For many years the European payments industry has been talking about consolidation and the eventual creation of 4-5 pan-European mega players covering different payment channels and, equally important, different markets. It did not seem a question whether this trend would materialise but who these mega players would be. Initially, First Data and to a lesser extent TSYS seemed to take the lead, then we had the terminal manufacturers Ingenico and Verifone expanding into service businesses to dilute from their original hardware focus.

Today, we are at the stage of cross-border deals amongst domestic champions. In EDC’s view, recent M&A activity of NETS truly places them amongst the payment powerhouses of Europe.

In their own words, NETS has been “sitting in the center of the digital payments ecosystem and is operating a deeply entrenched network which connects merchants, corporate customers, financial institutions and consumers enabling them to make and receive payments”. In other words, NETS operates as a merchant acquirer serving about 300,000 merchants across Scandinavia and the Baltics. It provides issuing processing services to more than 200 banks in the Nordics, it operates and processes the Danish and Norwegian domestic debit schemes Dankort and BankAxept and it offers account-based transfers, digital IDs and other digitisation services to almost 250,000 corporate customers. It employs 2,400 staff, processes 7.7bn issuing and acquiring transactions, generates revenues of approx. €1bn and an EBITDA of €350m (2016 figures). In other words, NETS is already a big player.

In previous years, NETS has expanded through acquisitions in the Nordics but the two deals that were announced over the course of last month were arguably the first really meaningful steps into wider Europe. Firstly, there was the merger with Concardis, the leading German acquirer that itself was on a mission through various M&A activities to become the German Payment Champion. Germany remains a market where card payments have a significant opportunity to grow so it provides NETS with access to further growth that might not be available in Scandinavia anymore. Concardis will benefit from the wider product portfolio of NETS as well as the increased scale at a time when its main German competitor is being acquired by Ingenico. The deal might also impact the processing relationship that Concardis has with First Data.

Only a few days after NETS announced the acquisition of dotpay/e-card, a Polish PSP serving the e-commerce space. Whilst much smaller in scale ($85m) it provides a very good strategic fit for NETS giving it access to a large, very dynamic and innovative market. It also provides great complementary capabilities for the e-commerce space.

Scandinavia is always being referred to as ‘the market’ where cashless payments have made the biggest impact and it is likely that a concern about not achieving similar growth rates in the future has pushed NETS, and its private equity owners, to pursue acquisitions outside the region. Whatever the motive, it will place NETS amongst the European mega players that the payments industry has been talking about for years.