November 2023 Business of Payments newsletter

The Business of Payments

Last month’s poor results from Worldline and Adyen have not set a trend. Nexi’s Q3 numbers came ahead of market expectations. Management said there was no sign of the slowdown in Germany which has so rattled Worldline’s shareholders. Nexi’s stock price is recovering nicely while Worldine is still bumping along the bottom.

Adyen bounced back after its plain-speaking Dutch management presented analysts with a more realistic assessment of the company’s growth prospects and promised a slowdown in the breakneck pace of new hires. Adyen’s Q3 revenue was up 22% and with the processor now targeting 50% EBITDA margins by 2026, significant cash profits are on the horizon.

The dilemmas faced by European legacy acquirers are well described in Nightmare on Acquiring Street, a new paper from PSE Consulting. This lays out the speed at which the market is moving to “gateway acquirers” such as Stripe, Adyen and Checkout, which offer a tightly integrated bundle of services operating over a single platform.

Source: PSE Consulting

Processors operating with old technology and without modern checkout and boarding tools are struggling. Barclays and Credit Agricole are the only banks remaining in the list of top European acquirers and both now recognise the need for change. Credit Agricole has announced a JV with Worldline and Barclays is exploring options for Barclaycard which could involve a sale or joint-venture.

As well as the impact of technology trends, European acquirers also need to contend with a profound shift in channel buying behaviour by small businesses, the most profitable customer segment. A new report from Flagship Consulting demonstrates the extent of the risk.

Source: Flagship Consulting

Independent software vendors (ISVs) and other platforms are now taking between 40% and 65% of new merchants signed in the US. This trend is coming to Europe and threatens banks ability to sell direct to SMBs. ISVs are demanding increasingly high commissions from the acquirers. Bain estimates that 90% of payment revenue is at risk of changing hands.

The impact on the ISV’s themselves is less well documented but these businesses are now finding they can generate up to half their revenue from commissions on payment processing. This is incentivising bad behaviour and we’re seeing incidents of market abuse where ISVs impose penalties for merchants that use 3rd party payment products.

Shopify, the leading eCommerce retail platform, charges a 2% surcharge if merchants don’t process transactions through Shopify Payments. And Lightspeed, a restaurant POS software vendor with over 10,000 customers worldwide, insists that all new customers take its integrated payments product. Those who don’t will be hit with a 0.5% transaction surcharge. 

This hasn’t gone down well in Canada where one restaurateur reported being charged $300 for using a competitor payment terminal“It’s not illegal, but it’s unethical,” said the local business association. Lightspeed have now introduced a price pledge to match competitor pricing in any country. But it’s worrying that many ISVs are now treating their customers as hostages. This won’t end well.

Corporate activity

Advent, the US private equity giant has bought London-based MyPOS for $500m.MyPOS, which became a merchant acquirer last year, claims 170,000 mPOS merchants in 30 countries and generated €11m EBITDA in 2022 on revenues of €60m. Advent has bought MyPOS through a newly established “payment and technology platform” called Circle which will be chaired by Laurent Le Moal, ex CEO of PayU. Expect more deals to come.

Total Processing, a small but fast growing ISO based in Manchester, recruited Martin Gilbert of Revolut as a heavyweight chair just six months ago. He has wasted little time in arranging the sale of the business to Nomupay, the well-funded Dublin-HQ’d processor formed from the ashes of Wirecard. Nomupay is clearly one to watch. 

Tencent, the Chinese technology platform, has paid $100m for an 8% stake in Global Blue, the market leader in Tax Free Shopping, at a valuation of $1.25bn. The Tencent relationship will cement Global Blue’s position with high-spending outbound Chinese travellers.

Silverflow, the Amsterdam based payment orchestrator has raised €15m at a valuation “significantly higher” than its previous raise in 2021. The money will be used to support the company’s expansion into Latin American and the Far East.

Shift4 has finally closed the $525m acquisition of Credorax Finaro. The eighteen-month delay, caused by the presence of a sanctioned Russian oligarch on the Finaro share register, has given management plenty of time to plan the integration. The combined business has scale (c.$200bn volume), international reach and the capability in eCommerce which Shift4 has been lacking. 

AIB and Bank of Ireland have abandoned efforts to create a domestic money transfer app to compete with the runaway success of Revolut. The banks had spent a total of €17m on the project which was to be called Yippay (yes, really) but ran into regulatory obstacles. Nexi had been contracted to build the product.

