Paysafe to sell direct marketing payment processing unit to KORT Payments

Paysafe Limited, a global payments platform, has entered into a definitive agreement to sell its direct marketing payment processing business to KORT Payments, an omnichannel payments provider. The transaction includes merchant contracts, technology assets, and employees, and is structured as annual earnout payments over the next five years. The deal is expected to close within 30 days, subject to finalizing certain transitional service agreements.

This divestiture is a key part of Paysafe’s broader portfolio optimization strategy, aimed at strengthening its focus on core business segments, including merchant payment processing and digital wallets. By exiting this non-core segment, Paysafe intends to reduce exposure to high-risk transactions and enhance financial stability. The move also completes the repositioning of its Merchant Solutions segment, aligning the company with long-term revenue growth and improved shareholder value.

Why Paysafe Is Divesting Direct Marketing Payment Processing

Paysafe’s direct marketing payment processing business primarily served card-not-present transactions across various industry verticals. Over the past few quarters, this segment faced profitability challenges, increased regulatory scrutiny, and heightened exposure to compliance risks. As a result, the company determined that an accelerated exit would minimize potential financial disruptions while allowing for a sharper strategic focus on scalable, lower-risk business segments.

Industry experts note that high-risk payment processing businesses often experience volatile revenue streams due to changing regulations and market conditions. By selling this unit, Paysafe is taking a proactive approach to enhance operational efficiency and strengthen its position in more predictable, high-growth sectors such as e-commerce, regulated gaming payments, and alternative financial services. The decision also reflects a broader industry shift, where payment processors are moving away from high-risk, fragmented transactions and focusing on integrated, sustainable financial solutions.

Financial Impact of the Divestiture on Paysafe’s Performance

Despite reporting strong revenue growth for 2024, Paysafe’s direct marketing payment processing business was underperforming relative to other segments. The sale is expected to positively impact profitability by eliminating a declining revenue stream while improving adjusted EBITDA growth.

For the full year 2024, Paysafe’s total revenue is estimated at $1.705 billion, reflecting a six percent increase from 2023. When excluding the disposed business, revenue growth stands at seven percent, demonstrating the strength of Paysafe’s core operations. Merchant Solutions revenue, excluding the disposed business, grew by ten percent, while Digital Wallets recorded a four percent increase. Adjusted EBITDA for 2024 is projected at $452 million, reflecting a two percent decline overall. However, when factoring out the divested business, adjusted EBITDA shows a two percent increase, reinforcing the company’s improving profitability.

The company’s fourth-quarter performance underscores the challenges associated with the divested unit. Revenue for the quarter was estimated at $420 million, marking a one percent increase compared to the previous year. However, when excluding the disposed business, revenue growth was four percent. Adjusted EBITDA for the fourth quarter declined by sixteen percent to $103 million, primarily due to merchant exits and associated credit losses totaling $23 million. The company also experienced financial headwinds due to foreign exchange fluctuations and interest rate changes, which impacted revenue by approximately $6 million and adjusted EBITDA by $7 million.

How Paysafe’s Growth Strategy Aligns with This Decision

Paysafe’s decision to divest its direct marketing payment processing business is aligned with its broader strategy of focusing on high-margin verticals. The company is directing resources toward expanding its e-commerce payment processing capabilities, strengthening its digital wallet offerings, and scaling services in regulated financial sectors. This realignment is expected to drive long-term revenue stability while minimizing operational risks.

By prioritizing high-growth verticals, Paysafe aims to reinforce its position in the rapidly evolving digital payments landscape. Industry analysts have highlighted that companies optimizing their portfolios in response to regulatory changes and shifting market dynamics tend to outperform competitors that continue operating across fragmented, high-risk payment channels. The shift towards integrated payment ecosystems and mobile-first financial solutions further supports Paysafe’s strategy of enhancing scalability and operational resilience.

Future Financial Outlook and Shareholder Returns

Paysafe has outlined a positive financial outlook for 2025, projecting revenue growth of between 6.5 and 8 percent. Adjusted EBITDA growth is expected to be in the mid-teens, with an anticipated EBITDA margin between 27.1 and 27.6 percent. The company remains committed to generating strong free cash flow and reducing its net leverage, targeting a 3.5x net leverage ratio by the end of 2026.

To further enhance shareholder value, Paysafe’s Board of Directors has authorized an additional $70 million to its existing share repurchase program, bringing the total available amount to $77 million. This reflects the company’s commitment to returning capital to investors while reinforcing confidence in its long-term financial health. The repurchase program will enable Paysafe to acquire shares through open-market transactions or privately negotiated deals, depending on market conditions and other strategic considerations.

Industry Trends and the Future of Payment Processing

The payment processing industry is undergoing rapid transformation, with companies increasingly focusing on sustainable, low-risk transactions. The demand for integrated digital payment solutions continues to rise, driven by technological advancements and evolving consumer preferences. As regulatory environments tighten, businesses in the sector are seeking to streamline operations by divesting non-core, high-risk business units.

Paysafe’s strategic divestiture aligns with this broader industry shift. By concentrating on digital-first payment services, the company is positioning itself for long-term profitability and reduced regulatory exposure. The decision also reflects a proactive approach to business realignment, ensuring that Paysafe remains competitive in the increasingly crowded fintech ecosystem.

Strengthening Paysafe’s Market Position

Paysafe’s divestiture of its direct marketing payment processing business is a significant step in its long-term strategic realignment. By focusing on merchant payment solutions, digital wallets, and high-margin financial services, the company is reinforcing its market leadership while improving financial predictability. The move also enhances operational efficiency, ensuring that Paysafe is well-positioned to capture growth opportunities in the digital payments space.

With strong revenue projections, continued investment in core business verticals, and a commitment to shareholder returns, Paysafe is charting a course for sustainable financial success. As the company moves forward with its streamlined operations, it is set to maintain a competitive edge in an evolving payments landscape. Investors and stakeholders will gain further insights into Paysafe’s growth trajectory during its scheduled earnings call on March 4, 2025.