Visa (V) Closes Currencycloud Buyout, Boosts Forex Prowess

Visa Inc. V recently announced that it has completed the buyout of Currencycloud. The acquisition of the U.K.-based cross-border payments platform is expected to enrich Visa’s digital payment solutions. The deal was first announced this July.

The acquisition is expected to provide Visa’s consumers with innovative foreign exchange (forex) solutions for cross-border payments. It will enable the company to provide transparent and flexible transactions for clients operating in multiple currencies. In addition to currency exchange services, the cloud-based platform enables financial service providers to offer multicurrency wallets and virtual account management.

Visa already had a strategic partnership with Currencycloud. The acquisition is expected to build on that partnership. The transaction is expected to have valued the acquiree at £700 million. The platform has a reach in more than 180 countries and supports more than 500 customers in banking and technology. Hence, it will expand Visa’s massive network. The operation of Currencycloud is expected to continue from its headquarters in London.

The move is a prudent one since cross-border transactions are likely to rise due to growing international trade. In fact, Visa noted that 43% of small businesses participated in international trade last year, when the pandemic-related demand destruction was high. As the economies around the world are recovering fast, cross-border exchanges are expected to rise. Hence, the acquisition of Currencycloud will likely be of immense value for Visa and boost its foreign exchange capabilities. It will facilitate the company to provide cross-border payment solutions to different sizes of businesses. 

Other companies that are working hard on improving cross-border payments include American Express Company AXP, Mastercard Incorporated MA and The Western Union Company WU.

American Express, based in NY, made a move in small business banking by acquiring Kabbage, which is an online lender. A large chunk of AmEx’s customer base consists of small businesses, which suffered the maximum blow from the pandemic. Now that things are looking up and small businesses are rebounding, the company’s products are likely to see a surge in demand. It recently joined forces with Fujitsu in a bid to offer an expense management solution for centralizing and boosting digital transformation for all Fujitsu offices as well as group companies. AXP’s bottom line for 2021 is expected to jump 78.8% year over year.

Headquartered in Purchase, NY, Mastercard recently commenced partnering with global financial technology (FinTech) startup Jeeves to launch the first physical card in Mexico, which will enable clients to pay in any currency wherein Mastercard is operating. MA’s deal with Jeeves will provide clients with easy solutions, cashback opportunities and secure cross-border transactions. The move will boost its presence in the Latin American market, wherein it has made several deals in the past few months. MA has a global commitment of connecting 1 billion people and 50 million micro and small businesses under the ambit of a growing digital economy within 2025. Its bottom line for 2021 is likely to jump 28.6% year over year.

Denver, CO-based Western Union enjoys a robust digital arm, thanks to several digital partnerships and investments. The company is building a solid digital services portfolio and digitizing the money movement process for clients. WU is also boosting the efficiency of operations and remains on track to achieve annual cost savings of $150 million by 2022. Western Union expects constant-currency revenue growth of 3-4% for 2021, indicating a turnaround from a 3% decline in 2020. Its bottom line will likely increase 11.2% year over year.

Price Performance & Zacks Rank

Shares of Visa have increased 1.4% in the past year against the industry’s 18.3% decline.

Image Source: Zacks Investment Research

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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