This is an interesting announcement of course as it signifies a continuing trend of partnerships and acquisitions between fintechs and other more traditional players across the financial services space. The cards networks have been very active as well, so the announcement of the spend management software company Fraedom being acquired by Visa is perhaps not so surprising. Fraedom is currently part of the UK –based Hogg Robinson Group (HRG), a travel management company that is also in process of being acquired by Amex’s GBT business. The Fraedom/Visa acquisition is a separate transaction and reported to be valued at GBP 141.75 million, or about USD 199 million at current exchange rates. It seems a logical acquisition given that the Visa and Fraedom have a long-standing relationship, going back to the Spendvision days, whose platform is the underlying solution for Visa’s IntelliLink system. Given that Amex has existing solutions, the exclusion of Fraedom in the AMEX GBT/HRG deal seems apt, while also not dependent on the successful completion of that deal.
In speaking with Kevin Phalen, Visa’s Head of Global Business Solutions, Fraedom will report to him as a subsidiary and continue to operate as currently structured, with Kyle Ferguson as CEO. Fraedom will also maintain its development center in Auckland, NZ. Visa expects that the majority constituency and distribution will remain financial institutions. Phalen indicated that Visa is continuing to enhance its transaction management capabilities, adding to its suite of solutions. The solution will continue to be brand agnostic and support transactions across the cards and payables landscape.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
Read the full announcement here