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

Global Blue anticipates strong 2023 with imminent return of Chinese travellers

Global Blue anticipates a strong 2023, buoyed by its return to profitability and the projected return of Chinese travellers. The Swiss headquartered provider of Tax-Free Shopping and associated services reported total sales in store, equivalent to payment volume, of €5.8bn in Q4 2022, the company’s Q3. This was just 6% below 2019 levels. While tax-free volumes were impacted by the continued absence Chinese and Russian shoppers and the UK government’s decision to abolish tax-free shopping in 2020, volumes in Advanced Payment Products (mainly DCC) have returned to pre-pandemic levels.

Total group revenue more than doubled in Q4 to €86.7m compared to 2021, though it remained 21% below 2019 levels. The company has maintained strong cost control measures as its revenues recover, with operating expenses up 33% on the year but 22% lower than 2019.

Tax-Free Shopping is Global Blue’s largest business unit, with over 300,000 merchant stores offering its services. Continental European tax free volumes are trending ahead of 2019 with US and Gulf visitors spending particularly freely. Management is confident that volumes in Asia Pacific will soon exceed 2019 levels as mainland Chinese shoppers have already started reappear in Singapore and South Korea. Survey evidence suggests that many Chinese are eager to resume traveling in 2023 and spend some of the €2.1tn savings built up during Covid. However, air travel capacity is projected to be limited in 2023, reaching only 25% of 2019 levels by April and 75% by Christmas. This means a full recovery won’t happen until 2024.

Global Blue’s Advanced Payment Product division, mainly DCC, has fully recovered, recording €1.4bn in volume in Q4, 17% higher than in 2019. However, revenues were only 1% higher, indicating some issues with pricing pressure and/or the customer mix. 

The company’s newest division, Complementary Retail Solutions, is an investment portfolio of businesses that help merchants engage with shoppers. In 2022, Global Blue acquired ShipUp, a French business that helps retailers communicate with customers post-purchase, for €35m. ShipUp has an annualized revenue of €5.5m and losses of €4.8m. Global Blue also acquired a small stake in Reflaunt, a circular fashion commerce provider, for €2m. These acquisitions complement a minority investment made in Twig, a circular commerce finance provider earlier this year.

Global Blue’s strong balance sheet, following the €211m equity investment from Certares and Knighthead in June 2022, is expected to enable the company to pursue further acquisitions. 

Overall, group operating profit was €9,2m compared to a loss of €19,4m in the same quarter of 2021 and a profit of €11m in 2019. Adjusted EBITDA, the company’s preferred measure of profitability, was €24.1m with positive results from TFS and AVP. The new CRS division made an EBITDA loss of €2.2m on €6.1m sales.

US shoppers boost Global Blue but recovery has a long way to go

Global Blue, the tax-free shopping specialist, reported Q2 results showing that it continues to benefit from the rebound in international travel. Pent-up demand for luxury goods is driving revenues back towards pre-pandemic levels although there is much further to go. Critically, Chinese visitors are still missing but management is confident that they will spend big once they are free to travel once more.

Sales in store (the total value of transactions) was €5.2bn in the three months to September 2022 (Q2 22/23) – up 148% on the same period last year. Global Blue points to 19/20 as a more helpful reference point. Sales are now just 17% below pre-pandemic levels.

Total revenue was €81.9m, down 36% on 19/20. Margins have been under pressure from changing product mix as Tax Free now accounts for a smaller proportion of sales. Take rate was 1.58%, a little better than last year but well below the 2.04% recorded in 2019.

Global Blue reports three divisional results. 

Tax Free Shopping volumes were €3.5bn (down 36% on pre-pandemic) despite sales in Europe returning to 2019 levels once you exclude the affect of TFS abolition in the UK. Strong demand from American and Gulf visitors offset the continuing absence of Chinese and Russians. Sales in Asia Pacific remain well down but are recovering. Management says high spending customers returned first in both regions. 

Tax Free revenue was €62.5m, 43% below 2019. Behind the headline numbers, the tourism rebound is patchy. Portugal, Greece and France have been trading well ahead of 2019 levels but sales in Germany. Austria and Holland remain depressed. 

American visitors are taking advantage of the strong dollar and spending 2.5x normal levels in Europe. Sales to shoppers from the Gulf were up 2x and especially buoyant in Turkey which also saw a huge increase in sales to wealthy Russians who aren’t allowed to shop in Europe.

Nobody knows when China will relax its Covid restrictions and allow its citizens to travel once more. However, Global Blue cites survey evidence suggesting that 80% of previously regular travellers will take a trip within a year of being free to do so. And experience from Hong Kong and Taiwan, which have relaxed restrictions this year, backs this up. Sales to these nationalities is already back at 69% of pre-Covid levels. 

Added value payment solutions (AVPS) volume, which includes DCC and multi-currency, has recovered more quickly than TFS. Sales were €1.4bn, 17% ahead of 2019, but revenue was €15.3m, 11% behind 2019. Management blames shifting product mix – in particular a successful quarter for merchant acquiring in Austria – for the decline in margins.

