Worldline reassured investors yesterday with its Q3 results and the stock, which has been under pressure for several years, jumped 18%.
The new management team is tidying up the business: disposing of non-core assets, simplifying the organisation (all go-to-market activities now report directly to the CEO) and, crucially, calming nerves around liquidity management. Analysts had been worried about the group’s cash-pooling structure and whether the holding company had access to liquidity trapped in subsidiaries.
Q3 revenue fell by 1% to €1.15 billion, but management could finally point to some stabilisation after several quarters of grim news. Merchant-service volume rose 7% to €145 billion – positive, if still below Visa and Mastercard’s 12–13% growth.
The sale of the Mobility division to Magellan remains on track, and Shift4 will acquire Worldline North America (the former Bambora USA business, originally Beanstream/IP Payments, acquired by Ingenico in 2017 and folded into Worldline in 2020) for €70 million.
Worldline USA is a gateway business generating around €60 million revenue from 140 000 merchants via 500 ISVs, delivering about €8 million EBITDA. Both sides will be happy: a price of roughly €500 per merchant is fair for a gateway business lacking a growth story but leaves plenty of upside for Shift4’s usual cross-sell playbook.
Elsewhere, Worldline’s Italian operations are gaining share through new bank partnerships; the Australian JV with ANZ Bank is back on track after price increases; while Germany remains more challenging. Bank partnerships there are performing, but third-party channels are lagging and in both Germany and the Benelux, SMB sales were hampered by a lack of Android terminals. That issue is now resolved, but it feels like an avoidable own-goal.
Overall, a quarter that finally gives investors reasons for cautious optimism.
Worldline’s half-year results disappointed investors as its core merchant services division once again underperformed the broader European market. Net revenue in the division fell 7%, while EBITDA dropped 19%, prompting a colossal €4.1 billion impairment, a remarkable figure considering Worldline’s current market cap is just under €1 billion.
The bad news kept coming. Worldline took an additional €142 million write-down on its minority stake in Ingenico, S&P has downgraded its bonds and the Financial Times raises questions about whether the parent company has ready access to cash held in subsidiaries.
The sales slump in merchant services is blamed on a tough SMB environment, particularly in Germany and the Benelux, where Worldline is struggling against the “Tap Pack” of SumUp, Viva.com, myPOS, Flatpay as well as ISV’s offering payments bundled with their retail or restaurant software.
Still, there are some glimmers of hope. External auditors brought in following the “Dirty Payments” scandal reported no further issues. Worldline has successfully offloaded its mobility and e-ticketing unit for €410m, and there are signs of life in markets like Australia, Italy, and Greece. The company also reports solid progress in platform consolidation and has re-entered the UK acquiring market. Worldline’s new management team remains upbeat, targeting a return to growth in 2026, though that promise may sound familiar.
Adyen’s H1 results were quite a contrast. Worldwide revenues grew 20% while EBITDA margins remained above 50%. Very few companies can boast such strong financial results but the stock price fell 18% as the Amsterdam-based acquirer reduced H2 guidance citing the impact of Trump’s tariffs on its Asia-Pacific clients selling goods to the USA. This is thought relate to Shein and Temu suffering from the imposition of customs duties on small packages.S
Despite years of effort and tens of millions of dollars in incentive payments to PSP’s, Discover’s global acceptance network had made little progress in attracting volume. Capital One, Discover’s new owner, is now looking to create a rival to American Express. The CEO said “there are only 2 banks in the world with their own network, and we are one of them. We are moving to capitalize on this rare and valuable opportunity. We need to achieve greater international acceptance and then build a global network brand.”
Dojo has established itself as arguably the UK’s leading SME payments provider but 2024/25 results show growth is slowing – revenue up just 11% and merchant numbers flat. Successful launches in Italy and Spain are critical to the future of the group because, despite a new $190m equity injection, Dojo must run fast to escape the interest payments on its £649 million debt mountain. Read more on the Business of Payments blog.
Today’s CEO normally boasts about using AI to cut staff numbers but FlatPay, the fast growing Danish-HQ’d PF, is delighted to have reached 1000 employees. The hiring spree is linked to new market entry into France and Italy where it is signing 2,400 merchants a month and expects to capture 3% share within 12 months.
The German Sparkasse are some of the few incumbent banks making a success of payments today. Revenue at S-Payment – which provides merchant services to the 353 member banks – was up 17% in 2024, the terminal estate grew 5% and girocard transactions increased 12% – well ahead of the market. Read more on the Business of Payments blog.
Secupay is another German payment business producing good numbers. Based in Dresden, Secupay is the country’s largest remaining independent PSP and processes c.€2bn annually from over 300,000 merchants. 2024 sales almost doubled to €19m. Secupay has recently secured full scheme membership and has built an acquiring capability using Silverflow software.
Global Payments stock price improved after management reassured investors on the near-term outlook which included Q2 results showing European revenues up 6%, flattered by the weaker dollar.
Global is performing best in central Europe. NBG Pay, the joint-venture with National Bank of Greece inherited from the acquisition of EVO Payments, processed €14bn of in 2024, grew net revenues 25% to €40m and reported a maiden operating profit. Global has entered Croatia with the acquisition of the acquiring unit of Erste Card Club,through its existing Vienna-based JV with Erste Bank.
Although Global has reported positive progress with regulatory matters in the US relating to the acquisition of Worldpay, it’s not commented on the situation in the UK where the combined business will probably have a >40% share of the acquiring market. Competition authorities in London have not yet decided whether to mount a full investigation.
