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TSG - TransactionWatch - 7-10-2020

TransactionWatch
Weekly Newsletter For Payments Executives That Covers The Most Important And Relevant Merchant Acquiring Deals And Activity

Week of:
July 6th July 10th

This report is based upon information considered reliable by The Strawhecker Group® (TSG), but the accuracy and completeness of such information is not guaranteed or warranted to be error-free. Information provided is as reasonably available, not to be deemed all inclusive. TSG assumes no obligation to update the content hereof. This report is subject to the terms and conditions of a separate license with recipient, is further protected by copyright under U.S. Copyright laws and is the property of TSG. Recipient may not copy, reproduce, distribute, publish, display, modify, create derivative works, transmit, exploit, or otherwise disseminate any part of this report except as expressly permitted under recipient's license with TSG. The Strawhecker Group (TSG) is not endorsed, sponsored by, or in any other way affiliated with any companies identified in this presentation. The trademarks of third parties displayed herein are the property of such parties, and, are provided merely for identification purposes. TSG claims no rights therein. This document has not been prepared, approved or licensed by any entity identified in this report. © Copyright 2020. The Strawhecker Group ®. All Rights Reserved.

Deal Activity Summary
July 6th July 10th

Table of Contents
Deal Activity Summary COVID-19 Industry Impact Payments Monetization Historical M&A Tracker Headline News Partnership Activity Management Changes TSG Payments Index TSG Buy/Sell Services

This Week's M&A Overview
This week continued to see steady M&A activity, especially within the international merchant acquiring space, with the announcement of two new deals. Paytm, a major payments gateway based in India, and its Co-founder and CEO announced their acquisition of Raheja QBE, a provider of general insurance services in India. This acquisition was valued at $76 million and looks to take advantage of the growing insurance market in the country by integrating Paytm's payment gateway into the digital insurance solution. In addition, this week also saw the announcement of Heidelpay's acquisition of Paysafe Pay Later, a deferred payments arm of the Paysafe Group. Expected to close in Q3 of this year, this acquisition enables Heidelpay to grow its European presence and capitalize on the growing adoption of buy now, pay later solutions in the region.
In other M&A news, the ongoing investigation into Wirecard has stirred a lot of interest into the company's assets and international operations from potential buyers. According to Wirecard's administrator this week, the company has more than 100 investors that have expressed interest in the company, with sales processes already being initiated for some international holdings.

2020/2019 M&A Activity Year to Date
Breakout by Transaction Category
6

June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July*

ISO (Independent Sales Organization)

2020 ISV (Independent Software Vendor)

Gateway

Other (Includes notable deals that TSG deems significant)

*As of publication. Note: TSG's selected M&A activity monitors specific markets relating to the acquiring industry and the general payments market.

COVID-19 Industry Impact
July 6th July 10th

As the world faces the continuously evolving COVID-19 pandemic, TSG is here to help support our clients by providing valuable information as it relates to COVID-19's impact on the merchant
acquiring industry. In order to help keep our readers well-informed about this ongoing crisis and how it relates to the payments market, below are this week's essential news stories.

New Data Show a Rebound for Restaurants And Hotels As States Wrestle With Covid-19
Digital Transactions | July 6th, 2020 Though Covid-19 still casts a long shadow over a number of U.S. states where early reopening's have led to a resurgence in coronavirus cases, data released Monday (July 6th) indicate merchant volume is climbing rapidly across industries. The positive trend includes the hard-hit hospitality sector, according to the latest numbers.
Discover Commits $5 Million to Support Black-owned Restaurants
BusinessWire | July 6th, 2020 In an effort to support the restaurant industry as it rebounds from the impact of COVID-19, Discover announced today (July 6th) that it will be giving $5 million to Black-owned restaurants. From now through Oct. 31, 2020, consumers can go to Discover's Facebook, Twitter and Instagram pages to nominate their favorite Black-owned restaurant, and 200 nominees will be randomly selected to receive $25,000.
MercadoLibre Tops $50 Billion in Value Amid E-Commerce Boost
Bloomberg | July 6th, 2020 Shares of Latin America's largest e-commerce marketplace MercadoLibre Inc. climbed above $1,000 for the first time as online sales surge in the region amid the coronavirus pandemic. Up 78% this year, MercadoLibre has benefited from a growing number of consumers that are either buying online for the first time or increasing the frequency of their purchases because of virus-related lockdowns.
Americans Lost $77 Million To Covid-19 Fraud -- And That's Just The `Tip Of The Iceberg'
CNBC| July 7th, 2020 Americans have lost more than $77 million in fraud related to Covid-19, according to the Federal Trade Commission. But that tally is likely a severe undercount amid an "unprecedented" scope of scams connected to the coronavirus, according to John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League, a consumer advocacy group.

