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Mastercard to Acquire Transfast, Expand Cross Border Business

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Mastercard Inc. (MA - Free Report) has announced that it is acquiring Transfast, a global cross-border account-to-account money transfer network.

The buyout will complement Mastercard’s exisiting suite of payment solutions.  The deal is likely to 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’s Mastercard Send solution for business-to-business (B2B) and person-to-person (P2P) payment services is already supported by Transfast. Consequently, the deal will expand the company’s cross border business.

The transaction is supposed to conclude in the second half of 2019. It offers immense potential for growth in the B2B and P2P payments space which remains underpenetrated.

Most of the businesses bear the brunt of higher costs, uncertainty and compliance requirements while making cross border payments to their vendors. Transfast along with Mastercard will be a one stop solution for all these issues.  

The deal will aid the company’s cross border business which has been witnessing growth as evident from an increase of 17%, 13% and 12% in 2018, 2017 and 2016, respectively. The trend is continue in the coming quarters.

The deal is also in sync with the company’s focus on growing its presence in the B2B space. Recently, the company launched Mastercard Track, which solves key challenges in the procure-to-pay process, including managing supply chain risk and creating more transparency in the B2B payments process. The company projects addressable payment flows in B2B globally at $120 trillion.

Mastercard also remains focused on inorganic growth via acquisitions as part of its long-term growth strategy. Acquisitions added 2% each in 2014 and 2015 to its revenues. Though the contribution of the same to the top line was meager in 2016, buyouts added 2% to revenues in 2017 and contributed 1.2% to the earnings per share in 2018.  Though acquisitions lead to integration risk, these have been aiding overall growth.

In a year’s time, the stock has gained 22% compared with the industry’s growth of 11.4%.

Mastercard carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include Global Payments Inc. (GPN - Free Report) , Fidelity National Information Services, Inc. (FIS - Free Report) and Euronet Worldwide, Inc. (EEFT - Free Report) .

Global Payments offers payment technology and software solutions. It carries a Zacks Rank #2 (Buy). In the last four reported quarters, the company delivered average earnings surprise of 3.34%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fidelity National operates as a financial services technology company internationally. It sports a Zacks Rank #1 (Strong Buy). The company delivered average positive surprise of 2.72% in the preceding four reported quarters.

Euronet provides payment and transaction processing and distribution solutions worldwide. It carries a Zacks Rank of 2. The stock recorded average four-quarter beat of 2.68%.

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