In a busy month for payments-related fundraising, here are some highlights:
Bumper, based in Sheffield in the UK, secured an additional £8m from the venture arms of Jaguar Land Rover, Suzuki, Porsche and others to expand its car repair software and payments platform to new European markets including Germany, Ireland, Netherlands and Spain. Bumper bought Cocoon Payments, an open banking specialist earlier this year.
Appcharge, a Tel Aviv based merchant-of-record specialising in helping mobile games publishers take money directly from consumers (avoiding app store charges) has raised $58m, bringing total financing to $89m. Appcharge claims $500m annual payment volume and growing quickly.
Reckon.ai, from Porto, has raised a further €5.1m (total of €8.5m) to grow its business selling autonomous smart cabinets – best thought of as walk-in vending machines where shoppers pay via an app or by tapping a payment card before entering.
Handwave, based in Latvia has raised $4.2m for its biometric payment products – hardware and software. You first must link your card credential to your palm print and then you can pay by putting your hand on a special reader. Palm payments make sense for saunas and swimming pools but, otherwise may be a solution looking for a problem.
Papercut, based in Sofia and led by ex-SumUp execs, has raised €2m for its BNPL aggregation service for SMEs. Embed is providing the payment infrastructure and money movement.
Turning to corporate activity, Payroc, a highly acquisitive US acquirer/processor, has bought Bluesnap, an online PSP and payment gateway based in Dublin and Boston. Payroc processes $115bn from 190,000 merchants and the deal gives it significant reach into Europe for the first time.
PayRetailers, a Barcelona-based PSP specialising in cross-border sales into Latin America, has acquired Celeris, an Amsterdam-based payment orchestrator. The deal should help PayRetailers improve authorisation rates.
Finally, Nexi has retained its partnership deal with Crédit Agricole in Italy, despite the bank’s French parent having bought a 7% stake in Worldline in 2024. This will come as a relief to Nexi’s management as it has been under pressure from Worldline for bank partnership in Italy. The Crédit Agricole deals covers processing for 100,000 POS terminals and 3m payment cards.
Scheming
Q2 2025 was another storming quarter for the schemes in Europe. Combined Visa and Mastercard payment volume rose 18% although the headline figure was flattered by the weak dollar. But 12% in Euro terms is still very impressive and reflects 10% growth in transactions and 2% uplift in ATV.
Mastercard and Visa have been neck and neck for a while but in Q2 Mastercard processed (marginally) more volume in Europe than Visa for the first time. This will be cause for a small celebration in Waterloo although Visa still managed a slightly higher number of transactions.
Cross‑border volumes remain robust for both networks; despite Adyen’s issues, neither reports geopolitics hurting demand with Visa’s CEO saying: “We see no meaningful impact from tariffs.”
Europe’s reliance on Visa/Mastercard – 13 of 20 eurozone countries use them for most POS payments – is spurring work on the digital euro (see below) and the European Payment Initiative’s wero wallet.
In Germany, the savings banks, which have integrated wero into the Sparkasse app, now claim 1m active users. For now, wero only works for P2P payments but eCommerce is coming later this year and merchants will certainly like the pricing. S-Payment is proposing 0.77% + gateway charges: rather cheaper than cards or PayPal. And, unlike open banking payments, wero comes with a payment guarantee.
Wero is also live in France although pitched as something rather cooler and cosmopolitan.
Turning to domestic schemes: Poland’s Blik, which has Mastercard as a key shareholder, posted standout 2024 results with revenue up 93% to €98m (~€0.06/tx) and profit at €48m.
Growth continued in H1 2025: total transactions were up 24% including almost €2bn of POS volume, managed through a virtual Mastercard which also allows Poles to use Blik at terminals abroad. Feel the chemistry as Mme Curie buys supplies in Paris.
Customers of Caixa Bank, BBVA and Santander can use Bizum, the fast-growing Spanish mobile payment wallet at POS for the first time. In contrast to Blik, the Bizum user experience is clunky – shoppers need to type their phone number into terminal to be sent a payment link.
Brazil’s Pix mobile wallet has attracted global attention for its stratospheric growth but seems to be taking share from cash, not cards. Since Pix launched in 2020, card transactions have been growing faster than ever – an annual growth rate of 20% compared to 14% in the previous years. Despite this, Donald Trump has launched an investigation into Brazil’s unfair trade practices including Pix which he says discriminates against Visa and Mastercard. Brazil’s President responded: “PIX is Brazil’s. We will not accept attacks on PIX, which is the patrimony of our people.”
ISV
The shift in payments distribution from banks to software vendors (ISVs) is one the biggest disruptions in the industry and is delivering big numbers to processors that have invested in building the right relationships.
Shopify, which provides websites for over 5m merchants worldwide, has aggressively shifted volume from 3rd party gateways (chosen by the merchant) to its in-house product – Shopify Payments. Processed via Stripe, Shopify Payments’ volume was up 38% in Q2 to $41bn and accounts for two-thirds of all sales made by Shopify merchants.
Stripe tends to be the partner of choice for eCommerce ISVs but Adyen’s platforms business is the go-to acquirer for vendors serving online and store-based channels. Latest results show Adyen’s payment volume from platforms up 80% to €27bn in H1 2025 from 255,000 terminals. 31 of its partners now process over €1bn each annually.
Adyen’s deployment capability in multiple countries and across channels is very attractive to retail software specialists that need a single solution for their multi-national clients. Sitoo from Sweden is a great example. From Sitoo’s perspective the key USP of partnering with Adyen is an increase in first-time help desk resolutions and reduction in time taken to troubleshoot faults.