Payments Monetization

Drive Growth Through The Monetization Of Payments
The continuous adoption of integrated software solutions among business owners has created a large opportunity for independent software vendors (ISVs). Effectively implementing payment processing capabilities can create significant payment revenue through their platform, increasing overall market valuation.
The process of monetizing payments within ISVs can be challenging and time consuming as there are several models to choose from. An ISV needs to evaluate factors such as the revenue opportunity, the level of risk, the resources required, and the overall customer relationship.
The Strawhecker Group's expertise and experience can provide customized guidance on your firm's go-forward strategy and execution.
EXPERTISE TSG has served leading software companies and is well positioned to build-out a payment strategy that helps you avoid barriers to entry. TSG can assess your current situation, review relationships, and develop a roadmap to your financial and operational objectives.

INDUSTRY CONTACTS TSG is highly knowledgeable of payment providers and can pin-point the appropriate partner to create a cohesive solution for you and your customers. TSG can provide an experienced guide that will reduce complexity, speed up implementation, and maximize your investment.

TSG can identify and assess areas of payment monetization and provide support to a relationship that is financially beneficial and increases enterprise value. Whether it is a new or existing offering, TSG can provide actionable insights to maximize the benefits of integrated payments among software solutions.

For more information, please contact MI@thestrawgroup.com

Historical M&A Tracker
Transaction History: February 2020 June 2020
Transaction Categories:

ISO Independent Sales Organization

ISV Independent Software Vendor

Gateway

Other Includes notable deals that TSG
deems significant

Transaction Category
Other
Other

Buyer
Heidelpay Group Paytm

Seller
Paysafe's `Pay Later' business
Raheja QBE

Purchase Amount
($ million)
-
$76

Date
7/9/2020 7/6/2020

Other

MFS Africa

Beyonic

6/30/2020

Other

Mastercard

Finicity

$825

6/23/2020

Gateway

Planet

3C Payment

Other

Professional Datasolutions

National Payment Card Association (ZipLine)

Other

Boku

Fortumo Holdings

$41

6/18/2020 6/18/2020 6/17/2020

Other

Square

Verse

6/15/2020

Other

TAS Group

Infraxis

6/10/2020

Other

Infibeam Avenues

Cardpay Technologies

6/8/2020

Other

Zip

QuadPay

$403

6/2/2020

CONFIDENTIAL. FOORtIhNeDrIVIDUAL USE ONLY. @ COMPYaRsIGtHeTrc20a2r0d. THE STRAWHECKER GRROiUsPk.RALeLcRoIGnHTS RESERVED.

Historical M&A Tracker
Transaction History: February 2020 June 2020

Transaction Category
ISO Gateway
ISO Other Other ISO Gateway
ISV ISO Gateway Other ISO ISO Other Other Other ISV

Buyer
Base Checkout.com Ontario Systems
Santander Euronet Rapyd Worldline Gojek Payroc Harbour & Hills
SoFi Celero Commerce
VizyPay Brex Brex Brex Fiserv

Seller
LucentPay
*merchant accounts
Pin Payments SwervePay Ebury
Dolphin Debit Korta GoPay
Moka POS Gateway Payments
Global Envoi Galileo Financial
Technologies FlashBanc Echo Daily Neji
Compose Labs Landria
Bypass Mobile

Purchase Amount ($ million)
$453 $130 $1,200 -

Date
5/28/2020 5/26/2020 5/19/2020 4/29/2020 4/28/2020 4/24/2020 4/23/2020 4/22/2020 4/22/2020 4/8/2020 4/7/2020 4/7/2020 4/2/2020 3/24/2020 3/24/2020 3/24/2020 3/18/2020
6

Historical M&A Tracker
Transaction History: February 2020 June 2020

Transaction Category
Other ISO Other ISV ISO ISV Gateway ISO Other Other ISV Other ISO Other Other ISO Other

Buyer

Seller

Purchase Amount ($ million)

Accuity

Apply Financial

Nets

Polskie ePlatnosci (PeP)

