The State of Fintech M&A in 2025: What’s Next?

After a turbulent period defined by economic uncertainty, rising interest rates, and a sharp decline in funding, the fintech sector is showing early signs of recovery in 2025. However, the rebound looks vastly different from the exuberance of 2021. The fintech M&A landscape is no longer driven by rapid expansion or speculative growth. Instead, it’s entering a new phase defined by profitability, operational efficiency, and strategic consolidation.

In 2021, global fintech investment peaked at $240 billion, driven by low-interest rates, aggressive investor appetite, and a surge in digital adoption. (See graph below) By 2024, however, that figure had plummeted, falling to $96 billion as macroeconomic challenges took center stage. When it comes to Fintech M&A, activity has shown promising growth, with Q3’24 YTD figures already surpassing full-year levels from the past two years. (Linklaters, 2025)

Now, as dealmakers regain confidence, 2025 signals a turning point. Fintech companies, investors, and corporates are refocusing their attention on strategic acquisitions that drive scale, enhance technological capabilities, and solidify regulatory standing. In this article we explore the key trends shaping fintech M&A, highlight growth opportunities within the payments ecosystem, and discuss how valuation models are evolving in today’s market.‍

1. Fintech M&A in 2025: Market Sentiment and Strategic Focus

The global fintech sector is cautiously optimistic as funding conditions begin to stabilize. Despite this expected rebound, it is worth noting that this is not a return to hypergrowth. Instead, the focus is shifting toward selective investments, sustainable business models, and regulatory alignment.

Key trends shaping the fintech M&A revival in 2025 

• Strategic Consolidation Across Saturated Markets: Companies in payments, lending, and neobanking are consolidating to reduce redundancy, expand market share, and enhance efficiency in an increasingly competitive landscape.
• Rise in Licensing Acquisitions: Companies are acquiring licensed entities to accelerate regulatory approvals, reduce compliance risks, and enable seamless expansion into new markets.
• Increased IP O Activity – But Not a Full Recovery: While IPO activity is picking up, many fintechs remain hesitant due to post-IPO challenges and volatility. Some companies are even considering reverse IPOs or take-private deals to regain operational flexibility.
• M&A Volume Over Value: The market has shifted from megadeals to a higher frequency of smaller transactions, signaling a more rationalized and sustainable deal landscape. Large firms are using these smaller deals to test new markets and integrate strategic capabilities without overextending.
• AI, Embedded Finance, and Cybersecurity as M&A Drivers: Acquisitions are increasingly focused on enhancing technological infrastructure, as these capabilities are critical for scaling operations, mitigating fraud, and improving financial services integration.

2. Strategic Consolidation: Fintech’s New Growth Model

In 2025, M&A is no longer just a tool for rapid growth—it’s becoming an essential strategy for survival, scalability, and competitive differentiation.

Companies across payments, lending, and wealthtech are increasingly pursuing M&A to:

• Expand geographical reach through cross-border acquisitions.
• Strengthen technological capabilities through targeted acquisitions of AI, cybersecurity, or regtech firms.
• Diversify product offerings to create full-service ecosystems capable of meeting evolving customer needs.

The Resurgence of IPO Activity: A Sign of Fintech’s Maturation

While fintech IPO activity slowed significantly during the market downturn, early signs in 2025 suggest a potential resurgence. According to PitchBook, global fintech VC exit activity is at its highest level both in deal value and count since Q2 2022, with $7.4 billion in value across 65 exits in Q4 2024.

This resurgence is driven by mature fintech companies with proven profitability and strong regulatory compliance. Firms that survived the funding freeze of 2023–2024 have emerged leaner, more focused, and better prepared for the public markets.

Key drivers behind the resurgence of fintech IPOs:

• Investor appetite for companies with sustainable business models and consistent revenue growth.
• Strong regulatory alignment that reduces perceived investment risk.
• Scalable technological infrastructure, particularly in embedded finance and real-time payments

Despite this resurgence, many fintechs are not rushing to IPO due to continued post-IPO challenges. Klarna, the BNPL giant, for example, once eyeing a public listing, has reportedly shifted its focus toward private funding rounds and strategic partnerships, delaying IPO ambitions. We have seen how companies that went public during the 2020–2021 fintech boom are even reconsidering their public status, opting for reverse IPOs or private equity-backed take-private deals to regain strategic control.

Some examples:

• Paysafe: The payment solutions provider, which went public via a SPAC in 2021, struggled with stock volatility and eventually explored take-private options with private equity investors.
• ​Network International: The Dubai-based payments processing company, underwent a significant ownership change in 2024. After its 2019 initial IPO, the company was acquired by a consortium led by Brookfield Asset Management in 2024, leading to its delisting from the LSE.
• MoneyLion: Following a challenging post-IPO performance after its SPAC merger, MoneyLion has been assessing restructuring options, including potential buyouts by private investors.

These examples illustrate how fintechs that went public during the peak of investor exuberance are now reassessing their options, either due to declining stock performance, regulatory pressures, or the need for strategic flexibility outside the public markets.

