Acorns enters into an acquisition deal with GoHenry to expand its presence in Europe in 2023

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An increasing number of fintech firms are targeting the under-18 consumer segment. From investment platforms to payment service providers, many of these fintech firms are looking at teens as the next-generation customers. With the competition in the space growing, mergers and acquisition deals have also risen rapidly in the global fintech segment that caters to the under-18 consumer demographic.

In 2022, GoHenry, the leading teen-focused prepaid card and financial services provider, announced that the firm had acquired France-based Pixpay to expand its presence in the European market. More recently, Acorns, the micro-investing platform based in the United States, announced that the firm had acquired GoHenry to expand its presence in the European region.

• In April 2023, Acorns announced that the firm had entered into an all-stock deal with GoHenry. As part of the agreement, GoHenry will become a wholly-owned subsidiary of Acorns. The financial details of the deals have been not disclosed by Acorns or GoHenry. However, the addition of GoHenry and Pixpay means that the United States-based firm now has a strong user base of six million.

The acquisition of GoHenry will also give Acorns access to the European market, which it has struggled to enter in the past. Furthermore, the timing of the deal is also noteworthy. Given the fact that the fintech sector is enduring a tough environment due to higher interest rates and inflation, the valuation of many late-stage firms has dropped significantly over the last few quarters. This has resulted in a perfect opportunity for well-funded firms to enter into merger and acquisition deals to expand their global footprint.

With operations in the United Kingdom, France, Spain, and the United Kingdom, the acquisition of GoHenry signals a major growth bet for Acorns, which until now has been only operating in the United States. In addition to getting access to the European markets, the acquisition of GoHenry will also aid Acorns to strengthen its focus on financial wellness and kids. In 2020, Acorns launched Acorns Early, an investment product that enables parents, guardians, and families to invest in the future of their children.

For GoHenry, the backing of Acorns will enable the firm to better compete in the teen-focused banking space in Europe. Over the last few years, several fintech firms and neobank have entered the under-18 segment, resulting in a tough competitive landscape in the European market.

• In France, Vybe has developed a mobile banking app for teenagers and also provides them with a prepaid card. The app can be used for keeping track of spending and making peer-to-peer transfers. To make the prepaid card more attractive, Vybe is also offering cashback on purchases made using the prepaid card solution at more than 60 partner brands.
• Kard is another teen-focusing prepaid card and mobile wallet provider seeking market share in France. In the United Kingdom, Osper, which functions as plastic money pocket money for children, has developed a prepaid card solution focused on teenagers. The prepaid card providers have built the platform with various features including parental controls.

• Starling Bank also launched Starling Kite aimed towards 6- to 16-year-olds. Bunq, in December 2022, rolled out under-18 accounts in various European markets, including Netherlands, Spain, Germany, Italy, France, and Ireland. Revolut rebranded its services for 6 to 17 years olds as Revolut<18. Previously known as Revolut Junior, the teen-focused service has more than 1.6 million customers globally, as of August 2022. Well-established banks such as NatWest are also eyeing a market share in the under-18 category.

As competition in the teen-banking space is expected to grow even further from the short to medium-term perspective, diversifying product and service offerings will play a pivotal role in the growth of these fintech firms and neo-banks. The backing of Acorns will enable GoHenry to diversify its service and product offerings beyond prepaid cards, thereby making the platform more attractive among parents and teenagers.

Over the next few quarters, PayNXT360 expects more such mergers and acquisition deals in the global market, as declining valuations and a stiffer competitive landscape continue to present potentially good buyout opportunities for well-funded firms that are seeking to expand their international footprint.

To know more and gain a deeper understanding of the European prepaid card market, click here.