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MasterCard (s ma), a global credit card company, today announced it has agreed to acquire DataCash for $520 million in a transaction expected to close by this October. DataCash, a European payment service provider, processed more than 240 million e-commerce transactions in 2009, and by purchasing it, MasterCard both expands its worldwide presence and positions the financial company for expansion in the fast growing mobile and e-commerce markets.
Until recently, traditional payment processors such as MasterCard, Visa (s v) and American Express (s axp), had little reason to fear the erosion of their services and business: Simply being an incumbent with a worldwide presence ensured continued some level of success. But as monetary transaction systems have morphed to micropayments and mobile — think PayPal and Square, for example — the old way of doing business is fast becoming outdated. Financial service companies know this, and they want a piece of the mobile payment pie that’s expected to reach over $633 billion by 2014.
Indeed, in the press release announcing the deal, MasterCard says it will “Expand DataCash’s platform and launch MasterCard’s new generation of e-commerce, mobile commerce and other payment products, enabling merchants to quickly accept these new forms of payments with minimal integration challenges.” MasterCard also indicated that the DataCash acquisition will bring improved fraud screening, which could help assuage consumer fears for both e-commerce and mobile transactions: one of the potential barriers for widespread adoption of wireless payment technologies like near field communications.
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