Mastercard Takes Corpay Cross-Border Payments Stake In Partnership

Forbes

29-04-2025

Mastercard and Corpay have today announced a partnership that sees Mastercard take a minority stake and invest in Corpay's cross-border payments business while bolstering the capabilities of the Mastercard Move platform.
Under the agreement, which follows previous collaboration between the companies, Mastercard is paying $300m for an approximately 3% stake in Corpay's cross-border payments business, representing an enterprise valuation for the unit of $10.7bn. This is the first time a material outside investment has put a value on the cross-border payments division.
The investment is accompanied by increased collaboration between the two companies, including the exclusive provision of some services. Corpay will become the exclusive provider of currency risk management and integrated high-value cross-border payments solutions to Mastercard's financial institution clients. Meanwhile, Mastercard will become the exclusive provider of virtual card solutions to Corpay's customers.
The agreement also sees Mastercard broaden the reach of its Mastercard Move payments platform to a greater number of small and medium-sized businesses in markets it has not previously served, including existing Corpay customers.
Pairing one of the industry's biggest non-bank corporate payments providers with one of its largest payments platform providers, the collaboration has the potential to significantly bolster both companies at a time when trade uncertainties are bolstering demand for more complex corporate payment solutions.
'This partnership is designed to give financial institutions and their corporate customers easy access to end-to-end cross-border payments options, including card and account-to-account solutions for all ticket sizes,' explains Pratik Khowala, Global Head of Transfer Solutions, Mastercard.
'Cross-border is a huge, growing opportunity, and there are still a lot of pain points to be solved by industry leaders.'
As a provider of payment solutions to leading financial institutions, Mastercard Move has built a strong presence in the consumer remittances space, where banks have come to see the service as a means of retaining customer loyalty by providing solutions that can compete with non-bank competitors.
'Mastercard Move has a global network and proven success in push-to-card and account-to-account disbursement and remittances, serving consumers as well as SMBs,' says Khowala.
However, banks are increasingly looking to do the same for corporate payments, where they are losing business to non-bank providers with sophisticated capabilities not required by consumer or SMB customers.
'They want to serve their customer end–to–end because if the customer goes to another provider for cross-border payments, it's not only about losing the revenue stream for that particular service but it's more about losing their loyalty and affinity with the bank,' says Khowala, adding that most of Mastercard Move's clients are 'interested in having one simplified solution across all their consumer and corporate segments'.
In partnering with Corpay, Mastercard is significantly increasing its ability to support its clients' corporate payments needs, in part through greater capacity to support large-value payments and increased vertical integration, but also through hedging and risk management solutions.
'Mastercard has come to the realization that they need a more fulsome solution from a cross-border perspective to really capture flow and win that volume and we answer that capability for them,' says Mark Frey, Group President, Corpay Cross-Border Solutions.
Allowing clients to set future cross-border payments at a fixed foreign exchange rate, risk management solutions have long been in demand among corporate customers, but are increasingly becoming a must for larger businesses, particularly in light of recent market volatility.
'In remittances, you only look at spot trades: nobody's thinking about buying forward or options. But when you have to make high value trade payments and you have to lock your date for certainty, that becomes a lot more interesting for SME and B2B,' says Khowala.
While Tier 1 financial institutions may have some in-house solutions, the partnership does allow Mastercard Move to support them on more exotic corridors where the platform already has a presence, and which in some cases are seeing growing demand as a result of changing trade flows. However, it presents a particular opportunity for Tier 2 and below financial institutions who have fewer capabilities in this area.
'Being able to manage the FX risk that comes from payments from an institutional interbank perspective at scale is super important, but we also find the Tier 2 to Tier 6 financial institutions are also looking to bolster their own FX risk management capability and acumen,' explains Frey.
'There's a significant opportunity to sell downstream into those corporate relationships – to the wholesale product, the treasury function, ultimately those financial institutions – but also to assist them with upselling their value proposition to their downstream corporate customers.'
Representing a 20x forward EBITDA multiple, the $10.7bn enterprise valuation of Corpay's cross-border payments division provides the first public, independent valuation for the unit. By contrast, at the time of writing – before the announcement was made public – Corpay's business as a whole had a market cap of $22.3bn. This gives the unit's valuation a larger share than that of its respective revenue and profitability.
By investing in Corpay, Khowala says Mastercard has 'put credibility to the seriousness of the commercial partnership' and ensured that the companies' interests remain allied in the 'medium to longer term'.
Frey, meanwhile, sees the selection of Corpay as an exclusive partner as an 'endorsement' of the company that it is 'certainly very respectful of', but also provides a significant commercial benefit for the company as it continues to build its presence in the corporate payments space.
'It represents a very attractive commercial opportunity for us, partnering with Mastercard to sell our capability to Tier 2 through Tier 6 financial institutions,' he says.
'The combined go-to-market capability of the two organizations, the existing footprint that Mastercard has, for us to continue to bolster their efforts to build a cross-border business and our share in those economics make this a very attractive commercial partnership.'
The partnership is highly unusual within the industry, representing a pairing between two publicly traded companies, however Khowala believes 'the timing is right'.
'We can always build things organically, but it takes time and our customer need is here and now,' he says.
'The two brands are recognized leaders in our respective segments of cross-border money movement. Financial institutions and corporate customers have come to trust the value they receive from each organization. Bringing these two brands together will help financial institutions to serve their end customers more efficiently.'
While the move is, as Frey puts it, the 'next natural step' for the two organizations, it comes at a time when a long-standing focus on reducing cross-border friction has shifted from focusing on the consumer space in favor of business payments.
'There has been a lot more progress made on the remittances side where the solutions are coming, the reach is happening, but on SME and large corporate there is still a significant gap,' says Khowala.
'Trade payments still take a long time – sometimes three to five days – and FX rates are not as transparent as you would like.'
There are also varying needs depending on the industry, as well as specific capabilities beyond risk, such as payment collections, that are not required on the consumer side. However, the current macroeconomic environment is also adding to the opportunity currently developing in the corporate cross-border payments space.
'The macro environment keeps changing and we need to be as flexible as we can to serve those customers,' says Khowala.
'An end-to-end suite of cross-border payment solutions, combined with all the insights and services that Mastercard brings, will provide our customers with more choices and help them be more informed as they navigate the macroeconomic uncertainty.'