Other payment processors want a piece of the action. Worldpay is finally taking the European ISV market seriously with some strong marketing support for the launch of Worldpay for Platforms. The proposition is based on the acquisition of Payrix in 2022
Electronic Payments, has bought Handpoint the Iceland-based mPOS vendor. Handpoint, which claims 100 ISV partners, processes $2bn annually from 18,000 devices in Europe and the USA. Electronic Payments is known for giving generous commercial terms to its partners (URL = www.residuals.com) and could be a disruptive new entrant to many European markets.
New shopping
Agentic commerce has potential to transform online shopping; replacing the established online commerce journey which begins with a Google search and ends at a finely honed checkout page with a chat-based conversation between you and an agent that has delegated authority to spend money with your payment card.
Instead, Shopify has given each of its 5m merchants a “chatbot accessible storefront API”and launched Shopify Catalog which aggregates products across all Shopify merchants to enable AI agents to search, recommend and (in the near future) transact. Shopify claims 12.3% conversion on AI-assisted shopping compared to 3.1% the old-fashioned way.
The payment industry has begun to launch product. Worldpay has introduced a Know Your Agent (KYA) framework to help merchants determine whether an agent is good (working for a genuine shopper with funds to complete the purchase) or bad (working for a scammer). Trulioo, the global ID vendor, is behind the product and has a helpful white paper here.
Open banking
Industry commentators have focused on the positive aspects of the UK’s National Payment Vision, notably a commitment to form a new delivery company, create a payment guarantee and find a commercial model that rewards all market participants. These all may take some time. Meanwhile, investors worry whether the open banking industry – suffering from low volumes and lower margins – can remain solvent long enough to see the fruits of these endeavours.
One example is Ordo, a high profile open banking startup which featured in last year’s Fintech 40. Ordo was bought by Neonomics of Norway in 2023 but the new owners have given up on UK open banking and Ordo has ceased trading. Writing on LinkedIn, Neonomics CEO said VRP (the open banking equivalent to direct debit) had been too slow to arrive resulting in a UK market size of just c.30m transactions/month. This is not enough to sustain an industry.
Thanks to partnerships with FIS and Visa, and backed by blue-chip investors including NAB, Citi and Rapyd, Banked – another high profile open banking start-up – will be well positioned if/when A2A merchant payments become mainstream. Meanwhile, 2024 accounts show that Banked generated just £700K revenue and will likely need yet more capital to supplement the £55m already raised.
On the positive side, it’s increasingly common to see open banking offered at checkout. Ryanair, working with TrueLayer, has started putting “pay by bank” first on its payment page as you can see below.
Open banking’s current lack of consumer protection will aways be an issue in travel payments. Meagan Johnson gives an example of an A2A transaction for which neither Air France, Trustly or Monzo will take responsibility. Next time, she says she will use a card.
It’s clear that open banking needs “scheme rules” that give clear guidelines for managing disputes. Following two recent product launches, it’s increasingly likely these will be card scheme rules. Following the announcement of Visa Protect earlier this year, Mastercard has followed suit with A2A Protect. Early adopters include NatWest, Santander and Monzo in the UK.
Crypto corner
Plans for the digital euro are accelerating. Regulators already worried about European over-dependence on American payment schemes are now equally concerned about a possible tsunami of dollar denominated stablecoins arriving from the USA.
However, Central Bank Digital Currencies, like the digital euro, are a very different proposition to commercial stablecoins. CBDC’s are designed as cash-substitutes that bring direct benefits to citizens rather than as infrastructure-level plumbing to facilitate international trade. The European Central Bank hopes to have a political deal on the digital euro by early next year.
The commercial banks aren’t happy and paid PwC to write a study that put the cost of digital euro adoption at €30bn if the digital euro sucks deposits out of current accounts leading to banks making fewer loans.
There are still few signs of crypto (stable or unstable) being used for retail payments. Undeterred, SpacePay, based in London, is raising $1.1m from the sale of its $SPY tokens, to promote crypto currency acceptance on its Android payment terminals. SpacePay says it charges just 0.5% and settles in fiat currency.
Coinbase, a platform that allows people to buy/sell crypto, is running adverts in the UK suggesting that investing gambling in crypto is the solution to inflation, stagnating wages, crumbling infrastructure and a withering welfare system. This won’t end well.
In other news
Numia won the merchant acquiring business of Banco BPM from Nexi last year. One of the first deliverables is “100 kiosks in 100 churches” allowing the faithful to make contactless donations.
Netherlands Railways has blocked virtual cards issued by Revolut, Paysafe and Vividfollowing discovery of a loophole that allowed passengers to travel for free. People would create a virtual card, take a trip, and then delete the card before the overnight settlement run.
Pedro Carvalho, sales director at Primer, which supplies payment infrastructure to large merchants, has spent the summer posting checkout crimes on LinkedIn. Here’s my favourite – the merchant asking shoppers to choose the processor. Why?
Shopify’s head of engineering gives advice on how to use AI. He says get your lawyers to default to “yes” and don’t skimp on letting your staff subscribe to the best tools. “If your engineers are spending $1,000 per month more because of LLMs and they are 10% more productive, that’s too cheap. Anyone would kill for a 10% increase in productivity for only $1,000 per month.”
Sam Altman says AI will kill KYC as we know it. Risk systems need to be “always on” to cope with the growing wave of deepfakes, spoofing and voice-cloning, he says.
How does a Shift4 logo get on an Adyen terminal? An Adyen exec responds: “What you’re seeing is an odd choice of background image, which is fully customizable on any of our terminals.”
