Digital banking startup SoFi has agreed to acquire payments startup Galileo Financial Technologies for $1.2 billion.

Galileo is a 20-year-old payments company that powers cards for competing financial startups, including Chime, Monzo, Revolut, Varo, and Transferwise. The Utah-based company raised a $77 million Series A funding round in October after years of bootstrapping.

The deal allows SoFi to accelerate the building and development of its product roadmap. This year, SoFi plans to add a suite of rewards for its SoFi Money debit card and launch a credit card, both on the Mastercard network.

“While we march forward on our mission to help people achieve financial independence through our own direct efforts, with Galileo, we can enable a broader ecosystem of companies to join us in helping the world over achieve financial independence,” SoFi CEO Anthony Noho said in a statement shared with Cheddar. 

Last year was a big year for payments mergers and acquisitions, as legacy payment giants realigned to take on upstarts like Stripe and Square. The megadeals included Global Payments’ $21.5 billion acquisition of Total System Services; Fiserv’s $22 billion purchase of First Data; and Fidelity National Information Services’ $43 billion purchase of Worldpay. 

Some industry observers predict it's only a matter of time before consolidation occurs among newer payments companies like Stripe, Square, and PayPal.

Galileo powers the basic functions of non-bank financial services providers, including: account set-up, funding, direct deposit, ACH transfer, early paycheck direct deposit, bill pay, transactions notifications, check balance and point of sale authorization. 

These services allow new personal finance brands like SoFi to provide traditional banking services to consumers with a better look and more efficient experience.

Galileo’s payments solutions and APIs (application programming interface) extend beyond challenger banking to consumer payments for merchants, gig economy workers, commercial payments, lending and investing. They help manage accounts, authorize transactions, monitor fraud and initiate disputes. 

By March it had processed $45 billion in payments, up from $26 billion in October.

Galileo will continue to operate as an independent subsidiary of SoFi. CEO Clay Wilkes will retain his role and title. 

San Francisco-based SoFi, which now has one million customers, initially launched as a student loan startup, but in the last year has expanded its offerings to include several more lending, investing, and insurance products. Last year, it launched SoFi Money, its fee-free hybrid checking account with a high-interest savings rate and a debit card.

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