M&A / FundingPayments

IBM, GoDaddy acquire fintechs to boost payment offerings

IBM is buying Canada's Expertus while GoDaddy is purchasing Poynt

As the year draws to a close, we’re seeing a flurry of M&As as companies rush to get deals done. On Tuesday alone, we saw two fairly significant deals in the digital payments space.

For one, IBM announced it has acquired Expertus Technologies, a Montreal-based SaaS payments and cash management company, for an undisclosed amount.

And, GoDaddy entered into a definitive agreement to acquire Poynt, a 7-year-old venture-backed developer of smart payments terminals, for up to $365 million.

The buys are further evidence that large companies are increasingly recognizing the value of buying fintechs rather than trying to build out certain technologies in-house. They are also examples of growing recognition on the part of such companies of the need for more digital capabilities.

The B2B digital payments space has been hot for a while. But now mass adoption of digitizing finances – fueled largely by the COVID-19 pandemic – is only driving demand in the sector.

IBM/Expertus

IBM said that purchasing the Canadian fintech would strengthen its portfolio as “an end-to-end digital payments solution provider” while further advancing its hybrid cloud an AI strategy.

In a statement, IBM Services SVP Mark Foster said the acquisition was driven by the fact that financial institutions “must balance greater demand for secure digital solutions while complying with rapidly evolving regulation.”

Expertus has been doing cloud since before cloud was cool. The 19-year-old company’s “payment-as-a-service” cloud-based software will expand IBM’s own hybrid cloud-based payments offerings, according to Foster, “transforming payments and treasury management with AI to give financial institutions the flexibility to rapidly innovate and stay competitive as consumer demands evolve.”

More than 1,000 entities – including banks, credit unions, regulatory agencies and corporates around the world –  process an average of over $50 billion daily on its payments platform. Expertus is also one of the largest North American services bureaus of the Society for Worldwide Interbank Financial Transactions (SWIFT), the network used by banks and other financial institutions to manage money transfers and treasury transactions.

With the buy, IBM says it “gains decades of consulting experience to address the most pressing payment modernization challenges of financial institutions.” In particular, it says Expertus will help it further simplify and streamline the payment transaction “experience” while complying with regulations, improving fraud detection and the enforcement of digital payments industry standards.

Shanker Ramamurthy, Global Managing Partner, Banking President IBM Industry Academy, IBM Global Business Services, told FinLedger via email that earlier this year, IBM Services launched a new Core Banking and Payments practice to help IBM capture new market opportunities.

“The acquisition of Expertus further strengthens our strategy to scale our services capabilities and the Expertus team augments and will be a part of our global payments practice,” he wrote.

Expertus has 60 employees and it is expected that all employees will move to IBM’s Global Business Services (GBS) unit, according to Ramamurthy.

GoDaddy/Poynt

GoDaddy also announced its plans to buy Bay Area-based Poynt, which in its own words was formed with the mission of “reimagining the ubiquitous payment terminal into a connected, multi-purpose device that runs third-party apps.”

Since its founding in 2013, Poynt has raised a known $133 million in funding, according to Crunchbase. Investors include National Australia Bank, GV and Matrix Partners, among others.

Today, Poynt is used by more than 100,000 merchants with over $16 billion in annual Gross Merchandise Volume (GMV). The company products are aimed at giving small businesses a way to sell and accept payments “anywhere – spanning point-of-sale (POS) systems, payments, invoicing, loyalty and rewards programs, and transaction management.

Poynt’s patented Android-based smart POS terminals, and PoyntOS powered third-party terminals deliver advanced in-person capabilities. The company provides mobile app and web/desktop software for POS, invoicing and virtual terminals.

And, of particular meaning to GoDaddy, Poynt offers a range of payment processing models for small businesses, including integration with 16 different payment processors, such as the top five US banks.

The deal, which is slated to close in the first quarter of 2021, helps GoDaddy further its goal of providing “a complete suite of commerce and payment services” to its customers, the company said.

“We’ve built leading e-commerce capabilities that today allow small businesses to easily sell on their sites, across major marketplaces and the most popular social networks, and now we will help make them successful everywhere,” said GoDaddy CEO Aman Bhutani, in a statement.

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