Photo credit: James Lloyd
Where to find me
I’ll be at the Checkout.com’s conference in Venice 7-9 October, at the ESPM meeting in London on 23 October, at the ePay Summit in London on 28 October and MPE in Berlin next March.
Worldline’s management responded to last month’s fraud allegations concerning its German business by commissioning two independent reviews. One will assess the remaining high-risk portfolio “to confirm its clean-up,” while the other, led by Oliver Wyman, will deliver a “comprehensive assessment” of Worldline’s compliance and risk framework. Initial findings are expected within weeks.
Despite a plunging share price and market cap now under €1bn, analysts aren’t calling Worldline a buy. The bonds are trading at less than 90 cents to the dollar. Rebuilding investor trust will require time, stable results and no more nasty surprises.
GTCR might want to hold off booking that profit just yet.
JP Morgan paid $800m for 48.5% of Greek fintech Viva Wallet in 2022 and announced a 50-person “payments innovation lab” in Athens. But the deal quickly soured and is now tied up in litigation in both Athens and London. In the latest twist, both sides are claiming victory. Despite the uncertainty, Viva seems to be doing well in the marketplace and has started calling itself the First Fintech Bank in Europe.
Figure 1 Photo credit Viva.com
Viva is part of a fast-growing group of well-funded, POS-focused European payment start-ups including SumUp, Flatpay, myPOS World and Dojo – some acquirers, some payment facilitators (PF). Let’s call them the Tap Pack.
SumUp, the Anglo-German PF that reported €1bn revenue and a maiden operating profit in 2024, has postponed its IPO to 2026. Valued at €8bn in its last funding round, analysts doubt that figure will hold in today’s market.
SumUp has also agreed, at long last to support Girocard payments. The move responds to two issues: Mastercard’s phase out of Maestro, and the German savings banks’ launch of S-Cube, a SumUp rival with Girocard bundled in.
Flatpay says it will sign 5,000 new merchants this month, boosted by its French expansion which claims 40 staff and 1,000 merchants already. Pricing is very keen – a free PAX A920 and all transactions at just 1.29%. The Danish PF is entering the UK next with the radical innovation of recruiting an in-house sales team in place of the usual network of self-employed agents.
The Tap Pack have been gaining ground at the expense of incumbents like Worldline and Barclaycard. But they now face pressure from a new wave of capital-light, unregulated startups offering a slick user experience on Adyen’s rails. Examples include Yetipay, Kody, and MyPOS Connect (not to be confused with MyPOS World).
London-based Yetipay just raised £3.5m in debt and equity for its hospitality payments platform. It claims to process £500m annually and generate £5m in revenue. The Adyen integration has enabled fast expansion into Spain and Italy. Here’s a photo of founder Oliver Pugh with what the press release questionably describes as a pink yeti.
Turning to SoftPOS, Rubean, listed on the Munich Stock Exchange, is finally seeing real growth. First-half 2025 revenues jumped to €2.54m, up from €0.84m a year earlier. Analysts expect full-year sales to double, and the stock has surged 35% to an all-time high of €8.75.
Rubean’s key selling points include Girocard support and integration with Redsys in Spain. Deichmann, the German shoe retailer, uses Rubean’s technology on Zebra handhelds into payment terminals. It’s a great example how SoftPOS can be transformational for enterprise retail.
In fundraising news:
Modern World Business Solutions (UK) raised £9m to scale from 60 to 200 staff. MWBS offers a white-label ISO-as-a-service platform and a comparison tool for SMEs seeking better payment deals.
Ontik, a London-based startup automating cash collection for the building trades, raised $3.7m. Payments are processed via Stripe or Yapily for open banking.
Paddle, the merchant-of-record platform for SaaS vendors, shrugged off a recent $5m US regulatory fine with a $25m debt raise. Its 2023 accounts showed a £46m operating loss on £57m revenue.Germany’s savings banks remain rare incumbent winners. S-Payment, their merchant services arm, grew revenue 13% to €292m in 2024, with mobile payments (Apple/Google Pay at POS) especially strong. Girocard transactions rose 12%, double the national average. And no red flags were raised in PayOne, the group’s JV with Worldline—which will reassure its beleaguered shareholders.
Scheming
Visa and Mastercard are facing mounting legal pressure in Europe. In a landmark UK ruling, a court found that commercial and inter-regional interchange fees breach competition law. Crucially, the court ruled interchange is anti-competitive “by object” – a first which could trigger a wave of merchant damages claims. Both networks plan to appeal.
Visa and Mastercard justify their fees by highlighting innovations such as tokenisation, now covering nearly half of Mastercard’s European transactions and Click to Pay, their long-delayed answer to PayPal. This is finally getting some serious marketing dollars although these don’t seem to have reached Poland.
With European payment sovereignty high on the political agenda, much depends on wero, the wallet backed by the European Payments Initiative (EPI). According to Finanz-Szene, EPI has raised an impressive €450m from shareholders including Worldline and Nexi. To succeed wero needs wide distribution through mobile banking apps and broad acceptance from merchants.
The distribution side is going well with five new Belgian banks added and Austria reportedly in talks. Wero claims 42 million users across Belgium, France, and Germany and processed €5bn in P2P volume in its first three months. eCommerce support is due this year, with in-store payments in 2026.
Wero hopes to link with Europe’s domestic mobile wallets, including Blik (Poland), Bancomat (Italy), Bizum (Spain), Vipps (Norway), IRIS (Greece), and MB Way (Portugal). Greece’s IRIS is likely to gain momentum thanks to a new law mandating acceptance both online and in-store.
