Transaction value in the hot financial technology sector is increasingly concentrated in the payments pace after Square Inc.’s $27 billion takeover of Afterpay. Payments companies raised $2.4 billion in the second quarter, leading the $7.5 billion sector-wide private placement haul that also includes banking technology, digital lending, and investment tech, according to S&P Global Market Intelligence.

A look at technology provides more insight into the financial services M&A boon. “The heat in the overall financial services M&A market is amplified within fintech,” says EY Americas Fintech and Payments M&A Leader Sara Elinson. “As some fintechs get to scale even at early stages—growing into new markets or accelerating growth—we’re seeing new levels of fintech to fintech M&A.”

SoFi’s $1.2 billion acquisition of payments platform Galileo Financial Technologies last year is potentially instructive. Galileo doubled processed payment volume from September 2019 to March 2020 to $53 billion, a growth trajectory that drew bidder interest.

The sector’s largest deals have otherwise been dispersed across fintech, including a consortium’s $5.9 billion takeover of CoreLogic announced in February and Thoma Bravo’s $3.8 billion acquisition of Calypso Technology.

Investor interest in the space is set to continue as private placements track deal volumes.

Brandon Zero