Quick Tinking

Image source: Lauren Mancke @laurenmancke - Unsplash aimy27feb - Shutterstock

What's going on?

Visa agreed on Thursday to buy European fintech firm Tink for $2 billion, in what may be a smart bid to block competitors from bypassing the payment giants card network.

What does this mean?

Open banking platforms like Tinks have caught on across Europe ever since new rules aiming to improve consumer choice came into force in 2018. Its technology allows third-party firms to access peoples banking data directly with their consent, obviously and to get an overview of their financial position without paying the likes of Visa for the privilege.

Visa, meanwhile, has been looking to expand beyond traditional payment methods, while keeping newfangled rivals from cutting into its lucrative role as middleman. The acquisition will help the company stay close to the more than 3,400 European banks that Tink services along with the data of their combined 250 million customers.

Why should I care?

For markets: Second time lucky?
Investors sent Visas share price higher following Thursdays announcement, potentially encouraged by the fact that its cash payment for Tink wont impact stock buyback and dividend plans. But the takeover isnt a done deal yet, and Visas recent attempt to acquire Tinks US rival Plaid for $5 billion was blocked by regulators for competition-based concerns that could also apply here. That wouldnt be so terrible for Tink, mind you: Plaids valuation tripled after Visas merger plans fell through.

The bigger picture: Keep the check, America.
Open banking still yet to arrive in earnest in the US has been a big factor behind Europes fintech boom. Startups like Revolut and Adyen have attracted multibillion-dollar valuations, and British payments firm Wise announced plans last week to list its shares in a move that could value the company at as much as $12 billion.

Originally posted as part of the Finimize daily email.

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