Visa has Plaid and now Mastercard acquires Finicity for close to $1 billion
- Earlier this year, Visa acquired Plaid, a leading financial data aggregation and insights firm.
- Now, Mastercard is buying Finicity, pointing to the strategic role data aggregation firms play in global payments.
Mastercard announced it has entered into an agreement to acquire Finicity, a leading provider of real-time access to financial data and insights.
- The purchase price is $825 million, with the potential of another $160 million earn-out if the company meets performance targets.
- The addition of Finicity strengthens Mastercard's activity in open banking, using the underlying financial data to connect the merchants, consumers, partners, and fintechs in the card company's ecosystem.
"Open banking is a growing global trend and a strategically important space for us. With the addition of Finicity, we expect to not only advance our open banking strategy, but enhance how we support and accelerate today’s digital economy across several markets,” said Michael Miebach, president of Mastercard.
In January 2020, Visa announced it was acquiring Plaid, another major player in the financial data and insights field.
- Visa paid $5.3 billion to purchase the data aggregator.
- At the time, Visa published a presentation deck outlining its rationale for acquiring Plaid.
- Mastercard is investing in its community-building activity -- its Start Path accelerator program identifyies early stage fintech firms to help accelerate their integrations on to its own rails.
- Mastercard's Start Path won Tearsheet's 2020 Best Innovation Program Award.
- With a marketcap over $300 billion, it's unlikely Finicity will accelerate revenues in a meaningful way for a company the size of Mastercard.
- Instead, like Plaid can do with Visa, Finicity's inroads in the fintech and lending community would offer Mastercard some cross-selling opportunities of its core offerings.
Finicity doesn't always get the same press as Plaid or MX does, but it's one of a handful of data firms working across the industry.
- Finicity won Tearsheet's Best Data Aggregator/Bank Partnership Award this month with its Direct Access Connection Partnerships.
- It has over 25 of the largest financial institutions in its direct access integration pipeline, with many already live, including JPMorgan Chase, Wells Fargo and Capital One.
- These connections eliminate sharing credentials by using secure APIs which use tokenized access which the consumer provides on the FIs secure web domain and not on the access provider or app’s domain.
“Finicity has a proven business, built on partnerships with thousands of banks and fintechs, similar to us. Finicity also shares our commitment to consumer-centric data practices, ensuring consumers have a say in how and where their information should be used," said Miebach.
"It’s through the use of next generation open banking APIs and clear consumer approvals that this financial information can deliver streamlined loan and mortgage processes, rapid account-based payment initiation and personal financial management solutions.”