Payment Processing Mergers Drive Industry Transformation: Credit Cards, ACH, and BNPL Lead $2.8 Billion Wave
The payment processing landscape experienced a seismic shift in 2024, with mergers and acquisitions reaching unprecedented levels. Global payments industry M&A deals totaled $2.8 billion in Q3 2024 alone, marking a 319% increase compared to the previous quarter, according to GlobalData’s analysis. This consolidation wave spans three critical sectors: credit card processing, automated clearing house (ACH) systems, and buy-now-pay-later (BNPL) platforms.
Financial technology companies face mounting pressure to scale operations amid regulatory changes and competitive threats. The result is a dramatically reshaped industry where smaller players merge with larger entities or risk becoming obsolete.
Historic Credit Card Processing Mega-Deals Reshape Market
The credit card processing sector witnessed its largest transformation in decades. Capital One Financial announced plans to acquire Discover in a $35.3 billion deal that would create a credit card behemoth with its own payments network. This merger represents one of the most significant financial services consolidations since the 2008 financial crisis.
The deal combines two of America’s six largest card issuers into a single powerhouse. Capital One shareholders will own 60% of the combined entity, while Discover shareholders receive 1.0192 Capital One shares per share. The merger requires federal regulatory approval and faces intense scrutiny from antitrust authorities.
Beyond the Capital One-Discover mega-deal, traditional credit card companies strengthened their positions through strategic acquisitions. Payment processor Fiserv recently announced hiring an enterprise growth officer who will focus on M&A, as the company lacks a specific embedded payments offering to sell to software platforms. Industry experts suggest companies like Finix, Tilled, and Infinicept could become potential acquisition targets.
Technology Integration Drives Acquisition Strategy
Credit card processors increasingly target technology-focused companies to enhance their digital capabilities. The focus shifts from pure volume growth to sophisticated payment solutions that integrate seamlessly with e-commerce platforms and mobile applications.
Traditional banks also entered the acquisition game. Visa continues its international expansion strategy, having acquired Brazilian fintech Pismo and planning to buy a majority stake in Mexico payments processor Prosa. Visa is likely to continue to be acquisitive, but focus more on international assets given the regulatory scrutiny applied to deals within the U.S.
ACH Processing Consolidation Accelerates Automation
The automated clearing house sector experienced significant consolidation as financial institutions seek to modernize legacy payment systems. ACH transactions process over 26 billion payments annually, moving the equivalent of the United States GDP twice in 12 months.
Financial technology companies specializing in ACH processing became prime acquisition targets. The sector’s appeal stems from ACH’s lower transaction costs compared to credit cards, typically around 1% or $0.30 per transaction versus credit card fees of 1.5% to 3%.
Banks pursue ACH-focused acquisitions to streamline operations and reduce manual processing errors. The technology enables financial institutions to handle increasing transaction volumes while maintaining compliance with National Automated Clearing House Association (Nacha) regulations.
Regulatory Changes Fuel M&A Activity
New federal requirements for electronic funds transfer capabilities pushed smaller institutions toward consolidation. All financial institutions dealing directly with the Federal Reserve must maintain electronic links to mainframe systems for ACH participation. This technological barrier created acquisition opportunities for larger players with established infrastructure.
BNPL Sector Experiences Major Consolidation Wave
The buy-now-pay-later industry underwent dramatic consolidation as providers struggled with regulatory pressures and funding challenges. Global BNPL market is seeing increased mergers and acquisitions as providers seek scale and efficiency to manage regulatory and competitive pressures.
Kredivo acquired a regional fintech platform in Thailand in May 2024 to bolster its BNPL services in Southeast Asia. Meanwhile, Riverty recently acquired a fintech startup in Poland to expand its footprint in Eastern Europe.
The sector faces mounting challenges from traditional payment giants. PayPal and Visa’s entrance into BNPL created competitive pressure that forced smaller players to seek merger partners for survival. Regional consolidation trends show mid-tier players may consolidate with larger providers to achieve scale and compliance.
Regulatory Pressure Accelerates Deals
Consumer Financial Protection Bureau regulations introduced in May 2024 applied credit card-like protections to BNPL providers. These new requirements for dispute resolution and refund processing created compliance costs that smaller companies couldn’t bear independently.
Apple incorporated Klarna’s BNPL service into Apple Pay in October 2024, providing users with interest-free installment options after Apple discontinued its Pay Later service. This partnership approach became common as established technology companies preferred partnerships over acquisitions.
Market Drivers Behind Payment Processing M&A
Several factors contributed to the unprecedented consolidation wave across payment processing sectors. Rising interest rates and volatile market conditions forced venture-backed startups to seek strategic alternatives.
Unprofitable venture-backed companies are burning cash with each month that passes, and they’re either going to need to fundraise more to continue funding operations, or seek out strategic alternatives, according to Eric Kaplan, an investor at Bessemer Venture Partners.
The combination of investor impatience and attractive fintech companies low on cash created ideal conditions for well-capitalized payment conglomerates to acquire strategic assets.
Technology Advancement Pressures
Digital transformation requirements pushed traditional financial institutions toward acquisition strategies. Companies needed advanced capabilities in artificial intelligence, machine learning, and real-time processing to remain competitive.
Payment processors invested heavily in embedded payment solutions that integrate directly into software platforms. This shift from standalone payment processing to integrated financial services created new merger opportunities between traditional processors and technology companies.
Geographic Expansion Through Strategic Acquisitions
International expansion drove significant M&A activity as payment processors sought global scale. Global fintech Rapyd bought PayU GPO to enhance its presence in Latin America and Europe, while France-based Market Pay acquired Polish paytech Novelpay.
Regional players pursued cross-border acquisitions to access new markets and customer bases. The strategy proved particularly effective in emerging markets where local expertise combined with international capital created competitive advantages.
European companies actively acquired North American assets to establish footholds in the lucrative U.S. market. Conversely, American companies bought European firms to access the Single Euro Payments Area (SEPA) network and comply with PSD2 regulations.
Future Outlook: Continued Consolidation Expected
Industry experts predict the consolidation wave will continue through 2025 and beyond. This year, the industry will reach a point where a lot of companies will need to explore strategic alternatives, potentially producing attractive assets for larger payment software companies to buy.
The market concentration will likely intensify as regulatory requirements increase and technology development costs rise. Smaller companies face mounting pressure to find strategic partners or risk being squeezed out by larger competitors with deeper resources.
Regulatory Environment Shapes Deal Activity
The incoming Trump administration has fueled optimism for increased M&A activity, particularly in banking and financial services. Reduced regulatory barriers could accelerate deal approvals and encourage more aggressive acquisition strategies.
However, antitrust scrutiny remains a significant factor for large transactions. The Federal Trade Commission’s challenge of major mergers suggests that mega-deals will face continued oversight, even under a more business-friendly administration.
The payment processing M&A wave reflects a maturing industry where scale, technology, and regulatory compliance determine competitive success. Companies that fail to adapt through organic growth or strategic acquisitions risk obsolescence in an increasingly consolidated marketplace.
As digital payments continue replacing traditional methods, the survivors of this consolidation wave will emerge as dominant players controlling the infrastructure that powers the global economy. The stakes have never been higher for payment processing companies choosing their strategic path forward.