The convergence of software and payments, pioneered in the USA, is now accelerating across Europe. A new report from Flagship Consulting highlights the extent to which PSPs are acquiring European software firms to gain distribution in key verticals like restaurants and retail. Let me know if you spot any they’ve missed.
American software vendors realised years ago they could double their margins by integrating payments. As Jim Roddy from the Retail Solution Providers Association puts it: “ISVs are the new ISOs.“I visited an RSPA member once, and the CEO didn’t show me new software. He shut the door, plugged in a TV, and pulled up a spreadsheet showing how much he made monthly from payments. The numbers were huge.”
Not all customers are thrilled. American restaurateurs are increasingly frustrated at being locked into inflexible, expensive payment setups bundled with their POS software. While competition authorities haven’t stepped in yet, scrutiny may not be far off, especially if merchants are barred from choosing their processor.
Acquirers hoping to partner with ISVs need to fully embed their offer within the software vendor’s customer proposition. That means API-based onboarding, access to management info, smooth customer service, transparent pricing, and generous commissions for the software partner.
Where does it go wrong? A Dutch restaurant shared on LinkedIn its experience of switching from Worldline to Viva. Integrating Viva’s terminals with its Odoo ECR software took less than two minutes. Worldline supports Odoo too but only via a special IoT box costing €35/month. The restaurant chose Viva despite higher transaction fees, citing better support and a simpler setup.
ChatGPT’s prototype shopping agent is slow and error-prone today, but it’s easy to see how it could soon become ubiquitous and render traditional eCommerce websites obsolete. If the AI already knows your shipping and payment info, what’s the point of a checkout page? Simon Taylor explores the implications. Startups like Ogment are already offering tools for merchants to adopt.
Shopify, the world’s leading eCommerce platform, is pushing back, posting a robots.txt file that directs agent developers to its official checkout SDK. Amazon is doing the same. As this LinkedIn discussion shows, Shopify’s move may upset tech purists but will please merchants already overwhelmed by bot traffic.
It’s still early days, and AI can’t yet be trusted. In one test, an AI managing an office vending machine lost money by over-discounting snacks and inexplicably stocking unsellable metal cubes.
Despite Amazon’s recent U-turn, checkout-free tech is gaining traction in high-traffic locations like stadiums. In Europe, we’re seeing rollouts in small grocery formats. Coca-Cola HBC plans 15 checkout-free stores in Hungary using low-cost Chinese AI from Cloudpick, integrated by Kende Retail and with payments by myPOS. This price is said to be just €40,000 for each shop.
Old fashioned vending is also rising as a payments channel. This 72-lane Boxbar drink dispenser in Manchester uses Adyen, Global Payments, and Viva for processing.
Having failed to commercialise virtual reality, Meta is now focusing on augmented reality via glasses and recently acquired a 3% stake in EssilorLuxottica, makers of Ray-Ban. It looks less ridiculous than a VR headset and you can imagine the power of AI seeing what you’re seeing and whispering helpful advice in your ear. Or maybe not. Matt Jones explains what it means for payments.
In Hong Kong, Alipay has launched smart glasses that let users pay by looking at a QR code and speaking the amount out loud. Rokid powers the app. Meizu has a similar product, with a dash of dystopia. People using these glasses don’t make eye contact and it’s very disconcerting as you can see from the video.
Product
Here’s a novel but quite risky idea. Better, based in Tel Aviv, is offering to step in to honour transactions where the card is declined due to insufficient funds. This start-up will “save the sale” by settling the merchant (less 10-15% commission) and waiting until after pay-day to put the transaction through. Better says it has already run a proof of concept with PayU. Similar products are available including Bounce.
Many subscription payment providers are struggling to keep up with the move by software vendors away from per seat or tiered pricing to models focused on how much data you crunch. Stripe reports that this “usage-based” billing is up 145% year to date.
Payments and loyalty
Rewe, the German supermarket giant with 3,800 stores, has launched Rewe Pay, a QR code wallet built by its in-house processor, Paymenttools. Setup is a bit clunky: shoppers register their Girocard, then complete a SEPA direct debit mandate via the app and sign their name on an in-store tablet. After that, payments are easy, made by scanning a QR code at checkout.
Commentators see Rewe Pay as a response to rising processing costs, especially as shoppers increasingly use Apple Pay linked to Visa and Mastercard, but the automatic incorporation of Rewe Bonus points on all purchases is equally interesting.
In a controlled, single-merchant environment like Rewe, the model should work. But I’ve long been sceptical of open-loop, card-linked loyalty. That idea has been around for years but has stumbled on technical barriers, unreliable merchant category code (MCC) data, and the difficulty of building profitable loyalty economics. Plus, card-linking offers benefits after the transaction, not before, making it hard for merchants to recognise high-value customers at the point of sale.
Paylead, based in Bordeaux, takes a bank-centric model, linking consumer ccounts to retail deals at the largest merchants such as Auchan and Decathlon. Paylead raised $6m in 2020. And Loyyo (Netherlands) replaces stamp cards with payment-linked rewards, is available via Adyen and CCV also recently secured new funding.
Fraud update
Chargebacks continue to rise. Ethoca projects global dispute volumes will hit 324 million by 2028, driven mainly by post-sale issues like slow refunds, unclear billing, and delivery friction, rather than outright fraud. The real pain is operational which has pushed merchants to look beyond traditional fraud tools. Visa’s Rapid Dispute Resolution (RDR) is gaining traction and is claimed to cut chargebacks by 20–30% for participating merchants.
