Embedded finance continues to be a major theme in the world of fintech, with a wide swathe of new financial services companies tapping APIs built by others to power payments and other financial transactions, and more. In the latest development, Global Processing Services -- one of the big players in the building and operating of those APIs -- has secured a huge round of funding, $300 million, which it will be using to continue expanding its business globally. London-based GPS (as it is known) already works with a lot of big names in some 48 countries -- its customers include Revolut, Curve, Starling Bank, Zilch, WeLab Bank and Paidy -- and has processed some 1.3 billion transactions on its platform since 2007. Now it will be looking to double down both on expanding its platform and its geographical footprint.
The money is coming in the form of an investment from two big VC/PE firms, Advent International and Viking Global Investors, which together will now have a controlling stake in the company. GPS is not disclosing valuation -- we have asked and will update if we learn more. It notes that Visa, which made a strategic investment of an undisclosed amount in October 2020, remains involved.
The deal will give GPS not just a cash infusion but a pair of partners that will help with making more strategic inroads into other markets, and potentially to bring in more technology to is platform. “We are delighted to partner with Advent and Viking, with their deep experience and track record in payments and fintech, and, who share our bold vision for the next generation of global payments,” said Joanne Dewar, CEO at GPS, in a statement.
This is one of the bigger investments made in the area of embedded finance in recent months, but it is by no means the only one. Another big competitor in the same space, Rapyd, also raised $300 million, back in August of this year. As a point of reference, Rapyd's valuation in that round was $8.75 billion. Checkout is now valued at some $15 billion; Railsbank raised a big round also this summer; closing a $600 million round earlier this year, Stripe (which focuses on payments APIs but continues to diversify into a whole lot more) is currently one of the biggest privately held tech companies in the world, and there are many more in the mix.
The reason so many of them are doing so well is two-fold: first, there have been an explosion of new, often mobile-first, financial services targeting consumers and businesses with more intuitive experiences, better service, often better rates and a better range of options to fit how people operate in today's world. Second, many of the core financial services that run in these new brands are commoditized and actually are very difficult to build. That's given rise to a pool of fintechs that have done the hard work and now power these services for multiple customers by way of APIs. In theory, both the brand and the embedded finance that tech provide win a little every time a customer transacts.
In the case of GPS, the company has been a decent player in that wider mix. In addition to having a strong list of big-name customers, it has to date issued some 190 million physical and virtual cards, integrated with some 95 issuer partners, gained a very strategic and key partner in the form of Visa and successfully expanded into Asia Pacific and the Middle East. The latter is significant in itself since so much fintech is regionalized.
So in addition to riding the bigger embedded finance trend, this is likely another reason why it's taken on this investment, and investors are interested.
“GPS provides key payments technology infrastructure, enabling the global fintech revolution. Their agile, resilient and modern cloud platform drives some of the most innovative use cases and allows fintechs to globalise through a single API,” said Peter James, director at Advent International, in a statement. “Through their customer-centric innovation, GPS has quietly established a leading position in key markets around the world with an attractive, diversified and global customer base. Together with Viking, we look forward to supporting GPS’ leadership team to expand the business’s product offering and accelerate its international reach.”