SoFi to Buy Payment Processor Galileo for $1.2 Billion

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by Christopher Hamman · 3 min read
SoFi to Buy Payment Processor Galileo for $1.2 Billion
Photo: Galileo Blog

SoFi will acquire Galileo. It will significantly affect the fintech industry as Galileo processes payments for many fintech companies.

SoFi decides to acquire Galileo for $1.2 billion. Sources say that the personal finance startup is keen on tidying the loose ends. The deal will reportedly help SoFi in the launch of new products as customers go digital as per their finances.

The deal was a hybrid one. It involved a cash and stock exchange. Both parties are optimistic about the future. Off the record, the deal involved $75 million in cash, $875 million in company stock and $250 million in seller debt. Details of the acquisition have not been made public.

COVID-19 Boosts Galileo Acquisition by SoFi

It also appears that the COVID-19 situation is also spurring some of the positive energy behind the acquisition. Anthony Noto who is the CEO of SoFi indicated this when he said:

“It’s the right time to do something like this – we’re on the precipice of a transition to digital from physical finance.”

Noto continued:

“It’s going to serve people in this environment and the need for mobile financial services is only going to accelerate.”

The global stay-at-home restrictions have caused shifts in many sectors. Everyone is now going digital rather than physical. The coronavirus situation is changing how people do things. Digital finance is one of the best gainers in this regard.

This acquisition is set to change the order of things. Firstly, Galileo is about ten years older than SoFi. The payments processing company handles large volumes of transactions.

These transactions are handled using their APIs or application programming interfaces. SoFi and Galileo started working together in early 2019 when Galileo was handling payments for SoFi money.

Discussions surrounding the acquisition had started before COVID-19 but the pandemic slowed things down. Now though, it seems that the pandemic is a dealmaker.

Things are going to get interesting from here on. Many of SoFi’s competitors are also Galileo’s customers. The situation is going to prove to be a test for anti-trust hawks in the financial space.

 Sofi Has Many Competitors

The list of competitors includes well-known names such as Revolut, TransferWise, Chime, Varro, Monzo, and others.

This presents several challenges for the parties. Both CEOs have indicated that the companies will operate independently. Many of the competitors may have issues with the acquisition. Corporate governance and ethical issues may be raised as well.

On the flip side, these competitors may also stand to gain from SoFi. Lending services are one such example.

Galileo’s CEO Clay Wilkes noted:

“We see product road maps that have big gaps in them that can easily be filled with the products SoFi has developed,”

He continued:

“Now is a good time to do this.”

At the end of the day, such a scenario may present a “win-win” situation. However, both parties will need to assure the Fintech space that this can work.

Valued at about $4.8 billion, SoFi has drawn investments from several heavy hitters. Investors include Silver Lake, Qatar Investment Authority, Peter Thiel among others.

Business News, Deals News, FinTech News, News
Christopher Hamman
Author: Christopher Hamman

Christopher Haruna Hamman is a Freelance content developer, Crypto-Enthusiast and tech-savvy individual. He is also a Superstar Content Developer, Strategy Demigod, and Standup Guy.

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