Q2 results from the major payment processors and card brands showed strong growth in most markets. Domestic volume continued its recovery from the pandemic and international travel resumed. It’s a consistent picture from PagoNxt, Discover Global Network, Nexi and Worldline. Covid is behind us and business generally back to normal although economic worries and supply chain disruption continues to trouble some players.
Among those still trading behind 2019 levels is Global Blue, the tax-free shopping specialist, still hit by the lack of Chinese visitors to Europe. and Euronet, which warned of capacity bottlenecks at European airports and the difficulties sourcing new ATMs. With DCC mark-ups at 13%, like one I spotted in Malta, these ATM’s must be worth their weight in gold.
Sabadell announced a three-way auction for its Spanish merchant acquiring business. Nexi, Worldline and Fiserv are in the running, with €42bn annual payment volume in play. The likely purchase price is rumoured to be around c.€400m.
In the UK, Capita sold its payment gateway business to Access Group, a hyper-acquisitive software roll-up, for £150m. PCI PAL published strong H1 2022 results with management confident of a pathway to profitability and Ravelin reported strong revenue growth but widening losses.
Open banking
It’s been a busy month for open banking news. While we’re no closer to knowing when account-to-account will kill credit cards, JP Morgan has a cunning plan. Its CEO, Jamie Dimon, is reportedly unhappy that his card divisions are blocking progress on open banking payments. “If I hear that any of you aren’t sharing information with each other, or you’re hiding information, you’re fired,” he said.
Tom Noye argues on his blog that mobile has completely changed banking and that JPM is not killing cards but building something bigger. If true, this strategy explains the banking giant’s purchase of Renovite, a well-regarded enterprise software business which has been building it a new set of payments platforms.
In Europe, Truelayer is one of a clutch of start-ups developing single interfaces into multiple bank APIs to facilitate open banking payments. The company claims 50% market share in UK, Ireland and Spain but this dominant position has come at a cost: operating losses were £30.1m in 2021 on turnover of £2.6m.
Despite the currently rather low volumes of open banking payments, use cases are expanding. Here are four which caught my eye.
Lithuanian Fintech Kevin (yes, Kevin) believes there is an opportunity to make account-to-account work at POS and announced a deal with Czech network, Switchio
Irish pay-by-link Prommt is working with Token to shift bulk links to open banking
PCI PAL, a contact centre payment specialist, announced a partnership with True Layer to offer open banking payments as an option for call centres
Volume Payments, a London-based start-up, plans to use consumer cashback to reward shoppers for changing their payment behaviour
House of Wirecard
The Netflix Wirecard documentary makes compelling viewing whether you’re a payment expert or not. The film focuses on the human stories of the investigative journalists and doesn’t have time to explain details of the fraud. For that, you’ll need to buy the book. German payment industry insiders tell me they long believed Wirecard was working for criminals. The revelation that Wirecard was allegedly a criminal enterprise itself was a surprise to everyone, possibly even to its CEO.
SoftPOS
A little like open banking, everyone knows that SoftPOS will be big but nobody knows when. I’ve always been more excited by the technology’s potential in large enterprise customers than for micro-merchants and there were two encouraging pieces of news this month.
In the Netherlands, ING is piloting SoftPOS in three branches of HEMA, a department store. It’s a team effort involving CCV (payment software and routing), Zebra (hardware) and Cow Hills (ECR software).
On a similar theme, PKO BP (Poland’s largest bank) has launched “LikePOS”, an enterprise SoftPOS priced at 5PLN ($1) per month plus standard merchant service fees. This is supplied by eService, EVO Payments’ Polish affiliate. EVO has been working with MyPinPad’s software since 2020.
Crypto corner
Mastercard’s pipeline of increasingly bizarre crypto announcements continues. Now you can have a Bored Ape (or other NFT) printed on the front of your crypto-fiat debit card. It says more about you than cash ever can.
One place you probably can’t use your NFT debit card is the metaverse. Researchers are pretty clear that the payment solutions don’t work yet.
Meanwhile, Worldpay revealed that it processed $15bn in crypto purchases from debit and credit cards in 2021. Whether you think this is a large number or a small number says much about your attitude to decentralised finance.
Central bank digital currencies (CBDC) are inching forward. Worldline and Nexi confirmed their positions as European payment champions with their inclusion in the ECB’s list of vendors running digital Euro pilots. More surprisingly, the selection of Amazon to work on a pilot CBCD eCommerce payment system would have raised eyebrows in protectionist Paris.
Back in the real world
With over 70m users and $1.7bn annual profit, Square’s Cash App has been a storming success with the American public. Now customers can spend their dollars at third party merchants, putting Cash App in direct competition with PayPal for the first time. Adyen, which likes to be ahead of the game with new ideas, is the first gateway partner.
It’s clear that online marketplaces will be processing significant payment volume for many years to come. The industry giants are finally catching up with this sector’s special requirements; notably the need to onboard large numbers of sub-merchants, handle split baskets and pay-out to multiple geographies. Both Checkout (see case study below with Zomato in Portugal) and Worldpay recently announced new products for marketplaces.
With Adyen and Stripe already having strong capability, the news is a further blow for the small band of specialists such as Lemonway, Mangopay and Limonetik.
Whether shopping in person or on the web, shoppers increasingly want to know the carbon impact of their purchases. Two start-ups have built interesting solutions. In South Africa, Curbon integrates with leading commerce platforms, such as Shopify, to present CO2 information at checkout. The data is based on the actual goods you’ve selected. Taking a broader approach, UK based Earthchain uses debit and credit card information and applies averages based on MCCs to give shoppers an approximation of the climate impact of their whole spend.
And finally, Rapyd, a hugely well-funded London fintech, has always struggled for a clearly defined brand proposition. When presenting at MPE in June, it was pitching a white-label solution for banks, rather like PPRO. Now its marketing is targeting small business owners in English provincial towns through the medium of public art.