3. The Growing Importance of Licensing Acquisitions in Fintech M&A

One significant shift in 2025 is the increasing importance of license acquisitions in M&A strategy. Regulatory complexity has become a central challenge for fintechs looking to scale, especially in payments, lending, and digital banking. As a result, acquiring companies with existing licenses has emerged as a fast-track strategy for market expansion and regulatory compliance. Fintechs are increasingly targeting acquisitions in regions such as Southeast Asia, the EU, and Latin America, where regulatory compliance can facilitate global expansion.

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Why Licensing Acquisitions Are Rising:

• Regulatory Compliance Fast-Track: Acquiring a licensed entity allows fintechs to operate immediately in heavily regulated markets without lengthy approval processes.
• Market Access & Expansion: E-money, banking, and lending licenses provide fintechs with direct access to new customer bases and regulatory environments.
• Competitive Differentiation: Companies with established licenses are becoming highly attractive targets, as regulatory compliance becomes a key market advantage.

Example:

The acquisition of Revolut’s European EMI license by a consortium of payment providers highlights how licensing has become a core M&A objective, allowing firms to expand operations, streamline compliance, and offer a broader suite of financial services.

4. Buy-Side and Sell-Side Strategies: The Heart of Fintech Deal-Making

As fintech M&A accelerates, companies are increasingly focusing on buy-side and sell-side strategies to gain market advantage or position themselves for acquisition.

Buy-Side Considerations:

For buyers, 2025 presents an opportunity to acquire fintechs that offer:

• Technological Synergies: Acquiring platforms that enhance AI, embedded finance, or regtech capabilities.
• Geographical Expansion: Acquiring companies that facilitate market entry, particularly in high-growth regions like Southeast Asia, Africa, and Latin America.
• Strategic Licensing: Targeting firms with valuable licenses to enhance service offerings and market positioning.

Many buyers are also exploring partial acquisitions, where they acquire a strategic stake in a company rather than a full buyout. This allows them to test new markets and technologies before committing to a full integration.

A notable and quite recent example of this buy-side strategies is Marqeta, who has been actively expanding its capabilities through acquisitions. In early 2023, Marqeta acquired Power Finance, a credit card program management platform, for $223 million in cash, marking the first acquisition in the company's 13-year history. Additionally, Marqeta agreed to acquire TransactPay, a European E-Money Institution and BIN Sponsor, to strengthen its card program management capabilities in the UK and Europe. ​

Sell-Side Strategies:

For fintechs looking to position themselves for acquisition, the focus is on:

• Strengthening Core Capabilities: Highlighting technology, customer base, and revenue streams.
• Regulatory Readiness: Enhancing compliance frameworks to appeal to acquirers.l
• Operational Restructuring: Streamlining operations to improve profitability and increase deal attractiveness.

On the sell-side what we will likely start seeing more is that instead of full exits, fintechs are pursuing:

• Partial Sales – Selling a minority stake while retaining control to secure capital without giving up operational leadership.
• Carve-Outs – Divesting non-core assets to focus on high-margin segments.
• Joint Ventures – Partnering with strategic players to enhance distribution while maintaining brand independence.

An example has been Qonto’s secondary share sale in November 2024, when the French fintech company explored selling at least €200 million in stock held by employees and early investors, aiming for a valuation of about €5 billion. With this approach companies to reward early stakeholders and attract new investors without relinquishing operational control. (Finantial times, 2025)

5. The Payments Ecosystem: M&A’s Most Active Frontier

Among all fintech sectors, payments continue to dominate fintech M&A activity. According to industry reports, payments companies attracted the highest level of fintech investment in 2024, with KPMG noting $21.4 billion in funding for the sector in the first half of the year. Other analyses, including those from Norton Rose Fulbright, highlight the resilience of payments firms in M&A markets, with the sector consistently outperforming areas like lending platforms and wealth management fintechs. While exact figures vary, the trend underscores investors' preference for scalable, revenue-generating fintech models in an evolving financial landscape.

The surge in digital transactions has fundamentally reshaped the industry. Total transaction value in the Digital Payments market is projected to reach $20.37tn in 2025, driven by increasing e-commerce penetration, the adoption of contactless payments, and the rapid evolution of real-time payment infrastructures. (Statista)

As competition intensifies, M&A has emerged as a critical strategy for companies seeking to scale, enhance operational capabilities, and expand into new markets. Consolidation in this space is driven by the need for technological innovation, regulatory compliance, and global expansion.

