Text size Mastercard (ticker: MA) and Visa (V) are working to extend their cross-border money-transfer capabilities into peer-to-peer transfers, KBW analyst Sanjay Sakhrani said in a note to clients Monday. Mastercard shares were up about 1.7% at $225.58 in recent trading, with Visa rising nearly 2% to $150.25. The back story. Mastercard said on Friday that it was withdrawing its offer to acquire Earthport (EPO.UK), a United Kingdom payments company that was the subject of a bidding war between Mastercard and Visa. Mastercard said it was dropping out because a low number of Earthport shareholders had accepted its offer. That clears the way for Visa to acquire Earthport, and separately, Mastercard said it would acquire Transfast, another cross-border payments company. (Visa declined to comment.) What’s new. “MA’s acquisition of Transfast and V’s potential acquisition of Earthport help further the companies’ strategies to broaden their focus and capture additional payments flows related to cross-border B2B payments,” Sakhrani wrote. “When closed, these acquisitions will provide V and MA direct connectivity and reach into bank accounts and ACH networks on a global basis.” That means that each payment company will have a better ability to generate revenue from sources other than their traditional card processing businesses. Looking ahead. There has been a significant amount of disruption in the cross-border payments space in recent years. Longtime leader Western Union (WU) has seen products like PayPal Holdings ’ (PYPL) Venmo and Xoom take significant market share. Sakhrani notes that potential moves by Mastercard and Visa are a sign that card processors want to get into the P2P money-transfer business too. Write to Ben Walsh at ben.walsh@barrons.com
Mastercard and Venmo are set to enter the cross-border, peer-to-peer payments sector with their respective acquisitions of Transfast and Earthport. As well as expanding global revenue streams for both card payment giants, analysts said the entry of Mastercard and Venmo into the cross-border payments market could put pressure on disruptors PayPal and Visa.