As you may have seen on PaymentsNews, MasterCard announced the acquisition of DataCash, a pan-European (and a bit beyond) gateway, this morning for $520 million.
Before I jump in, you might want to take a look at the earlier opinion piece I posted regarding Visa’s $2 billion acquisition of CyberSource, since the rationale for MasterCard’s acquisition seems similar. Also, there’s also a bit of background on gateways in general included there.
Getting back to MasterCard and DataCash, in my opinion, this is an aggressive move that makes sense for a number of reasons. First, MasterCard is not exactly a new entrant into the gateway business. It has been running MiGS (MasterCard Internet Gateway Service) in the Asia Pacific region for a number of years and has been successful with that offering. MasterCard seems to clearly believe in the strategic nature of the gateway business and the importance of expanding it beyond that region, particularly in Europe.
DataCash comes with over 300 employees and will undoubtedly speed MasterCard’s time-to-market in Europe. If MasterCard were to take the purely organic growth path in that region, it would have a lot of new hires to make and train in a short period of time—and the gateway business is competitive and moving fast.
I think it’s also important to point out a perhaps than less obvious benefit of this acquisition. It sends a clear signal to the marketplace and to MasterCard’s own employees that MasterCard is entering a new phase. It seems willing to make aggressive acquisitions and raise the competitive intensity of the battle – Game On!