NEW YORK (AP) – MasterCard said Thursday it bought the prepaid card program of London’s Travelex for $458 million in cash.
The prepaid card unit manages consumer and corporate prepaid travel cards to businesses including financial institutions, retailers, travel agents and foreign exchange bureaus.
MasterCard Inc., which is based in Purchase, N.Y., said the deal speeds up its strategic goals in the fast-growing prepaid card category with expansion outside the U.S. It doesn’t plan to issue cards directly through the acquired operations, however.
Prepaid, already one of the fastest-growing card categories, is expected to grow about 22 percent per year through 2017, according to a recent study commissioned by MasterCard.
Travelex said the sale will allow it to speed up its investment plans in higher growth areas like Asia and South America.
The companies already work together. Last year, a majority of Travelex card programs were converted to the MasterCard brand.
The deal comes with an additional $55 million incentive for hitting certain performance targets. It is expected to close within the first six months of next year.
MasterCard believes the acquisition will slightly reduce earnings next year.
(Copyright 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)