Cielo pays US$24.7mn for online payment processing solutions firm Braspag

Tuesday, May 24, 2011

Brazil's leading card acquirer, Cielo, has purchased online payment processing solutions provider Braspag for 40mn reais (US$24.7mn), in what Barclays Capital deemed an "important step" in online sales for the acquirer, the investment bank said in a research note.

Braspag operates as a gateway, integrating online stores with financial institutions and merchant acquirers before card transactions are wired for authorization. The firm commands a 65% share of the high-growth e-commerce segment, according to the note.

Barclays' analysts Henrique Caldeira and Roberto Attuch said that although the acquisition was small for Cielo compared to last year's purchase of a 50.1% stake in mobile platforms developer M4U for 50.1mn reais, "we believe that Cielo is pursuing a strategic strengthening of its product portfolio with online retailers."

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But the analysts noted that e-commerce still represents an unsubstantial fraction of all payment card volumes captured by card acquirers, and as such, "the acquisition of an intermediary player in this segment should not change the key commercial roles between acquirers and their main customers."

Barclays kept its 3-Underweight rating and 14-real per share price target for Cielo's stock.