GoCardless Explores Mergers and Acquisitions to Bolster Market Dominance

GoCardless, a fintech company based in London with support from GV at Alphabet, is considering mergers and acquisitions as a strategic move to strengthen its position in the fiercely competitive online payments sector. CEO and co-founder Hiroki Takeuchi expressed the company's commitment to continuous growth, stating, "We’re constantly reviewing the market for opportunities that will accelerate our growth, add value to our core payment platform, or strengthen our open banking proposition."

In a recent exclusive interview with CNBC, Takeuchi highlighted GoCardless's openness to potential acquisitions, drawing attention to the company's first significant purchase last year—Latvian open banking company Nordigen. While no financial details were disclosed, the acquisition aimed to expand GoCardless' reach by providing access to bank account information for its 85,000 global customers.

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Addressing the broader landscape of the fintech industry, Takeuchi anticipates increased consolidation and merger and acquisition opportunities. He noted, "In this space I expect there’s going to be a lot of opportunities for consolidation and M&A [mergers and acquisitions], especially in the context that some companies in this space are going to be well positioned to survive these challenging conditions and grow stronger."

Despite a 37% decrease in U.K. fintech investment in the first half of 2023, the country's fintech industry remains robust. GoCardless, founded in 2011 by Takeuchi, Monzo co-founder Tom Blomfield, and Matt Robinson, processes over $30 billion in payments across 30 countries.

The fiscal year ending June 2022 saw GoCardless's revenue at $85.9 million, marking a 45% increase. However, losses also rose by 34% to $7.78 million, reflecting the company's focus on strengthening its core product and navigating challenging market conditions.

Takeuchi acknowledged the changing market dynamics over the last 18 to 24 months and emphasized the importance of maintaining a strong core product, with open banking being a crucial element. He pointed to market shifts such as Visa's acquisition of Swedish open banking startup Tink and Rapyd's purchase of PayU GPO as notable deals to monitor.

Open banking, characterized by emerging technology standards allowing third-party companies access to account data from incumbent banks, plays a pivotal role in GoCardless's strategy. Takeuchi stated that payment service providers (PSPs) are interested in connecting to GoCardless' technology for direct debit, particularly as businesses become more discerning about their payment suppliers in tighter macroeconomic conditions.

As GoCardless navigates potential opportunities for mergers and acquisitions, Takeuchi stressed the need for discipline in aligning such endeavors with the company's overarching strategy. With the Nordigen merger reportedly progressing well, GoCardless remains poised for strategic moves in the evolving landscape of the online payments industry.