With one group of companies developing core banking, payments, and other financial technology, and another group using that technology to build customer-facing businesses through APIs (application programming interfaces), embedded finance has continued to be the engine driving the growth of fintech in recent years. Global Processing Services, one of the larger companies on the core technology side, today announced a $100 million round of fundraising, a reminder of how popular embedded finance remains as a company and of GPS’s growing presence in the field.
In this current financing round, the two investors are Singaporean investor Temasek and US business MissionOG. The cash comes in the form of an extension of a $300 million investment that GPS announced back in October 2021, bringing the total amount of funding raised to $400 million. Advent International and Viking Global Investors collaborated on the financing, resulting in the two firms owning an overwhelming majority of GPS. In addition to Visa, there are other shareholders in the firm. A value for GPS, situated in London, England, has been withheld, as has been with the company’s previous valuations in the round.
The company’s spokesperson responded to the valuation question with the following statement: “This is not something on which we would like to be drawn, but we continue to aspire to be one of the largest Playtech companies in the world, mirroring the success of providers on the acquiring side of payments, such as Adyen, Stripe, and Checkout.com, and Marqeta on the issuing side.” “We feel that we have created a unique platform.” Our ability to offer financial empowerment and assist more of our fintech customers throughout the globe on their road toward unicorn status will be enhanced by this infusion of funding from the world’s foremost specialists in payments and next-generation technologies.”
Using the funds, GPS will be able to continue expanding its fintech services portfolio, which includes payment, direct debit, and standing order processing, virtual cards, mobile wallets, fraud protection, expenditure management, cryptocurrency management, BNPL, and other services (these are sold under the GPS Apex brand).
In particular, the firm wishes to develop further in Europe, Asia Pacific, and other emerging markets across the Middle East and Africa; it also wants to introduce new goods. There are currently no loan products in the mix, so that may be one area the company tackles; insurance could be another, and solutions targeted for specific sectors could still be another.
The rationale for the investment and investor interest is that GPS and the sector in which it operates have seen a significant increase in inactivity. Neobanking services have grown in popularity (and credibility) among consumers and businesses in recent years; on the other hand, an ever-expanding range of non-fintech businesses (such as telcos and retailers) are leveraging the concept of embedded finance to incorporate new features and revenue streams into their products and services.
Overall, as the Covid-19 pandemic spread worldwide, consumers and businesses made a significant shift to conducting all of their financial transactions online. It appears that even after the pandemic has subsided, they will not ultimately return to their analog ways of conducting financial transactions. Because of this, venture capital financing for the whole fintech sector has been negatively affected. Just yesterday, another major participant in fintech, the payments startup Checkout, secured a stunning $1 billion at a value of $40 billion, putting the company in the $40 billion range.
On the other hand, GPS focuses primarily on people working directly in the fintech industry, with clients such as Revolut, Starling, Curve, Zilch, and Paidy among those who utilize its services. It claims that its services are now being used in 48 countries and that it completed more than 1.3 billion transactions last year, with 190 million cards having been issued as of this writing.
Gene Lockhart, the general partner at MissionOG, said in a statement, “GPS is an innovative technology firm, and we think their unique location at the center of the global payments ecosystem excellently positions them to power the next generation of financial services.” MissionOG’s extensive network and years of expertise will be an asset to Joanne and the whole team, and we look forward to being a trusted, valued partner to them.” With this investment, Lockhart is assuming the position of chair of GPS, which is noteworthy.
As GPS CEO Joanne Dewar said, “the upsizing of this most recent round of financing is a significant step forward for the firm and a solid validation of our approach.” Our dedication to innovation and the delivery of a single scalable technological platform have propelled us forward at breakneck speed over the last several years. We will be able to benefit significantly from the experience that our new partners bring to GPS as we move into our next phase of regional development and technological innovation.”