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News Article

Mastercard to Buy Finicity for US$1 Billion

By MBN Staff | Thu, 06/25/2020 - 13:13

On the road toward digital transformation, Mastercard will buy Finicity, the US open banking company, in a US$1 billion deal. The company expects to expand its presence in the open banking segment, a growing business area that the payment group said is going to accelerate due to the COVID-19 crisis.

Open banking, which gives customers more control over how their bank details, credit cards and savings are shared, has seen slower adoption in the US than in Europe, where regulatory frameworks for information sharing are much more developed. However, a small group of companies, such as Plaid and Finicity, created companies that develop technology that allows financial services data to be shared and used by fintech groups and large banks for anything from loans to financial wellness tools.

"There is no doubt that there is a business opportunity here, wherever you look, life becomes more digital, open banking enables a more digital economy," Michael Miebach, president of Mastercard, told the Financial Times. Miebach hopes the trend will "accelerate" as the pandemic forced people to enter the digital age. Mastercard already has its banking platform open in Europe and started talks with Finicity before the crisis.

In August last year, Mastercard jointly launched with Nubank the bank's first 100 percent digital credit card with no annuity fee in Mexico, making it the only gold card on the market with that benefit from the start, the company said. Nubank, the largest digital bank in Brazil, said that considering itself a transparent company, there will be no small letters or incomprehensible clauses in the contract, in addition to offering the lowest rates in the market.

A Brake in Latin America

Just a few days after launching digital payments through WhatsApp, Banco Central do Brasil (Brazil’s central bank) suspended the service and ordered that Visa and Mastercard stopped operations and transfers in the country through Facebook's messaging system. The central bank said operations without prior analysis by the monetary authority could harm the Brazilian payment system, including data competition, efficiency and privacy. If Visa and Mastercard do not comply with the order, they would be subject to administrative fines and penalties.

"Our goal is to provide digital payments to all WhatsApp users in Brazil using an open model, and we will continue to work with local partners and the central bank to make that possible. In addition, we support the central bank's PIX digital payments project and, together with our partners, we are committed to working with the central bank to integrate our systems when PIX is available," WhatsApp said in a statement.

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