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Fintech, Payments Innovation, and the Acquisition of Worldpay
Allayannis, George (Yiorgos); Yemen, Gerry; Lane, David Case F-1829 / Published May 31, 2018 / 34 pages.
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Product Overview

This case uses the Vantiv, a US credit-card-processing company, acquisition of Worldpay, Britain's largest payments processor, to discuss broader themes in the payment space. Payments are a crucial function of financial institutions because of their sheer volume and revenue potential. Fintech has enabled more ways for financial institutions and consumers to make payments and has the potential for significant disruption. The material in the case allows for an exploration of the payment ecosystem, including acquirers, issuers, aggregators, e-commerce, m-commerce, gateways, processors, point-of-sale providers, card networks, mobile payment processors, and mobile wallets. The ecosystem is complex and the competition seems to only be rising. Without doubt, the imperative of globalization has forced a focus on the importance of payments. In particular, growth in emerging markets?such as India, which in 2016 rendered some of its high-value currency banknotes useless in an effort to foster electronic payments?pointed to the need to capture the global shift away from cash and checks toward credit, debit, account-to-account online, and other means of digital payment. Yet there are risks to financial globalization and payments, including security, changing regulatory environments, and unpredictable technology shifts. The case begins in mid-2017 when Vantiv acquired Worldpay, for $10.4 billion, in a deal that valued the merged entity at $28.8 billion. The acquisition was expected to achieve several goals. One was to combine Vantiv's integrated payment technology with Worldpay's global merchant base. In particular, Vantiv would have access to Worldpay's non-US merchants to process payments, and Worldpay would increase its access to the US market. Combined as Worldpay, the two businesses would scale up in size and functionality to gain global market share, accelerate long-term growth by 3%, generate more than $200 million in synergy savings, and integrate technology to innovate. As an omnicommerce payments provider, Worldpay was expected to process more than $1.5 trillion through 40 billion transactions (assuming performance similar to that in fiscal year 2016). The deal appeared poised to be a payments powerhouse. At the same time, the business unit of JPMorgan Chase & Co. that handled card transactions backed out of bidding on Worldpay. Had it found the price tag too high, or was it something else?


Learning Objectives

?Explore the uses, types, and importance of payments for financial institutions. ?Determine how financial institutions make money with payments. ?Consider the value of bank fees relative to that of consumer data. ?Analyze the Worldpay deal and its role in the massive payments market. ?Assess the role of fintech relative to and as part of banks. ?Consider how less regulated entrants are disrupting the payments market. ?Discuss the evolution of payments and how technology enables it ?Understand risks underlying the payment ecosystem such as security, regulatory, etc.

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  • Overview

    This case uses the Vantiv, a US credit-card-processing company, acquisition of Worldpay, Britain's largest payments processor, to discuss broader themes in the payment space. Payments are a crucial function of financial institutions because of their sheer volume and revenue potential. Fintech has enabled more ways for financial institutions and consumers to make payments and has the potential for significant disruption. The material in the case allows for an exploration of the payment ecosystem, including acquirers, issuers, aggregators, e-commerce, m-commerce, gateways, processors, point-of-sale providers, card networks, mobile payment processors, and mobile wallets. The ecosystem is complex and the competition seems to only be rising. Without doubt, the imperative of globalization has forced a focus on the importance of payments. In particular, growth in emerging markets?such as India, which in 2016 rendered some of its high-value currency banknotes useless in an effort to foster electronic payments?pointed to the need to capture the global shift away from cash and checks toward credit, debit, account-to-account online, and other means of digital payment. Yet there are risks to financial globalization and payments, including security, changing regulatory environments, and unpredictable technology shifts. The case begins in mid-2017 when Vantiv acquired Worldpay, for $10.4 billion, in a deal that valued the merged entity at $28.8 billion. The acquisition was expected to achieve several goals. One was to combine Vantiv's integrated payment technology with Worldpay's global merchant base. In particular, Vantiv would have access to Worldpay's non-US merchants to process payments, and Worldpay would increase its access to the US market. Combined as Worldpay, the two businesses would scale up in size and functionality to gain global market share, accelerate long-term growth by 3%, generate more than $200 million in synergy savings, and integrate technology to innovate. As an omnicommerce payments provider, Worldpay was expected to process more than $1.5 trillion through 40 billion transactions (assuming performance similar to that in fiscal year 2016). The deal appeared poised to be a payments powerhouse. At the same time, the business unit of JPMorgan Chase & Co. that handled card transactions backed out of bidding on Worldpay. Had it found the price tag too high, or was it something else?

  • Learning Objectives

    Learning Objectives

    ?Explore the uses, types, and importance of payments for financial institutions. ?Determine how financial institutions make money with payments. ?Consider the value of bank fees relative to that of consumer data. ?Analyze the Worldpay deal and its role in the massive payments market. ?Assess the role of fintech relative to and as part of banks. ?Consider how less regulated entrants are disrupting the payments market. ?Discuss the evolution of payments and how technology enables it ?Understand risks underlying the payment ecosystem such as security, regulatory, etc.