So much for the carrot, here’s the stick. Visa’s updated Acquirer Monitoring Program(VAMP) is raising the stakes. Acquirers now face stricter thresholds, tighter enforcement, and the risk of fines, or even losing their membership if chargeback rates across their merchant portfolios climb too high. TrustPay (not to be confused with Trust Payments) has a solid explainer on the changes.
VAMP and Mastercard’s counterpart, the Excessive Fraud Merchant (EFM) programme, put pressure on acquirers and PSPs to take a more proactive role in policing their portfolios. In recent weeks, both Worldline and Paddle have shown the consequences of inattention. But for merchants, the message is equally clear: chargebacks are no longer just a cost of doing business, they’re a serious reputational and commercial risk that could jeopardise access to processing altogether
Car Commerce
The global auto industry is scrambling for new revenue and wants to pivot to a service-led model where drivers pay for parking, charging, or fuel directly through the vehicle’s OS. Naturally, the car brands want a cut. That’s why many are now resisting Apple’s “CarPlay Ultra”, which sidelines in-car payment systems. The problem? Motorists prefer to dock their phones and control everything from there. Top Gear takes a detailed look in this video.
Under pressure from government, the UK industry has agreed to roll out a National Parking Platformwhich allows any participating app to work across all publicly owned car parks. It’s already live at 476 locations, handling 550,000 transactions a month. There’s not that much money in parking payments. I calculate the three leaders in the UK market – Ringo, JustPark and Paybyphone – generate annual sales of c.£60m between them.
Open banking
UK open banking payments have stalled, with volumes flat at around 28 million transactions per month since early 2025. This reinforces the urgent need for a proper open banking scheme—with an acceptance mark, rulebook, consumer protection, and a business model that gives banks a reason to maintain high-quality APIs.
TrueLayer underscored the slow pace of adoption across Europe with new figures from France and Germany Despite claiming a 60% market share in France, it processes just €2bn annually; in Germany, it holds 30% with €1.4bn in volume. Nobody is getting rich soon. A new Stripe partnership may help, but patchy bank APIs continue to limit growth.
Meanwhile, Trustly appears to be the only open banking player making real money. In 2024, volumes rose 54% to $85bn, and net revenue grew 32% to $239m. “Adjusted”EBITDA was up 50% to $73m. Business remains strong in North America and Europe, where Trustly retained its UK Government tax contract. Note: these results come from a press release, not audited accounts.
Trustly’s profit engine is widely believed to be US gaming, so others are following. London-based Yaspa, which offers open banking payments with integrated KYC, has raised $12m to target US iGaming, through a new office in Atlanta.
In a completely different vertical, Bumper, a UK car finance company, has acquired Cocoon, an open banking payment vendor which says its product is used by 20% of car dealers.
Stable coins
There’s been an explosion of commentary on stablecoins following the approval of Trump’s Genius Act, which for the first time sets out a regulatory framework. Jason Mikula has the details. Genius has triggered a rush among banks, fintechs and retailers to launch their own digital dollars which will be backed 1:1 by US Treasuries, although, unlike dollars in a bank account, there is no deposit insurance.
Why would businesses want in? For one, they keep the interest on Treasury bonds. And for retailers, stablecoin wallets could cut card fees if shoppers preload value. But it’s unclear why everyday users, especially in European democracies with easy access to banking services, would hold a private currency with no consumer protection. “Unless you’re a criminal, there’s no use case,” says Ryan Cummings, former White House advisor.
Business of Payments readers likely have two questions:
When will stablecoins be used for retail payments?
As for profitability: probably not. If stablecoins are fungible, meaning a “Walmart dollar” is interchangeable with a “JPMorgan dollar” then margins may collapse to 10bps, in line with money market funds. Coinbase is already offering 4.1% on USDC, and as Andrew Dresdner notes, that leaves little room for profit.
In other news
The latest UK government payments strategy includes the formation of several new committees: a Payments Vision Delivery Committee, a Vision Engagement Group, and a Retail Payments Infrastructure Board. Undoubtedly good news for those who make a living sitting on industry panels.
In Denmark, NETS went down on Saturday 19 July, leaving Danes unable to use ATMs or POS terminals at home and abroad across Dankort, Visa, and Mastercard. One group of Danes stranded in Cyprus wrote: “Our plan for now is to try a live performance that includes both singing and dancing, but we are crossing our fingers that the problem is resolved before they refuse to serve us any more beers.”
Figure 2: Danes struggling to come to terms with the NETS outage
Worldline disappointed investors as it blamed macro-factors for slow growth in H1 2024 and shared a downbeat assessment of the outlook for the rest of the year. Giles Grabinet, CEO, called out a “volatile consumer spending environment that exhibited a visible softening across many European countries in the second quarter.”
Revenue grew just 2% to €2.289bn with all three divisions – merchant services, financial services and mobile/ticketing struggling to grow sales faster than inflation.
Merchant solutions is the largest division and also the one that interests us most at Business of Payments.
Merchant volume was up 5% at €230bn in H1 2024 but all the growth came in the first quarter. Q2 volume was flat at €120bn with management blaming the wet spring and a “particularly weak June.”
Merchant revenue was up just 3% to €1.6581bn with the take rate dropping 1bp to 0.72%. Growth was constrained by “softer macroeconomic conditions” despite a resilient performance in Italy and the travel/gaming verticals.
Sales were also hit by the loss of €130m annual revenue from the termination of a set of high-risk merchants. €40m of this reduction was from Germany and followed BAFIN’s intervention at PayOne, Worldline’s troubled JV with the local savings banks. Worldline’s share of PayOne’s losses was €88.4m in 2023 although it did receive a dividend of €18.4m.