The Irish banks may be better served joining the European Payment Initiative (EPI) which has completed its acquisitions of iDEAL and Payconiq. This gives the EPI a solid basis of technology and transaction flow on which to build a common digital wallet for all European markets.

New Shopping

We’re keeping a close eye on grocery. Shifts in supermarket payments can move the whole market. But not yet. The FT concludes that, twenty years after the debut of online groceries, shoppers still prefer buying food in real life. Despite the pandemic boost only 12% of UK groceries are bought online.

But in-store shopping is changing rapidly with the introduction of self-checkout, Smartcarts and autonomous stores.

Italy’s first autonomous store has opened in Verona. In contrast to many pilot implementations, this one is a large format Tuday supermarket. The technology, supplied by Sensei, a Portuguese start-up, can even detect variable weight items through an integration with the scales. Payments are from Nexi. Shoppers don’t need to use the app. They can pay at a standard POS if they choose.

Tesco is trialling a similar process at one UK store. Again, shoppers don’t need to use the retailer’s app. They just walk up to the checkout which will “magically present them with a list of the products they have picked up”. Shoppers can pay with a card in the normal way. The technology is from Trigo, an Israeli start-up already working with REWE, Aldi and Auchan and in which Tesco has a small stake.

A2Z, the Israeli start-up which is leading development of smart carts, announced the delivery of an initial order of 250 to Monoprix, the French supermarket. These carts contain sensors that automatically record your purchases. A2Z believes it will sell a total of 30,000 smart carts in France alone over the next three years through IR2S, its distribution partner.

There is a live debate about self-checkouts. It’s clear they can work well for small basket sizes but not for the weekly shop. Whether it’s using a handheld scanner or fixed self-checkout terminal, the process puts too much work on the shopper. 

Booths, an upmarket UK supermarket, has removed self-checkouts completely. The customers seem very happy.

In biometric news, PayEye, a Polish start-up which allows people to pay with an iris scan has launched a new range of hardware. Called eyePOS, the terminals include a special camera but also take standard payment cards. PayEye offers them for an introductory price of €11.25 per month.

Despite overwhelming consumer demand to pay at POS by tapping their mobile phone on the terminal, there are still some circumstances when a physical card is needed. One is the M6 toll road in the English midlands. The operator has annoyed tens of thousands of motorists by removing the ability to use Apple or Google Pay. The rationale? A Government dictat that it was illegal have a mobile phone in your hand while in control of your vehicle.

After a predictable outcry, the Government has conceded an exemption for making a contactless payment and the toll road systems will be upgraded for Apple Pay.

In-car payments

The toll road problem would be avoided if all motoring-related payments – parking, charging and fuelling – were brought together in a single app accessed from the car dashboard. 

Mercedes Benz has built its own payment service but Volkswagen is following a different approach of co-ordinating a set of partners. VW has launched “Pay to Fuel” for its Skoda brand working with Mastercard, Parkopedia and ryd, a German fintech that offers a pay-to-fuel app.

Meanwhile, VW has sold PaybyPhone to Fleetcor, a large US B2B payment company for $300m. PayByPhone, generates c.$40m annual revenues from its app which gives access to 4m parking spaces in 1,000 cities across Europe and North America. Payment volume was $900m in 2022, giving a very healthy take rate of 4.4%.

Fleetcor plans to expand the PayByPhone service to include EV charging and automatically buying fuel at service stations.


Alcohol and cigarette vending machines are common in Germany, but age verification can be tricky. It’s  good to see Girocard, the domestic debit scheme, working with Feig, a leading vending machine supplier, to restrict sales to those old enough to buy the products.

Also in Germany, Bluefin has gained Giro certification for the TECS platform it acquired earlier this year and launched a white-label POS service for ISVs. Newland is providing the Android terminals. In other hardware news, ITCARD, a Polish acquirer with 90,000 POS, has started deploying Ingenico’s Axium terminals. This is positive news for Ingenico which has been very slow to market with a workable Android product.

One reason why Stripe is so popular, despite its high prices, is that it makes life easy for its customers. For example, you can now manage Klarna disputes from within the Stripe dashboard. Previously, Stripe merchants needed to deal with Klarna customer services via email.

It’s no surprise that Stripe can get its merchants to write great testimonials. Here’s the CIO of La Redoute, the giant French catalogue retailer, explaining why he chose Stripe as its global PSP/processor. “It has been an incredible and enjoyable journey working with Stripe’s team,” he says.      

