Personal finance start-up SoFi has finalized plans to buy Utah-based payment processing company Galileo in a $1.2 billion deal. Talks on the deal have been ongoing for months now and SoFi has finally agreed to pay for the company, CNBC reports.
The acquisition is in line with SoFi’s vision to explore the current transition to digital finance in order to meet its customers’ needs caused by the COVID-19 pandemic. The pandemic has necessitated the use of digital payments as an alternative to cash to curb its spread as suggested by the World Health Organisation (WHO).
Time for digital finance?
The WHO had earlier this year advocated the use of contactless payment options. According to the CEO of SoFi, Anthony Noto, this has caused a major shift to digital payment and the need for mobile financial services is likely to increase going forward.
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“It’s the right time to do something like this — we’re on the precipice of a transition to digital from physical finance,” Noto told CNBC in a phone interview. “It’s going to serve people in this environment and the need for mobile financial services is only going to accelerate,” he said.
His company, SoFi was founded in 2011 while Galileo has been around for nearly two decades. SoFi has been working with Galileo since early last year as the payment processor for SoFi Money. Galileo primarily connects banks to credit cards through APIs.
While Galileo has several other clients like SoFi, Noto and Galileo’s CEO Clay Wilkes say the acquisition by SoFi will also help to break new grounds for the clients.
SoFi and Galileo doing well amidst coronavirus
Several companies including fintechs are not in their best states right now owing to the Coronavirus pandemic. However, the two startups, SoFi and Galileo are said to be doing great and getting this deal despite deal flow slowing down significantly.
With the acquisition and working together of the two fintech companies, more digital payment options will be made available to the global population as the two intend to expand internationally. It will also create more access to finance as other clients of Galileo may go into several options including lending.