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E-commerce continues to gain momentum — a trend we’ll see played out in the next two months of holiday shopping — and with that comes more consolidation. Today, Elavon, the payments company that is a subsidiary of US Bancorp, announced that it will acquire Sage Pay, one of the bigger payment processors in the UK and Ireland serving small and medium businesses.

Sage Pay’s owner Sage Group said the deal is being done for £232 million in cash (or $ 300 million at today’s currency rates).

Elavon is active in 10 countries and says it’s the fourth-largest merchant acquirer in Europe, competing against the likes of  Global Payments, Vantiv, FIS, Ingenico, Verifone, Stripe, Chase, MasterCard and Visa. The deal is still subject to regulatory approval (both by the Federal Reserve in the US and the Central Bank of Ireland), and if all proceeds, the deal is expected to close in Q2 of 2020.

The acquisition points to a bigger trend underway in e-commerce. The market is very fragmented, not just in terms of the companies who sell goods online but also (and perhaps especially) in terms of the companies that manage the complexities at the back end.

In keeping with that, Sage Pay has a lot of competitors in its specific area of taking and managing the payments process for online retailers and others taking transactions online or via mobile apps. They include some of the same competitors as Elavon’s: newer entrants like Stripe, Adyen, and PayPal (all of which have extensive businesses covering many countries and are each larger than Sage, valued in the billions rather than hundreds of millions of dollars), but also smaller operations like GoCardless as well as more established companies like WorldPay.

This deal is a mark of the consolidation that’s been taking place to gain better economies of scale in a market where individual transactions generally generate incremental revenues.

Sage Pay, in that context, was a relatively small player. It 2018 revenues were £41 million, but it is profitable, with an operating profit of £15 million, and Sage said it expects “to report a statutory profit on disposal of approximately £180 million on completion.”

The deal comes on the heels of Sage Group — which is publicly traded — confirming reports in September that it was looking for strategic alternatives for the payments business. Sage Group for the last couple of years has been divesting payments and banking assets to focus more on accounting, people and payroll software, which it sells through an SaaS model.

“Our vision of becoming a great SaaS company for customers and colleagues alike means we will continue to focus on serving small and medium sized customers with subscription software solutions for Accounting & Financials and People & Payroll,” said Steve Hare, Sage’s CEO, in a statement. “Payments and banking services remain an integral part of Sage’s value proposition and we will deliver them through our growing network of partnerships, including Elavon.”

Elavon, as the consolidator here, was itself acquired by US Bancorp way back in 2001 for $ 2.1 billion. Currently it is active in 10 countries, but in that same vein of consolidation to improve economies of scale on the technical side, and to aggregate more incremental transactions on the financial side, Elavon’s main objective is to increase its overall share of the e-commerce market in Europe. specifically by expanding with Sage Pay further into the UK and Ireland.

“We are a customer-focused company that is helping businesses succeed in a global marketplace that is changing rapidly,” said Hannah Fitzsimons, president and general manager of Elavon Merchant Services, Europe. “This acquisition brings tremendous talent and leading technology to Elavon, which can be leveraged across the European market.”


TechCrunch

Google and PayPal have been strategic partners for some time. The companies in 2017 announced that PayPal would become a payment method in Android Pay, the service that later rebranded as Google Pay. Last year, users who added PayPal as a payment method on Google Pay could then pay for services like Gmail, YouTube, Google Play and Google Store purchases via a PayPal option in Google Pay. Now, a similar integration is making its way to online merchants who accept Google Pay on their website or mobile app.

Explains Google, hundreds of millions of customers already have payment methods saved to their Google Account — including, in some cases, PayPal, thanks to the 2018 integration.

With this expanded integration, merchants can opt to enable PayPal as a payment method in their own Google Pay integration — something that’s easily done if Google Pay has already been implemented on their site. All that’s required is only a small code change to the list of allowed payment methods (see below).

At that point forward, any online shopper who wants to check out using Google Pay will have the option of selecting PayPal to make the purchase.

The benefit of this integration for consumers is that they won’t have to sign in to PayPal when they use it through Google Pay, which cuts down the number of steps to take at checkout. That, in turn, can increase conversions. They’ll also have access to PayPal’s Purchase Protection and Return Shipping benefits.

For online merchants who are also PayPal merchants, when a customer selects PayPal through Google Pay, the merchant receives the money in their PayPal Business Account within minutes.

PayPal’s embrace of its one-time competitors like Apple and Google actually began several years ago, and is still gaining ground as the technology platforms better integrate its service.

The company began teaming up with rivals like Visa, MastercardAppleGoogleSamsung and Walmart to help it achieve better traction both at point-of-sale in retail stores and within the popular mobile wallets offered by mobile OS platform makers Apple, Google and Samsung. Today, PayPal lives alongside other payment cards — like credit and debit cards — inside these mobile wallets.

For merchants that want to offer a variety of checkout methods, they can add support for the digital wallet platforms themselves, and PayPal simply comes along for the ride.

The PayPal option for Google Pay works in all 24 countries where customers can link a PayPal account to Google Pay.


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