,” Michael Miebach, Mastercard’s president, said in a statement.

Barron’s reported in March that Finicity was up for sale. Intuit (INTU) was “looking hard” at Finicity, which provides a suite of APIs that helps companies like Experian (EXPGF) to authenticate and enroll customers. Other Finicity customers include U.S. Bancorp (USB), Wells Fargo (WFC), and JPMorgan Chase (JPM).

The deal is the latest for Mastercard which acquired Nets, a European payments company, in 2019 for $3.2 billion. Mastercard also bought Transactis, which helps businesses deliver bills and receive payments, last year. The financial services behemoth said it did not expect the Finicity acquisition to be incrementally dilutive to its business for more than 24 months.

Mastercard spent time with Finicity after Visa (V) announced its $5.3 billion buy of Plaid in January, a venture capital executive said. Visa paid nearly 50 times revenue for Plaid, Barron’s has reported.

Mastercard is paying more than 50 times revenue for Finicity, a person familiar with the situation tells Barron’s.

Finicity has raised some $80 million in funding, Crunchbase said. Investors include Experian Ventures, which led a $42 million B round for the company in 2016.

Finicity’s 500 employees are expected to join Mastercard, a spokeswoman said. Finicity will continue to run and grow its operations in Salt Lake City and Mumbai, India, she added. The deal is expected to close by the end of the year.

Barclays provided financial advice to Mastercard, while FT Partners advised Finicity on the sale.

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