Mastercard Inc. MA has acquired Vyze, a fin-tech company, which specializes in providing a wide range of payment options via its technology platform.
The deal will allow Mastercard to better serve its customers by providing multiple point-of-sale payment options, thus adding to shoppers’ flexibility and convenience.
The solution, also called buy-now-pay-later, to be provided by Mastercard via this deal is in great demand, as consumers seek greater payment flexibility. As per Accenture, these solutions represent a more than $1.8 trillion opportunity. The buy-now-pay-later space is thriving as it allows easy shopping without the burden of payment at the time of purchase.
The solution is also believed to be a win-win for the parties involved. While on one end customers can take home a product that they can’t afford to pay all at once, the retailer on the other hand gains by moving products off the shelves fast. Also, the lender gains by increasing his credit offering .
Vyze is a perfect fit for Mastercard since it complements the latter’s cards and ACH-based payment solutions with Vyze’s solutions, which involve connecting merchants with multiple lenders, allowing them to offer their customers a wide range of credit options online and in-store. This deal should lead to higher transaction processing at Mastercard.
Recently, Mastercard announced that it will acquire Transfast, a global cross-border account-to-account money transfer network. The acquisition will perfectly complement Mastercard’s existing suite of payment solutions. The deal would expand the company’s connectivity worldwide in the account-to-account space, enhance compliance capabilities and enable it to offer superior foreign exchange tools.
Mastercard is proficient in striking deals and buying businesses. Its active acquisition strategy is supported by a strong balance sheet with significant financial flexibility and continued cash generated from operating activities (that has been increasing since 2009 expect in 2014). The same was up 10% year over year in 2018.
Mastercard carries a Zacks Rank #3 (Hold). The stock has gained 34% in a year’s time compared with the industry gain of 23%. Its strong business fundamentals and its leading position in a thriving payments industry will help to keep the rally in the stock alive.
Some better-ranked stocks in the same space are Diebold Nixdorf, Inc. DBD, Worldpay, Inc. WP and WEX Inc. WEX. Each of these stocks carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Diebold Nixdorf has witnessed an upward revision in its 2019 earnings estimates by 30% over the past 30 days.
Worldpay and WEX Inc. each surpassed earnings estimates in each of the four reported quarters, with an average positive surprise of 5.1% and 2.99%, respectively.
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