Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
The acquisition of the U.K.-based processor follows Visa’s purchase of CyberSource.
MasterCard Inc. announced today plans to buy U.K.-based payments specialist DataCash Group plc in a bid to beef up its e-commerce offerings and keep pace with rival Visa Inc., which this year bought CyberSource Corp., another provider of payment processing and fraud prevention services for e-retailers.
MasterCard is paying $520 million for DataCash, which handled more than 240 million transactions last year for 1,400 retail, travel and entertainment companies, most of them in Western Europe.
“E-commerce represents an important part of MasterCard’s growth strategy, and this acquisition will allow us to provide new services to our acquiring customers, as well as drive increased e-commerce penetration in both existing and new markets,” says Ajay Banga, MasterCard president and chief executive officer. “The acquisition of DataCash will expand our already significant e-commerce merchant gateway presence in Asia and Australia to European countries and other high-growth, emerging markets worldwide.”
DataCash processes payments for online and multichannel retailers, and provides fraud prevention services and access to alternative ways to pay online besides payment cards. MasterCard says the deal will help drive adoption of DataCash’s services beyond Europe, and improve MasterCard’s fraud-prevention capabilities by integrating DataCash’s expertise.
MasterCard also plans to use DataCash to expand into Europe the MasterCard Internet Gateway System, currently operating in Asia and Australia. That gateway service enables online merchants to accept 145 currencies and for merchants that operate in many countries to connect through a single link to many of the merchant acquirers that funnel transactions into payment networks around the world.
DataCash provides MasterCard with capabilities similar to those Visa obtained with its $2 billion acquisition of CyberSource. “It’s definitely a me-too play versus Visa, but perhaps with a lot more digestible investment and ROI,” says payments consultant Steve Mott of BetterBuyDesign.
“They basically found a business with a similar DNA to CyberSource, but with a stronger position in Europe and Asia—and at a quarter of the price,” says Jason Pavona, executive vice president of sales and marketing at Litle & Co., a processor of card-not-present transactions for online and catalog retailers.
MasterCard says it expects the deal to close by the end of October.