Euronet Worldwide (EEFT) to Expand in Greece Via Acquisition

Euronet Worldwide, Inc. EEFT has entered into an agreement to purchase the Piraeus Bank Merchant Acquiring (PBMA) business of Piraeus Bank (Bank), the largest bank in Greece.

The company will also engage with Piraeus Bank for collaborative product distribution, processing and customer referrals. Scheduled to close in 2021, the deal will make Euronet the sole long-term partner providing merchant acquiring services to the Piraeus Bank customers.

Notably, Euronet and Piraeus Bank share a long standing relationship that dates back to the 2000s. The company was already the Bank’s card issuing and merchant acquiring services provider prior to the above-mentioned agreement.

In 2005, Euronet's Greek subsidiary Euronet EFT Services Hellas EPE acquired Instreamline S.A., a unit of Piraeus Bank. Instreamline provides credit card and point-of-sale outsourcing services and debit card and transaction gateway-switching services to the Piraeus Bank Group.

For Euronet, Piraeus Bank is the best fit as the latter’s in-store acquiring business represents approximately 20% of the market in Greece while its online merchant acquiring accounts for nearly 40% of online and digital transactions in the country. This vast business opportunity will be available readily for Euronet.

Euronet will be shelling out $360 million for Piraeus Bank-acquiring services and assets that include roughly 205,000 POS terminals at 170,000 merchants throughout Greece as well as the bank’s online merchant acquiring business.

The merchant-acquiring services market in Greece is particularly attractive as digital payments in this region accelerated amid governmental mandates and the increased consumer requests for non-cash payments in the pandemic times.

This upward trend in demand is expected to continue as research indicates that the domestic acquiring volume in Greece will double the approximate €30 billion ($35.8 billion) in 2020 to nearly €60 billion ($71.7 billion) by 2031. Against this backdrop, Euronet’s collaboration with Piraeus Bank will ease its penetration in the region.

The PBMA business will help Euronet maintain its history of double-digit growth rates. The deal will contribute to Euronet’s revenues by approximately $80-$90 million and add $15-$20 million of EBITDA in the first full year of operations. However, the acquisition cost will range between almost $3 million and $5 million.

The merchant-acquiring business has been a key driver for a fast-growing and very alluring payments market over the past several years, which is riding the wave of digital disruption. The Merchant acquirer is a central party in a digital payment transaction. Every time a consumer pays a merchant, it is the acquirer that captures, authorizes, processes and settles that transaction. Merchant acquiring covers payment acceptance through any payment mode.

Traditionally, acquiring function was generally conducted by a bank, which had relationships with merchants for other banking requirements and therefore also offered merchant-acquiring facilities. Over time, the acquiring industry has evolved with non-banking players entering the fray and providing support directly or indirectly to merchant acquiring.

Some other merchant acquirers in the United States are Fidelity National Information Services, Inc. FIS, Bank of America Corporation BAC and Global Payments Inc. GPN among others.

Year to date, the stock has gained 4.9% compared with its industry’s growth of 11%.

Euronet presently carries 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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