$439

InterPayments

SurchX

Mindbody

ZeeZor

Fiserv

MerchantPro Express

RevSpring

Loyale Healthcare

Checkout.com

ProcessOut

Santander

Elavon Mexico

$85.7

Intuit

Credit Karma

$7,100

LendingClub

Radius Bancorp

$185

Flywire

Simplee

Klarna

Moneymour

REPAY

Ventanex

$50

Square

Dessa

Intercontinental Exchange Australis Capital Worldline

Bridge2 Solutions
Paytron Merchant Services
Ingenico

$8,600

Date
3/12/2020 3/11/2020 3/6/2020 3/4/2020 3/3/2020 3/3/2020 2/26/2020 2/24/2020 2/24/2020 2/18/2020 2/13/2020 2/12/2020 2/10/2020 2/7/2020 2/5/2020 2/4/2020 2/3/2020
7

Headline News
July 6th July 10th
Wirecard Administrator Sees Strong Interest From Potential Buyers
Reuters | July 7th, 2020
Wirecard's administrator said on Tuesday (July 7th) that more than 100 investors have expressed interest in buying the collapsed German payments firm's core business and holdings. The firm filed for insolvency last month owing creditors 4 billion euros ($4.5 billion) after disclosing a 1.9 billion euro hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.
American Express, Discover, Mastercard and Visa to Power Global Expansion of Simple, Consistent Digital Checkout Experience
BusinessWire | July 8th, 2020
Today (July 8th), American Express, Discover, Mastercard and Visa announced they are each beginning technical preparations for global expansion of the Click to Pay online checkout based on the EMV® Secure Remote Commerce industry standard in additional geographies including Australia, Brazil, Canada, Hong Kong, Ireland, Kuwait, Malaysia, Mexico, New Zealand, Qatar, Saudi Arabia, Singapore, United Arab Emirates and the United Kingdom, with others to follow.

BillDesk Plans To Sell-off Business For $2.5 Billion
LiveMint | July 5th, 2020
Domestic payment gateway BillDesk is once again in the market looking for buyers after its promoters attempted to sell it unsuccessfully two years ago. This time round, all the BillDesk promoters are trying to sell-off the entire business, in the wake of a rapidly growing competition in the digital payment services space and a thriving e-commerce industry in the country.

Partnership Activity
July 6th July 10th

Barclaycard has extended its partnership with SAP, one of the largest software providers globally, on providing its Smartpay gateway solution to SAP customers across the European region. Businesses using SAP Commerce Cloud will have continued access to Barclaycard's Smartpay solution which enables them to seamlessly accept payments across online and offline channels. Barclaycard's partnership with SAP provides the company with access to a wide network of customers, in which SAP has amassed more than 12 million users worldwide.

Discover Financial has signed a strategic partnership agreement with Saudi Payments, a wholly owned subsidiary of the Saudi Arabian Monetary Authority. Under this agreement, Discover cardholders will be able to use their card on the mada network, which includes POS, eCommerce, and ATMs across the region. In addition, this agreement also allows Saudi banks to issue cards on the Discover Global Network for transactions outside of the Saudi Arabia region.

Other Notable Partnerships:
· Judopay teams up with Thyngs on offering touch-free cashless payment solutions for the hospitality sector.
· Deutsche Bank signed a multi-year partnership with Google Cloud for the development of cloud services.
· India-based SBM Bank has partnered with Mastercard on cross-border payment solutions through Mastercard Send.
· Soldo extends its partnership with Mastercard on becoming a principal member. · Mastercard partners with Mox Bank on launching an all-in-one numberless bank card. · Accrualify teams up with Visa on launching a new corporate card.

Management Changes
July 6th July 10th
Payrailz Announced The Appointment Of Kavita Singh As Its New VP Of AI Product Management
Digital payments provider, Payrailz, has announced the appointed of Kavita Singh as the company's new VP of AI Product Management. Singh brings more than 15 years of experience in product management and develop and previously served as Chief Product Officer at Credit2B.