Why Payments Companies Are Prime M&A Targets

M&A activity within the payments ecosystem is being fueled by several key factors:

• High Transaction Volumes & Revenue Scalability: Payment companies generate predictable, recurring revenue from transaction processing fees, making them attractive to acquirers seeking long-term, stable income streams. Their inherently scalable business models allow for exponential revenue growth as transaction volumes increase. Through M&A, acquiring firms can integrate payment processing capabilities into their own ecosystems, enabling them to create proprietary payment platforms, gain control over transaction data, and unlock new monetization opportunities such as value-added financial services, lending, and embedded finance solutions.
• Regulatory Compliance as a Market Enabler: Companies with strong regulatory and licensing frameworks are highly desirable targets. In jurisdictions such as the EU, US, and Singapore, where obtaining financial licenses can be complex and time-consuming, acquiring an already licensed entity provides a fast-track to market entry. Regulatory-compliant firms also reduce the risk of legal and compliance issues, making the acquisition more valuable for firms looking to expand globally.
• Technological Scalability & Infrastructure Control: Payment firms often operate on advanced, scalable technology platforms that facilitate seamless market expansion and integration with multiple financial products. Acquirers see these modular, cloud-based infrastructures as key enablers for new revenue streams, supporting innovations like real-time payments, blockchain-based settlements, and AI-driven fraud detection. Owning a proprietary payment tech stack also reduces dependency on third-party providers, lowering costs and improving operational efficiency.
• Cross-Border Payment Capabilities: As international trade and e-commerce grow, cross-border payment solutions have become increasingly valuable. Firms that streamline international transactions, reduce foreign exchange friction, and enable faster cross-border settlements are prime M&A targets. Acquiring these companies provides instant access to global payment corridors, facilitating seamless international business operations while also opening up opportunities for multi-currency wallets, digital remittances, and borderless banking services.

Key Segments Driving M&A Activity in Payments

The payments space is composed of several dynamic sub-sectors, each driving unique M&A trends:

1. Payment Service Providers (PSPs): Consolidation for Global Scale
PSPs facilitate digital transactions for merchants by managing payment processing, fraud detection, and security. As competition heats up, many smaller PSPs are being acquired by larger players seeking to scale operations and expand global reach.

• Trend: The need for global transaction capabilities is driving PSP consolidation, with deals focused on enhancing cross-border payment functionality and expanding merchant networks.

2. Buy Now, Pay Later (BNPL): Strategic Expansion Despite Regulatory Challenges
While BNPL companies faced regulatory headwinds in 2023–2024, the sector remains an attractive target due to its high user engagement and innovative financing model. Financial institutions are particularly interested in acquiring BNPL providers to diversify consumer lending offerings.

• Trend: Traditional banks and credit providers are seeking to integrate BNPL services into their offerings to compete with fintech disruptors.

3. Merchant Services: Enhancing Fraud Detection and Cross-Border Payments
Merchant service providers are increasingly in demand due to their ability to streamline payment processing and enhance security. M&A activity in this segment is often driven by the need to expand cross-border transaction capabilities and improve fraud detection.

• Trend: Real-time payment solutions and advanced fraud detection technologies are key drivers of acquisition interest in this segment.

4. Embedded Finance & Digital Wallets: The Future of Seamless Financial Experiences
Embedded finance allows companies to integrate financial services directly into non-financial platforms, while digital wallets provide consumers with a convenient, mobile-first payment experience. Both sectors are becoming hotbeds for M&A as firms seek to expand ecosystems and diversify revenue streams.

• Market Trend: The embedded finance market is projected to reach $7 trillion by 2030 (Lightyear Capital), as firms strive to create seamless, ecosystem-based financial experiences.

Challenges and Risks in Payment M&A

Despite the growth potential, M&A activity in the payments space is not without challenges:

• Regulatory Complexity: Navigating the licensing requirements across multiple jurisdictions remains a significant hurdle, particularly for firms pursuing cross-border acquisitions.
• Technology Integration: Merging technology infrastructures from different organizations can be costly and time-consuming, often leading to operational inefficiencies.
• Market Saturation: With many regions already saturated by major PSPs and merchant service providers, identifying high-value acquisition targets is becoming increasingly difficult.

6. Navigating the Future of Fintech M&A

The next 12–24 months will be defined by:

• Increased consolidation across payments, lending, and regtech.
• Cross-border acquisitions driven by regulatory strategy and global market expansion.
• Surge in AI-driven fintech acquisitions, especially in fraud detection and compliance.
• Traditional financial institutions ramping up M&A to digitize services and modernize infrastructure.

In 2025, fintech M&A is more than just deal-making—it’s a strategy for growth, market expansion, and regulatory readiness. Success will belong to those who:

• Secure relevant licenses to facilitate market entry and compliance.
• Pursue strategic M&A opportunities on both the buy-side and sell-side.
• Prioritize sustainable growth, technological innovation, and profitability.

Ready for Your Next Strategic M&A Move?

At PaymentGenes Capital, we empower fintech companies and investors to make informed, strategic decisions in today’s evolving M&A landscape. Whether you’re exploring buy-side opportunities, preparing for a strategic exit, or seeking licensing acquisitions to strengthen your market position, our team combines deep industry knowledge with hands-on execution expertise.

Our approach goes beyond traditional advisory—we help you identify the right opportunities, navigate complex regulatory environments, and drive long-term value through strategic partnerships and acquisitions.