Payment Firms Consolidate and Make Deals to Dominate Sectors

The global payments industry is undergoing significant consolidation as companies shed peripheral businesses to double down on core competencies. While payment companies once offered a range of services to attract customers, they are now specializing—whether in issuer services, merchant acquiring or embedded finance.

“The payments business has always been about doing everything for everybody. Now it’s about doing one thing really well,” says Jonathan James, Fifth Third’s managing director for Technology, Media, Telecom & Entertainment.

There are several catalysts for the surge in industry consolidation trends: a need to scale, rising demand for global capabilities and pressure to innovate faster. This trend is not just fueling mergers and acquisitions activity but also redrawing competitive lines. For companies, the shift toward specialized platforms means the stakes are higher than ever when choosing partners.

What’s driving payment firm consolidation?

With low margins demanding high volumes, scale has long been a vital factor in the payments space. Payments companies used to try to do as much as possible for everybody and owned both sides of the transaction — the issuer side, which deals with payment cards and manages bank relationships, and the acquiring side, which processes card transactions for merchants.

The trend has now shifted to focusing on one side of payments or the other. In one of the sector’s biggest shakeups, Atlanta-based Global Payments, a payments and e-commerce firm, announced plans on April 17, 2025 to buy payments processor Worldpay from Fidelity Information Services (FIS) and private equity firm GTCR for a total of $24.25 billion. With this move, Global Payments aims to become a pure-play commerce solutions provider to merchants, streamlining operations to serve merchants and expand global reach.

At the same time in this complex swap transaction, FIS is doubling down on banking and issuer services by acquiring Global Payments’ issuer solutions business for $13.5 billion, deepening its focus on financial institutions and corporate banking infrastructure.

Now companies are further narrowing their focus. Many are tailoring platforms for specific sectors, such as e-commerce, B2B or embedded payments for industries like hospitality or gaming. This vertical specialization enables faster innovation, a more precise fit for products and more efficient hiring.

“It’s a good time to be in the business right now. There’s a lot going on,” James says.

Cross-border payments are another major driver. Companies increasingly seek end-to-end global solutions that reduce friction across currencies, banking systems and various regulatory jurisdictions.

“There’s so much friction when you make a payment in another country, in another currency, with different rules and oversight. Anything that reduces that is extremely valuable,” says James.

In another move to create innovative, one-stop solutions, Paychex’s acquisition of PayCor in early 2025 for $4.1 billion highlights the growing demand for platforms that combine human resources (HR) and payroll capabilities. The consolidation is blurring lines between payments, data analytics and operations software.

In this new era, infrastructure matters more than ever. “The long run isn’t so long anymore,” says James, emphasizing the importance of agility and modernization. Companies running on legacy systems face real risks of disintermediation and outright obsolescence, which requires new solutions. Fifth Third’s Newline, for example, provides embedded payment solutions to many payments businesses, allowing for streamlined digital payments and such services as pay-by-bank and merchant card issuance.

Today’s providers are bundling customer analytics, staffing tools and engagement platforms in all-in-one systems. Lines between traditional enterprise systems and commerce platforms are blurring; whoever controls the operating software increasingly also controls the payment flow.

Blurred business lines

The recent wave of consolidation and the industry’s pivot toward specialization has given rise to companies that are better equipped for strategic advancement, talent acquisition and operational agility.

More companies are now embedding payments into operational platforms, whether point of sale (POS) systems or payroll suites. A typical example is restaurant payment technologies such as Genius, Toast or Clover. Many now have embedded payment solutions that allow customers to order, pay and tip at the table using handheld devices. These systems can also integrate with the restaurant’s inventory management, staffing schedules and customer loyalty programs, combining payments with operations and analytics. 

The embedded model is becoming more popular in many industries. In HR and payroll, platforms like Paychex and Gusto are integrating payments to manage everything from payroll processing to contractor payments and tax filings.

Innovation is happening not just in how payments move, but in how companies manage cash flow, detect fraud and enhance customer experience. Real-time transaction monitoring, artificial intelligence-driven alerts and predictive analytics help businesses make decisions and discover actionable insights. For retail customers, embedded financing options like “buy now, pay later” are becoming more ubiquitous.

Looking ahead

More consolidation is coming. Private equity is circling, especially with underperforming special purpose acquisition companies (SPACs) and niche fintechs looking for exits by sale. Some fintech and payment companies that went public via SPACs a few years ago now find it onerous to operate as public companies. Some may now be looking to go private via a private equity sponsor or strategic partnership. These kinds of partnerships offer operational and capital support without the pressure of public markets. 

Meanwhile, sector-specific software, such as POS technology in hospitality, is becoming a strategic gateway to controlling payment flow. Platforms such as Toast in hospitality and Gusto in HR and payroll are managing core business operations, embedding payments, capturing transaction data and streamlining cash flow. Big tech firms are also embedding payments on their platforms — Amazon with Amazon Pay, Meta with integrated payments in Messenger and WhatsApp and Google with Google Pay — making traditional players rethink speed, scale and innovation.

Payment innovation that once took years can now occur in months. Digital payments systems such as the real-time payments network and FedNow, as well as application programming interface-driven ecosystems, are enabling increased use of digital payments by both B2B and B2C firms. Companies need to choose partners with the flexibility to evolve with their chosen niche.

Fifth Third Bank’s Technology, Media, Telecom & Entertainment group, part of Fifth Third Corporate & Investment Banking, brings decades of combined experience, insights and sophisticated, customized solutions to our clients. Learn more here.