First quarter isn’t over yet and there has been another significant acquisition in the payments industry. ACI announced last week that it will be buying bill pay provider Speedpay from Western Union. It appears that the need for technology investment was a consideration in this deal as it has been for other merger activity of late. Here’s the official summary from the deal announcement:
ACI Worldwide (NASDAQ: ACIW), a leading global provider of real-time electronic payment and banking solutions, and The Western Union Company (NYSE: WU), a global leader in cross-border, cross-currency money movement, today announced they have entered into a definitive agreement for ACI to acquire Speedpay, Western Union’s United States bill pay business, for $750 million in an all-cash transaction. This acquisition brings together two leading bill pay portfolios in the rapidly-evolving U.S. electronic bill pay and presentment (EBPP) market.
This is a nice portfolio add for ACI. They will increase the number of billers in the U.S. to 4,000, adding to their existing clients on the UP Bill Payment platform. Western Union gets to shed a non-core, domestic only business, that given the rate of innovation in the bill pay space, will require more attention and investment.
A Little About Speedpay
Speedpay provides the technology to larger billers sending at least 50,000 bills a month. They offer bill presentment, bill payment, customer communication and data analysis. The industries they serve include:
- Auto Finance
- Consumer Finance
- Government
- Insurance
- Mortgage
- Utilities
Bill pay has been receiving a lot more attention lately. For years, financial institutions didn’t pay much attention to their bill pay solutions even through it’s a critical financial transaction for consumers. Bill pay is a money losing product if viewed solely as a standalone product. Billers have picked up the slack and have been offering consumers a better experience with payment choice, payment clarity, alerts and reminders.
I expect that this merger will allow ACI to offer more of its capabilities including innovations around real time payments to the combined organization. As ACI’s CEO stated:
“This acquisition reinforces ACI’s ‘any payment, every possibility’ vision and accelerates our ability to capitalize on the growing global payment transaction opportunity over the next five years. It presents a great opportunity for ACI to strengthen and add scale to our On Demand business, and provides fuel for growth and increased R&D investment which will benefit both ACI and Speedpay customers,” said Phil Heasley, president and CEO, ACI Worldwide.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group