Stripes’ platform strategy is sparking interesting innovation. Lopay is a UK mPOS provider built on top of Stripe’s APIs.  Lopay (the clue is in the name) undercuts SumUp and iZettle by charging just 0.99% for debit/credit transactions. It says it has signed 20,000 merchants in 18 months. Lopay charges 0.8% extra for instant settlement and says this is a very popular option. 

DeluPay is targeting a similar market in France with a solution based on QR codes linked to open banking transfers. 1,000 merchants have signed up to benefit from transactions free under €2 and 0.5% thereafter. If you understand French, watch the CEO get quite a grilling on this early morning business TV show. The presenters struggle with the consumer proposition and keep asking why they wouldn’t keep using Apple Pay or Paypal.

The Polish Post Office is looking to capitalise on the 10m users of its mobile app by adding InPost Pay as a checkout button for local web shops. Customers can then pay within the app using Blick, cards or cash on delivery.

Finally, take a look at This is a very impressive AI powered search engine that allows you to construct a basket across over 1m Shopify merchants. Payment through Shopify Payments of course.


SoftPOS is a downloadable payment application that allows any Android device equipped with an NFC chip to take money on cards. This represents a clear threat to the terminal manufacturers who, together, ship over 100m units each year. Sunmi is the first to respond. It’s latest Android hardware range includes a low-cost terminal designed for SoftPOS and shipped without a PCI certificate.

I think SoftPOS will make a quicker impact in the enterprise market than for micro-merchants. For example, Alaska Airlines is working with Stripe to allow 7,000 crew members to accept contactless payments for food and drink using their airline issued iPhones. This should speed up in-flight service. 

Symphopay, a Romanian POS payment gateway has sold its SoftPOS application to Raiffeisen Bank. The solution is already deployed at 880 easybox lockers of Sameday courier company.

Dotykacka, the Czech retail and restaurant software provider with over 20,000 merchants, has launched SoftPOS  in the Czech Republic and Slovakia. The solution is from, a Danish start-up with Nexi providing the processing.

MyPOS has launched SoftPOS in the UK with merchants paying 1.6% + 7p per transaction and no monthly fee. I think it’s a mistake for vendors to forgo a standing charge as there’s a high risk of attracting large numbers of merchants that never make any transactions.

The steady rollout of Apple’s Tap to Pay as an alternative to Android has reached France. Group BPCE, Adyen, myPOS, Revolut, SumUp, Viva Wallet and Wordline are offering the product at launch. 

Open banking

The latest Open Banking Impact Report shows UK open banking payments doubled compared to 2022 and now running at £4.5bn a month, still small modest compared to c.£65bn on cards and c.£110bn on direct debits.

There are now 45 open banking payment providers in the UK. This is probably rather more than the market needs and many vendors must be wondering they can stay in business long enough to reach break-even.

Who is going to consolidate the overcrowded open banking market? The CEO of Go Cardless, a very well-funded UK direct debit specialist, said it would likely be making acquisitions. Go Cardless already bought Noridgen, a Latvian open banking provider earlier this year.

If open banking payments are going to become mass market, vendors need to provide a superior customer experience to cards. One good example is William Hill, provider of online gambling and sports betting, which will be offering open banking for both pay-ins and pay-outs. This is a sector where bank transfers offer clear advantages over cards, notably the ability to pay winnings instantly. Truelayer is providing the technology.

If the industry doesn’t move quickly, the tech giants will drive the market forward. 

Apple has started using open banking to offer iPhone users the chance to view their bank balance and transaction history before confirming an Apple Pay transaction. Although it would be a small additional step for Apple to start directing Apple Pay transactions over open banking rails, it may be reluctant to lose the 0.15% commission it charges card issuers today.


We’ve covered the rip-off fees from many ATMs in tourist locations before. Honest Guide (1.3m subscribers) explains the scandal better than we can. Euronet doesn’t come out well.

With the debate raging about whether merchants should be obliged to accept cash, it’s good to see merchants playing an active role for or against. This sign was spotted by Chris Higham in Newcastle.

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And which button would you press in this Las Vegas taxi?  Photo from Booshan Rengachari.

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In other news

French railways has introduced ticketless transit based on contactless payments for regional trains. This is a wonderful idea which should be adopted by all transit authorities everywhere.

