Voyager Digital Acquires Crypto Payment Platform Coinify

Voyager Digital is set to acquire crypto payment platform Coinify in an attempt to accelerate its international expansion and bolster its capabilities in the payment space.

The buy will give Voyager’s customer base of about 1.8 million users a way to make payments from their Voyager accounts.

Voyager CEO Steve Ehrlich said that the firm had been mulling the best way to enter the payment space for “quite some time,” noting that the company views the segment as Voyager’s  next evolution.  

“We felt that the strength of our team and the resources we had were better served elsewhere, and the acquisition of the payment business was something we felt at the right price, with the right team and the right culture … would get us to market faster than trying to find other members to advance into our team,” Ehrlich told Blockworks.

In the early years of crypto, firms in the space were focused on proof of concept and initial market share, said Donald Putnam, managing partner at Grail Partners. 

“Now, we enter the consolidation phase, where the game is all about global scale, and each M&A deal needs to either add to the vertical integration of tech stack or add scale to an existing vendor,” he explained in an email to Blockworks. “These new global competitors will not obsess about adding market share organically – there is time for that in the third phase, which is all about bundling and pricing.”

Why Coinify and why now?

Founded in 2014, Coinify allows individuals to buy and sell crypto and offers products for businesses allowing them to accept payments in virtual currencies, among other services.

Voyager will utilize Coinify’s virtual currency payment platform available in Europe, Asia, North America and South America. The company’s services include individual payment processing in 15 cryptocurrencies and transaction settlement in 20 fiat currencies through Coinify API.

Ehrlich said that Voyager’s motivation to enter the payment market grew as Mastercard and Visa have been “pretty loud” about their growing involvement in crypto in recent months. 

Mastercard announced last month that it was looking to simplify the conversion from cryptocurrency to traditional fiat currency by partnering with companies to issue cards and facilitate the conversion through fiat-backed stablecoins. In April, the payment giant was selected as the exclusive card network for Gemini’s bitcoin-backed credit card.

Meanwhile Visa has added to its crypto division this year, and has partnered with 50 crypto platforms on card programs that allow users to convert and spend digital currency at 70 million merchants. The company reported that consumers spent more than $1 billion worth of cryptocurrency on goods and services through Visa’s crypto-linked cards in the first half of 2021.

Ehrlich said that there have also been more “smart people” talking about accepting crypto. He noted billionaire Mark Cuban’s announcement in March that dogecoin could be used to pay for tickets and merchandise for the Dallas Mavericks, the basketball team he owns.

Voyager’s user base grew about 1400% in the first six months of 2021, the company reported. Many are small- to mid-size business owners, Ehrlich said.

“People are going to want to use payment rails for crypto, especially for the stablecoins,” he added. “We partnered with Circle as well and we’ve seen what they’ve done, and we have a huge community that wants to use crypto.”

Compass Point senior analysts wrote in a June research note that Voyager’s zero-commission trading model, broad array of crypto trading pairs and large number of coins gives it a stronger value proposition than competitors like Coinbase, Square and PayPal.

The value proposition 

The Compass Point added that Voyager’s position in the crypto space and earmarked marketing spend could result in $1 million incremental funded accounts and drive $11 billion assets under management by the end of 2022. 

Under the terms of the share purchase agreement, the consideration to Coinify shareholders will consist of 5.1 million newly issued shares of Voyager Digital common stock and $15 million in cash, the firm announced.

Coinify CEO and co-founder Mark Hojgaard said in a statement that joining Voyager would allow the firm to rapidly grow merchants utilizing Coinify’s payment processing technology.

“The combination positions Voyager as the go-to choice for businesses and individuals seeking an efficient transaction vehicle for a wide range of purchases globally,” he said. 

Going forward, Ehrlich said Voyager will consider acquisitions and partnerships to help it enter other potential areas of interest, such as custody, wallet services or retirement products.

“We take a really broad-based financial service approach to everything we do,” he said. “We’re trying to gauge where we think the market’s going to go in the next three-plus years, and so when there’s an opportunity for us, we’ll take a look at it.”