The new Complementary Retail Tech Solutions (CRTS) division includes two businesses acquired in 2021 to give Global Blue a wider portfolio to sell to its luxury retail customers. Combined revenue from ZigZag, an eCommerce returns platform and Yoduda, an eReceipts platform was €4.1m, up 41% on last year.

Revenue growth at the group level is not yet hitting the bottom line. Operating expense more than doubled to €80m which narrowed operating profit from €7m to €2m. 

The company’s preferred measure of profitability is adjusted EBITDA which gives a happier result. This measure swung to a profit of €25.8m from a loss of €0.4m in Q2 last year. This was mainly due to sharply increased profitability from Tax Free Shopping. However, group adjusted EBITDA is still running almost 50% below pre-pandemic levels.

Financing costs grew €7.7m resulting in an overall pre-tax loss of €11.7m. Global Blue generates most sales in Euros but borrows in dollars which has led to FX losses.

Looking forward, management is optimistic about 2023. It claims to have cut 25% of operating costs during Covid which will spark significantly higher profits when business finally returns to normal levels. Global Blue also says it is well hedged against inflation – luxury goods brands can sustain price increases – and the looming European recession. Domestic slowdown won’t hit tourism, management claims. 

Global Blue – travel corridors reopen but business still far from normal

Few businesses were as badly hit by Covid than Global Blue. In normal times, the tax-free shopping specialist helps travellers get VAT refunds quickly and securely. But during the Covid lockdowns, customers stayed at home and revenue dropped an eye-popping 89% in its 2020/21 financial year. 

Global Blue furloughed staff, cut costs and took extra investment including an additional €211m in July this year from Certares Opportunities Fund, which now has a stake of 13%. Silverlake remains the dominant shareholder in the NYSE listed company.

Announcing its Q1 (April – June) 2022/23 results, management predicts business finally returning to normal over the next few quarters as the last restricted travel corridors open up.

Sales in store – the value of retail transactions to which Global Blue applies one of its services – bounced back strongly from €0.9bn in Q1 21/22 to €3.7bn in Q1 22/23 although sales remain well below the €5.7bn recorded in the same quarter of 2019. Tax Free Shopping volume was up €1.8bn to €2.8bn, Advanced Payment Solutions (AVPS) which is mainly dynamic currency conversion (DCC) grew £0.6bn to €1.1bn.

Total revenue bounced back by €39.4m to €56.1m in Q1 2022/23 but remains well below the €100.5m generated in 2019. The improved revenue performance has been at the expense of some margin erosion. Overall take rate fell from 1.9% to 1.5% with margins lower in Tax-Free but holding steady in AVPS. 

Complementary Retail Tech (CRTS) is a new division that includes two UK based acquisitions,  ZigZag Global, an e-commerce returns platform, and a majority stake in Yocuda, an e-receipts platform. Revenue from the two businesses was up from €2.8m to €4.0m on the back of higher eCommerce retail sales and a greater volume of returns. 

Global Blue kept tight control of total operating expense, down 8% from €62.7m to €62.6m.

Adjusted EBITDA, the company’s preferred measure of profitability, swung from a loss of €10.7m to a profit of €6.8m. This positive result remains below the €39.5m recorded in the 2019. The turnaround was strongest in the Tax-Free Shopping division with adjusted EBITDA growing €19.7m to €20.5m.

Overall operating losses were sharply reduced from €51.5m to €14.7m. In 2019, the business was at break-even. 

Global Blue says that it has enough resources to meet its needs for next 12 months but the business is cash hungry. It pays refunds to consumers before it receives that VAT from the merchants, typically in 30 days. The more volume it processes, the more working capital it needs. Despite the Certares investment, Global Blue warned that it will need additional cash to fund growth, “meet debt service requirements and interest payments under our indebtedness, fund general corporate uses… and expand our business through acquisition.

Management updated on the state of global travel. 61% of travel corridors (by 2019 revenue) are now open, 8% restricted in some way and 31% (China and Russia) effectively still closed. 

Chinese residents are still subject to onerous quarantine when returning home. This presents a major barrier to outbound travel. China accounted for 40% of tax-free spending in Europe before the pandemic but Global Blue is convinced the customers will soon return citing “strong pent-up demand.” More than 80% of Chinese who were travelling to Europe pre-Covid say they will be back within a year of borders reopening although there is no certainty when they might start flying to Europe. “We believe a recovery of Chinese travel to Europe may take a few more months and that it may be a slow recovery, spanning across a few quarters.” 

Russians would, no doubt, like to travel as before but have less money and fewer places that welcome their visits. Global Blue has sold its take in its Russian JV but retains an option to buy it back should the macro position improve. One final headwind is that the UK, a major inbound destination which accounted for 14% of Global Blue’s revenue pre-Covid, has bizarrely abolished tax-free shopping completely as part of the Government’s plans to “level up” the UK.

China and Russia aside, the strong recovery seen in Global Blue’s Q1 numbers has kept going into July and August.

High spending Americans (strong dollar) and Gulf (strong oil price) are visiting Europe again and making up for lost shopping time. Management says Tax-Free Shopping volume is now running at 71% of 2019 levels, up from 58% in Q1. Sales are particularly strong in continental Europe with like for likes almost back at 2019 levels. Indeed, Portugal, France and Switzerland are running well ahead of 2019.