Santander reported that both volume and revenue growth at PagoNxt were the slowest since the business was formed in 2020. PagoNxt groups the bank’’s payment capabilities in single operating division but Santander has struggled a little to mould these businesses into a coherent whole.
The German merchant acquiring business and Superdigital, its Brazilian subprime unit were closed in Q3 at a total cost of €243m. Next to leave will be Ebury, although in happier circumstances. The UK-based trade finance specialist is set to float on the London market in early 2025 at a valuation of around €2bn.
This will leave PagoNxt with two divisions. The largest is Getnet, a merchant acquirer with strong positions aligned to Santander’s domestic banking network – Spain, Portugal, Brazil, Mexico (where Getnet launched contactless ticketing on the Mexico City metro) and Argentina. Getnet is the number two acquirer in Latin America and will start selling in Chile shortly. The Latin American capabilities are now available to merchants through a single API connection called Getnet SEP (single entry point) which will be attractive to European merchants looking to simplify acceptance in this part of the world.
Total merchant payment volume at Getnet was up 7% in Q3 to €57.6bn with the strongest performance in Mexico, Spain and Portugal.. ATV was up 3% at €23.03.
PagoNxt Payments, sometimes known as Payments Hub, will be PagoNxt’s second operating unit. PagoNxt Payments groups all Santander’s A2A capabilities. The bank is steadily migrating its operating units onto the new platform and transaction volume is reported to be 5x greater than a year ago.
Total revenue across all today’s Pagonxt divisions – Getnet, PagoNxt Digital and Ebury – was up just 4% at €311m in Q3, the lowest growth since the division was founded four years ago. In better news, the proportion of business sourced from outside the Santander banking network has reached 24% year to date. This has grown from 14% in 2022 and is a key metric to help judge whether PagoNxt can prosper independently.
Expenses rose 15% year on year to €288m. Management believe technology spending has peaked and it’s now a question of driving down unit costs by driving up volume. There are early signs that the strategy is working. Cost per transaction processed, in constant currency, continues to fall and was down 7.5% YTD at 3.6c. This number includes acquiring and A2A.
Operating income, quite volatile from quarter to quarter, was down 52% at €23m in Q3 but flat year to date.
EBITDA margins were up 3.1pp to 23% YTD and management is confident of hitting its medium-term target of 30%. This seems achievable on the current trajectory, but management is also sticking to its 30% revenue growth target. This seems more ambitious – revenue was up just 12% YTD – and will present an early challenge to Juan Franco, the newly appointed PagoNxt CEO who joins from Nuvei.
