Visa inc. V recently announced that it has completed the acquisition of Currencycloud. The acquisition of the UK-based cross-border payments platform is expected to enrich Visa’s digital payment solutions. The deal was first announced in July.
The acquisition is expected to provide Visa consumers with innovative foreign exchange (forex) solutions for cross-border payments. This will allow the company to provide transparent and flexible transactions to customers operating in multiple currencies. In addition to foreign exchange services, the cloud-based platform enables financial service providers to offer multi-currency wallets and virtual account management.
Visa already had a strategic partnership with Currencycloud. The acquisition should build on this partnership. The transaction is expected to have valued the acquired company at £ 700million. The platform has a reach in more than 180 countries and supports more than 500 clients in the banking and technology sectors. Hence, it will expand Visa’s vast network. Currencycloud is expected to continue to operate from its headquarters in London.
This decision is prudent as cross-border transactions are likely to increase due to the growth in international trade. In fact, Visa noted that 43% of small businesses participated in international trade last year, when demand destruction from the pandemic was high. As economies around the world recover rapidly, cross-border trade is expected to increase. Therefore, the acquisition of Currencycloud will likely be of immense value to Visa and strengthen its foreign exchange capabilities. This will allow the company to provide cross-border payment solutions to different sizes of businesses.
Other companies striving to improve cross-border payments include American Express Company AXP, Embedded Mastercard MA and Western Union company WU.
American Express, based in New York, took a step in small business banking services by acquiring Kabbage, which is an online lender. Much of AmEx’s customer base is made up of small businesses, which have suffered the greatest blow from the pandemic. Now that things are improving and small businesses are rebounding, demand for the company’s products is expected to increase. It recently partnered with Fujitsu to offer an expense management solution to centralize and boost digital transformation for all Fujitsu offices as well as group companies. AXP’s net profit for 2021 is expected to grow 78.8% year-over-year.
Based in Purchase, NY, Mastercard recently began partnering with global financial technology (FinTech) startup Jeeves to launch Mexico’s first physical card, which will allow customers to pay in any currency in which Mastercard operates. . MA’s deal with Jeeves will provide customers with simple solutions, refund opportunities and secure cross-border transactions. This decision will strengthen its presence in the Latin American market, where it has concluded several transactions in recent months. MA is globally committed to connecting 1 billion people and 50 million micro and small businesses in a growing digital economy by 2025. Its net income for 2021 is expected to increase by 28.6 % year over year.
Western Union, based in Denver, CO, enjoys a strong digital arm, through several digital partnerships and investments. The company is building a strong portfolio of digital services and digitizing the process of moving money for clients. WU is also improving the efficiency of its operations and remains on track to achieve annual cost savings of $ 150 million by 2022. Western Union expects constant currency revenue growth of 3-4% for 2021, indicating a turnaround from a 3% drop in 2020. Its bottom line is likely to grow 11.2% year over year.
Zacks Prize Performance and Ranking
Visa shares have risen 1.4% in the past year compared to industrydecrease of 18.3%.
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The company currently has a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
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