Goldman predicts rise in payments M&A in 2018

FILE PHOTO: A sign is displayed in the reception of the Sydney offices of Goldman Sachs in Australia, May 18, 2016. REUTERS/David Gray/File Photo

(Reuters) - Goldman Sachs GS.N expects more M&A deals in digital payments this year and on Thursday identified Wirecard WDIG.DE and Ingenico INGC.PA as potential targets.

“We expect the payments industry to continue to benefit from a number of secular technology drivers: the shift to electronic payments from cash and an even faster shift to online payments,” Goldman Sachs analysts wrote in a note.

Recent deals have included Vantiv's VNTV.N takeover of Worldpay WPG.L and Hellman & Friedman's Nets NETS.CO bid.

Last month, Morgan Stanley analysts said the tax reform in the U.S. could make more funds available for payments companies such as Paypal Holdings PYPL.O.

Morgan Stanley said new European rules on online payments, the Payments Services Directive 2 (PSD2), could also be another catalyst that triggers mergers and acquisitions in the sector.

PSD2, which started last week, allows retailers and consumers to bypass banks by authorizing payments directly from personal accounts, aiming to cut costs and increase choice by widening the range of firms offering financial services.

Reporting by Thyagaraju Adinarayan in Gdynia; editing by Alexander Smith