Date Announced

Company

7/6/2020

Marex Spectron

Personnel New Position

Ram Vittal

North America CEO

7/6/2020

USA Technologies Davina Furnish General Counsel

Previous Position
Managing Director and Head of Treasury Services Franchise Client Management at JPMorgan Chase
Director, Associate General Counsel at E*Trade

7/6/2020

USA Technologies Eugene Cavanaugh Interim CFO

Consultant & Private Investor

7/7/2020 7/7/2020

Payconiq International
Payrailz

Guido Vermeent CEO

CEO at Payconiq Netherlands

Kavita Singh

VP of AI Product Management

Chief Product Officer at Credit2B

7/7/2020 7/8/2020 7/9/2020

NMI TransferGo Coinbase

Kyle Pexton

President

Edgardo Savoy Chief Technology Officer

Paul Grewal

Chief Legal Officer

CFO at NMI
Group Chief Information Officer at The Restaurant Group
VP and Deputy General Counsel at Facebook

TSG Payments Index
Q1 2011 Q2 2020

*Drop in value from Q4 2019 to Q1 2020 is attributed to the volatility and uncertainty caused by the ongoing COVID-19 pandemic

VS.

TSGPX

S&P 500

+22% CAGR

$800
$670 $700 $600 $500 $400 $234 $300

$200

+10% CAGR

$100

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Payments companies have been thriving in recent years and are becoming more valuable and profitable for the company and its investors. With strong earnings year after year, many payments companies are rapidly increasing their market capitalization and gaining the attention of additional stakeholders.
The chart displays the performance of a $100 investment in an index of selected payments companies which represent the "TSG Payments Index" this index is calculated on a value weighted basis using market capitalization and is compared to the S&P 500 which is also calculated using the same methodology. A $100 investment in the TSGPX in Q1 2011 would be valued at approximately $670 in Q2 2020, as compared to $234, if invested in the S&P 500.
On average, payments companies grow at a compounded rate that is 12% higher than that of the industry average. This growth rate is more than double of the industry average and represents the attractiveness of the payments market. The Payments Index is depicted to portray the growing nature of the payments market and hints at where this market is headed in the coming years.

TSG Buy/Sell Consulting Services

Buy-Side
· Buyers use TSG's due-diligence subject matter experts for support on a variety of key decision criteria can affect the value of the property. TSG assists buyers by acting as their advisor as they evaluate the financial value, benchmarking key performance metrics, determine risk, and evaluate the value of any technology assets.
Sell-Side
· The key factor in a successful asset sale is understanding the true value of your enterprise. Value is defined as the "amount a buyer is willing to pay." TSG has a pulse of the market and performs an extensive evaluation of value drivers to ensure potential "sellers" understand the value of their company in the marketplace prior to starting the sales process. In addition, buyers can use the data to assess offers that have been received for an accurate and fact-based assessment of the offer.
Private Equity
· TSG can help private equity firms understand the landscape before investing and can build a market analysis to determine which investment is the best fit to create the highest ROI. TSG provides investors and financial institutions with the documented valuation information needed to support funding events.
Restructuring & Re-Capitalization
· TSG can facilitate strategic exercises to help forge a new path ahead and can help with implementation of a new structure to ultimately maximize the value and performance of the entity.

30+
ACQUISITIONS AND INVESTMENT
TRANSACTIONS

250+
COMPLETED PAYMENTS CO.
VALUATIONS

8 of 12
OF THE LARGEST PAYMENTS TRANS IN THE LAST YEAR

$10-100M
TYPICAL DEAL RANGE

TSG Buy/Sell Consulting Services
TSG Has Advised For Many Leading Companies in the Payments Industry

In its sale to

In the acquisition of

In the acquisition of
&

In its Merger with

In its sale to

On their funding event with

In the acquisition of

In due diligence support of its investment into

In its recapitalization of

In a merchant portfolio purchase from

In its merger with

On the organization of its joint venture with

On their investment in

In the acquisition of

In acquisition of the operation assets of

In the acquisition of

On their joint venture with
17

ANALYTICS + CONSULTING
The Strawhecker Group (TSG) is a fast-growing analytics and consulting firm. The company serves the entire payments ecosystem, from fintech startups to Fortune 500 companies. The firm provides its clients with advisory services, research and analytics to help them plan and execute their strategic initiatives. Based in Omaha, a recognized payments industry hub, TSG is an established leader in this high-growth, ever-evolving space.

40+
Of the top 50 merchant acquirers served, including 9 of the top 10

250+
Completed payments company valuations; as well as ~30 buy/sell/investment advisements

1,000+
Clients advised, including many in the Fortune 500

23+ Years
Average Associate experience in the payments industry

3.7+ Million
Card-accepting merchants in TSG's AIM analytics platform, driving millions of dollars in ROI for its users

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