Worldline’s growth problem is reflecting in its merchant metrics which show it failing to profit from the shift in commerce to online sales. The total number of merchants rose 3% to 1.22m of which the vast majority (85%) are still trading F2F. Annualised payment volume per merchant rose just 2% to €377K, revenue per merchant was flat at €2,718 and adjusted EBITDA per merchant fell 6% to €633.
Management promises that new products and distribution partnerships will restore the business to growth. The most important initiative is the Credit Agricole JV which Wordline confirmed will go live in the first half of 2025. The new business, called Cawl (for Credit Agricole Worldline) will allow Worldline access to the acquiring market in France for the first time.
Cawl will be competing with a newly announced JV between two other French banks, BPCE and BNP, which also has grand ambitions. Giles Grapinet is unphased, saying that although these two banks bring “extremely powerful distribution” this newly created partnership will use in-house systems and will struggle without an external technology partner.
Worldline’s expansion into Italy, in partnership with local banks is going well and growing in the“very strong double digits.” The latest deal, Worldline’s fifth, is with CCB bank, and brings an additional 60.000 (very small) merchants processing €6bn in total. Migration begins in the second half.
Management made no update on progress at Worldline’s very expensive JV with ANZ Bank. In 2022, Worldline paid €307m for its 51% of the business which processes 20% of transaction volume in Australia. Worldline’s share of the JV’s losses was €39m in 2023 and it had to invest a further €20.4m in H1 2024.
Away from bank partnerships, Wordline had good news to share with other new products and commercial deals including:
Worldline’s combined payment solution for marketplaces and platforms with OPP, a Dutch eCommerce gateway acquired in 2022, is now live with 165 partners.
Worldline says there are likely to be 2.5m public EV charging points in Europe by 2030. With more than 20 EV charging operators representing more than 25% of the market, Wordline says it is well placed to capture the promised growth. Two new EV partners were signed in H1 – Ampeco and EnerCharge.
Other new merchants included Luxair, (acquiring and APMs), IWG (payment orchestration and collecting), North Consulting (vending linked to local acquirers in the Nordics) and Cdiscount (online smart routing).
Worldline’s brief outage in the UK during July had limited impact. Marc-Henri Desportes, deputy CEO, said “We handled it very professionally, keeping a very good engagement with our customers. Impact is limited and outages, unfortunately, in our industry, it happens from time to time even to the biggest ones in the tech industry.”
Management called out cost pressures from the steady migration of domestic cards to international schemes, notably in Italy, but said it was standardising on IC++ to mitigate the risk. Worldline has been a strong supporter of the EPI and Giles Grapinet reiterated the need for strong European payment schemes. “It’s part of our playbook ..to make sure that there is diversity at point of sale and that there is never one monopoly route that is going to impose its condition on the entire ecosystem.”
Merchant solutions adjusted EBITDA fell 3% to €386m in H1 as margins dropped 2bps to 23%.
Turning to Worldline’s two smaller divisions, financial services revenue was down 2% to €457m and adjusted EBITDA down 1% to €126m. Issuer and acquirer processing performed well, especially in Germany. New wins included Sonet and MarketPay for Italy, but the topline was hit by the earlier loss of some large contracts.
Mobility revenue was up 2% at €174m and adjusted EBITDA up 36% at €30m. Worldline renewed to large contracts that include ticketing and payments – one in the event sector, the other with an energy company.
Group adjusted EBITDA (formerly known by a French acronym as OMDA) fell 1% to €514m.
After integration and rationalisation costs (€58m) and Power24 (€174m), unadjusted EBITDA fell 34% to €282m.
The Power24 programme will see hundreds of staff exit the business in the second half of this year. The new operating model is live from August and the exercise is expected to save €220m annual costs, 10% higher than originally expected. 29% of staff are now located in “low cost” countries, mainly India, Poland and Romania and this proportion should rise to 33% in 2025.
After deducting depreciation and amortisation, Worldline recorded an operating loss of €16m following a profit of €120m in the same period last year.
Looking ahead, management says growth is constrained by “European domestic consumption uncertainties” and is targeting a very modest 2-3% organic revenue increase. Investors were unimpressed and the stock trades at around €8 compared to a peak of €80 in 2021. Despite the negative market reaction, Grabinet believes that “Worldline will quickly start to benefit from a strengthened competitiveness and operational leverage that will drive solid medium- term performance.”
It’s obvious why Klarna is selling. KCO competed with key distribution partners such as Stripe and Adyen and the very generous sale proceeds will bolster Klarna’s balance sheet and help grow its lending business.
But it’s less clear how KCO’s new owners will make a return on their investment. Stand-alone gateways have been under considerable pricing pressure in recent years, and many have ended up vertically integrated into the larger merchant acquirers.
In banking news, BNP Paribas and BPCE, which together handle c.30% of card payments in France, will invest €100m each and pool their payment capabilities to create a joint-venture with the scale to compete with Worldline and Nexi. Technology will be “home grown” and most likely a continuation of Partecis, an in-house platform based on ACI products. While there’s plenty of scope for synergy in France, the JV will find its hoped for international expansion rather more challenging as PagoNxt, Santander’s payment unit, demonstrated when it recently closed its German operations.
IDC, a London-based research firm, has published vendor evaluations for online and omni-channel retail payments. The full reports cost $20,000 each but the top ranked firms have helpfully made their sections available free of charge. Stripe comes top for online payments although is marked down for being expensive. Adyen is first for omni-channel but customers are warned that its all-in-one solution may lack flexibility.