Farewell Dotpay. The pioneering Polish eCommerce gateway was acquired by Nets Nexi in 2018 and its brand is now folded into Przelewy24.

Klarna management has averted a strike by conceding a collective bargaining agreement with its workers. Its CEO didn’t handle a subsequent all-hands call very well, likening union reps to the corrupt pigs in Animal Farm.

CAB Payments has been one of the least successful IPO’s of 2023 with shares down 80%. The FT explains why.

French authorities have levied €414m fines on four Meal Voucher providers for anti-competitive practices in this €6bn market. This is very profitable business – the providers charge 2.5% to the employers and 2-5% for the restaurants.

BCG reports that eCommerce growth, which slowed sharply as real life returned after the pandemic, has now returned to its longterm trend.

If you watch one video this month, check out this US start-up’s application of AI to wearable technology.

One of the rare European banks making a success of payments is Santander whose Getnet unit is now number two merchant acquirer in Latin America.

What??? Nearly 1% of the entire US GDP goes through Delta Airline’s American Express card, generating $5.5bn annual revenues for the airline.

Two slices of archive magic from the BBC. The Future of Credit Cards (1986) and the Future of Banking (1968).  

And finally

Accounting for inflation, this is spending a penny in an Irish toilet. JustTip is providing the attendant service. Spotted by Rónán Gallagher.

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Where to find me?

I’ll be at the PSE Merchant Acquiring Conference in London on 5 December and then at MPE 2024 in Berlin on 12-14 March.

Get in touch

Geoffrey Barraclough

Adyen’s “gaze fixed on the horizon” despite deteriorating margins

Investors took fright at the latest earnings report from Adyen showing declining take rate and EBITDA margins as the Amsterdam based processor continues to invest heavily in market expansion and product development. Making a contrast with the layoffs and cost cutting elsewhere in the sector, Adyen made a plea for shareholders to back its long-term thinking, stating: “This philosophy, which often necessitates greater and more lengthy investments, has ultimately come to differentiate us.

Nobody can argue with the operational success of the business – happy customers, market-leading technology and strong market share growth. Customer churn is less than 1% and 80% of new volume comes from existing merchants. Yet Adyen is finding it tougher to turn fast growing market share into revenue, and incremental revenue into profits.

Payment volume grew 41% to €422b for H2 2022. Adyen’s core customer base of digital merchants continues to trade strongly but, encouragingly, the business added as much incremental volume from the unified commerce segment which includes omni-channel merchants such as H&M, Levi’s and Lacoste. Management points to the success of its in-house POS solution as vindication of its long-term investment theses. The product was first launched in 2016. In H2 2022, Adyen processed a very impressive €64bn of POS transactions from omni-channel merchants, up 57%. Unified Commerce was recently extended to Mexico and Japan.

The platform segment, which is hoped to become a major growth engine in coming years, reported only 16% volume growth although management says this would have been 79% excluding the eBay relationship.  

Net revenue grew 30% to €722m, a healthy number in normal circumstances but 11pts behind volume growth. Take rate (net revenue as a share of payment volume) dropped a further 2bps to 17bps. The fall was blamed on “continued growth of customers already on the platform” and “increased overall ATV due to travel volumes rebounding.” Although management stresses that it sees take rate as an outcome not a target, the continued decline in this metric suggests Adyen is finding it harder to convert market share gains into revenue.

Revenue growth was particularly strong in North America (up 45%) where future sales will be boosted further by a new partnership with Oracle. Europe, Adyen’s largest market saw sales 20% higher than H2 2021. Adyen’s investments in Latin America and Asia Pacific are also beginning to pay off with revenues up 44% and 36% respectively, albeit from a relatively low base.

Operating expenses rose 78% to €388m with the continued fast pace of hiring resulting in employee costs ballooning 92% to €193m. Total staff numbers grew from 2,180 to 3,392 during 2022 with average cost per staff member up 17% to €65K. Management says its “deliberate decision to continue scaling the team… further situates us to capitalise on the sizeable opportunity at hand.”

Adyen has also stepped-up sales and marketing activity, with spend growing 64% to €31m “as we invest in driving brand awareness to unlock commercial growth at a global level and were able to host events to meet our customers in-person again.”  Travel expenses more than trebled to €23m as teams got back on the road. 

