On Thursday, Visa Inc. the world’s leader in digital payments, said that it would be buying Currencycloud, a London based cross-border payments platform for £700 million which is approximately $960.1 million. The platform lets banks and financial service providers offer currency exchange services.
Visa had already given $80 million in funding to the startup last year along with Google’s parent Alphabet’s venture capital arm GV, BNP Paribas, a French bank and SBI Holdings, a Japanese financial services firm. Sources said that the startup had a value of $500 million at its last funding round and is getting a sweet deal from Visa, although the amount in equity that Visa already possesses will be reduced from the final price.
Currencycloud was founded in 2007 in London. It has about 500 customers in about 180 countries. It has processed more than $100 billion since 2012. It is used by many of the biggest startups and othe companies such as
- Monzo
- Moneze
- Starling
- Revolut
- Dwolla
- Starling Bank
- Penta
- Lunar
It will continue servicing these customers, while Visa will use its technology to offer a wider range of services to its existing customers such as
- Financial institutions
- Fintechs
- Consumers
Currency transfers and remittances are among the fastest growing financial services. Both e-commerce and supply chains are extending across borders. A recent report said that about 48 percent of small businesses all over the world conducted international transactions or trade last year.
Many transactions are conducted using mobile services and cloud-based services as consumers are adopting a global outlook. Remittances and currency transfers are more often than not costly and inefficient and are ripe for disruption. Currencycloud embeds currency transfer into other financial services and makes them run more efficiently. Huge companies like Visa find it easier to acquire such companies instead of building such operations from the scratch.
Currencycloud will continue to operate from London, with its team. Visa said that the acquisition has not as yet received regulatory approval. This could be Visa’s second major acquisition of the year as it also has a deal with Tink, a Swedish fintech for $2.1 billion.
Visa shares rose by 0.4 percent on Thursday morning. It saw a 23 percent increase in value due to the increase in digital payments during the pandemic.