Income before tax was down 1% at €334m while EBITDA, the company’s preferred measure of profitability, was up just 4% to €372m. EBITDA margins dropped to 52% from 64% “driven by employee benefits exceeding net revenue growth as we accelerated our hiring pace.”  Management says it could return to c.65% EBITDA margin “if we shifted to optimizing for this metric, but our gaze is fixed on the horizon.”

The staff may be expensive, but they have not been idle. Adyen has launched its one-click checkout (to match Stripe’s USP) and rolled out new in-house designed payment terminals. Merchants baffled by 3DS complexity will be pleased Adyen has also followed Stripe in taking on the responsibilities of delegated authentication itself. And, in the platform segment,  Moneybird, an Dutch SME accounting software provider, is piloting the SME finance tools, including card issuing and business accounts that Adyen announced in November 2022.

Adyen margins under pressure as it invests for growth

Adyen’s share price took a knock after H1 results as investors were unimpressed at a sharp reduction in margins. The business is growing faster than ever but incremental payment volume is delivering diminishing revenue. The extra €46bn processed in H1 (over H2 21) produced an additional €43m revenue (a take rate of just 9bps) and zero EBITDA.  

Management insisted that no customers are loss-making and that it was still “onboarding profitable volume at scale” and that “there is strong operating leverage in the business.”

Adyen take rate and gross margin

Overall, payment volume grew 60% year on year to €346bn with the recently established POS business up 97% to €45bn as Adyen grows its share of multi-channel retailers. On the results call, Ingo Uytdehaage, CFO, assured analysts of continued progress. Adyen is in a “fast growing space and our runway is significant.”

The declining take rate was explained by a number of factors including a rebound in airline volume (for which Adyen only provides gateway services) and tiered pricing which offers discounts to enterprise merchants as their volume increases. More positively, existing customers seem happy. Churn remains <1% and current merchants are providing 80% of the volume growth. This indicates how well Adyen has positioned itself as the go-to provider for many of the most successful digital businesses.

Adyen has divided its business into three segments – Digital, Unified Commerce and Platforms.

Adyen payment volume breakdown

Digital includes merchants trading purely online. Volume more than doubled from €102bn to €218bn. 

Unified Commerce includes merchants trading both POS and eCommerce. Volume was up from €22bn to €80bn of which POS now accounts for more than half. Adyen says it wins business because of its single platform which allows it to “translate the most complex consumer demands into seamless shopping journeys such as self-checkout, cashierless stores and buy-online-return-in-store.” New customers include Dior, All Saints and Uniqlo.

To help deliver a better customer experience, Adyen has taken the unusual step of commercialising its own design of payment terminals. Two were announced alongside the financial results – a PINpad which connects to smartphone or tablet and a more highly configurable Android terminal which can run ECR and payment software on same device. Hardware is a means to an end. The CFO explained the aim “is certainly not to increase profits on the terminal hardware side. It’s more on the innovation side and making sure that … by having full control that we could drive down the cost of the terminal.” Adyen is also one of small number of vendors working with Apple on launching SoftPOS in the US.

Platform includes marketplaces and ISV. Volume grew 53% to €48bn. Platform is Adyen’s strategy to address the high-margin SME market through partnerships although the volume is suspected by some commentators to be mainly coming from eBay – a customer Adyen won from Paypal. 

Adyen has developed a broader range of financial services to sell to SMBs through its platform relationships – business bank accounts, loans and card issuing – but these are “still in beta” and for the foreseeable future, it does not expect significant financial contributions.” The CFO explained “it’s going to take a couple of years to really see the revenues.

Net revenue was up 37% to €608m with strong performances from APAC and North America. Revenue growth of 30% in EMEA probably indicates Adyen is not gaining share as fast as previously. EMEA remains the largest market and accounts for 57% of total net revenues.

Adyen net revenue breakdown H2 2022

EBITDA was up 31% year-on-year to €356m but actually declined slightly from H2 21 to H1 22. Overall margins remain a very healthy 59%. Profits were hit by higher payroll costs as 395 staff were added, together with a sharp increase in travel as employees got back on the road to meet customers and each other. Adyen made a very clear commitment to F2F business life: “It’s clear that building trusted relationships and driving innovation moves faster when time is spent together. The speed and excitement that meeting each other in person brings has always been a crucial part of our success and our view on how to build the Adyen culture for the long term.”

Capex was €40m (up 160bps to 6.6% of net revenue) as a result of the geopolitical crises. “We invested in our data center infrastructure at a larger scale than we would have under different macroeconomic circumstances.”