Viva Wallet’s lawsuit with JP Morgan ended in a London courtroom with both sides claiming victory. JPM paid an eye-popping $800m for 48.5% of Viva in 2022, primarily to gain access to SME customer onboarding tools for European markets. Haris Karonis, Viva’s founder, claimed that JPM then deliberately blocked his company’s launch in the US so that the giant American bank could buy the rest of Viva on the cheap. JPM counter-claimed that Karonis failed to understand how far Fintech valuations had fallen.
It’s taken four years and 14 of the original 31 banks have exited the consortium but the European Payment Initiative (EPI) has finally launched wero, the long-long-awaited domestic European payment champion. Wero, a combination of “we” and “euro”, is live for person-to-person money transfer, initially for customers of co-operative and savings banks in Germany and KBC in Belgium. French banks come on stream in the autumn.
Shoppers will be able to make eCommerce payments with wero from early 2025 and Computop, the German PSP, has already begun asking merchants to register to be part of a pilot. In-store payments will follow in 2026.
The consensus from payment experts is that for wero to succeed the EPI needs to focus ruthlessly on user experience and keep the member banks firmly in the background. And “I need a wero” is the only song that will do as you can hear in this short commercial.
Even though wero is at least six months away from being ready for eCommerce, its launch sparked the unexpectedly early closure of Paydirekt/Giropay, a domestic competitor to PayPal launched by the German banks in 2016.
Insiders tell me that the service termination was badly handled. Giropay switched off its old integration interface at the end of June even though many acquirers had not yet migrated to the new version.
Meanwhile, Klarna has announced the closure of Sofort, the German online bank transfer service which it bought for $150m in 2013. Merchants will be migrated to Pay Now, Klarna’s open banking product. This includes buyer protection which is great for shoppers but less exciting for Sofort’s many merchants in the gambling and adult sectors. These customers will be looking for alternatives.
Klarna’s new wrapper doesn’t come cheap. In Germany, Adyen is charging 1.35% + €0.20 for Klarna Pay Now transactions. For UK merchants, Mollie is asking a punchy 4.99% + £0.30.
Blik, the wildly successful Polish mobile payment standard, continues its stunning growth with payment volume up 53% in 2023 to €29bn. Blik is jointly owned by Mastercard and a number of local banks who have suddenly woken up to the importance of their investment. From now on, the banks will send their CEO’s to Blik’s board meetings.
Bancomat, the Italian domestic debit scheme, is finally getting its act together. Milan-based investment fund FIS has made a €100m investment, the board has been slimmed down to speed decision making and a new CEO appointed from Mastercard. Nexi runs the technology for Bancomat and has put the card scheme live on Apple Pay and as a payment option on Amazon.
We’re taking a keen interest in the convergence of software and payments. Flagship Consulting’s latest report shows quite how dependent many American ISV’s have become on payment and other financial services revenue.
In response, payment processors know they need to partner with ISVs and some have gone further, buying or building an in-house range of vertical software.
Intriguingly, the stock market value of payment processors that offer software is rather lower than software vendors that offer payments processing. Jevgenijs Kazanins looks at why Toast (an ISV that offers payments) is valued more highly than Shift4 (a processor that offers software) even though Toast makes much less money. His conclusion is that ISV’s are better at securing recurring revenues under contract.
European ISV’s have now realised they too can make money from processing. The opportunity is smaller than in North America because payment margins in Europe are much lower. Nevertheless, a savvy commerce software vendor can still double profit margins by embedding payments in its core merchant offer.
With so many acquirers and PSP’s pivoting towards ISV’s as their primary distribution channel, a number of start-ups have begun offering key parts of the technology stack as-a-service. Here are a few that have caught my eye.
Shape Technologies is offering payments-platform-as-a-service to payment facilitators with capabilities including onboarding, KYC and billing. Shape is founded by alumni from Cardstream and is helping put Taunton, Somerset on the Fintech map.
Fung, in Amsterdam, offers a similar product set to Shape but is also a payment institution and can handle the money flow too.
Dublin/Vilnius based Paynt, goes one step further with a full acquiring-as-a-service proposition.Subscribe
New shopping
We’re keeping a close eye on the progress of autonomous stores as one possible driver of a seismic shift in grocery transactions from POS to the shopper’s phone.
Although sceptics point out that frictionless checkout often involves more manual intervention than the vendors let on, the use cases are multiplying. For example, in a village store in Switzerland a shipping container is transformed into an unmanned convenience store (or walk-in vending machine) using technology from FastaXs.
In Europe, Mastercard is backing PayEye, a Polish start-up which is piloting its iris/facial recognition product at five locations of Empik, a large retailer of books, toys and games.
A number of start-ups are trying to make it easier for merchants and consumers to move to digital receipts. Habits are hard to shift. Despite a new legal requirement in France that paper receipts should be opt-in only, Auchan, the grocery chain, reports 60% of shoppers still ask for paper.
In the UK, Slipp, which boasts JD Sports as an early client has raised £750K. Slipp integrates with the ePOS software to send the shopper a text or email. JD Sports says using Slipp’s SMS receipts to promote its loyalty programme is increasing the number of customer sign-ups.
Anybill, from Regensberg in Germany, asks customers to scan a QR code presented by the ePOS. Pricing ranges from €4.49 to €35.99 per month per outlet.
Yocuda, a French start-up acquired by Global Blue, claims to have delivered over 2m electronic receipts to over 200,000 identified shoppers. Clients include Halfords and Decathlon.
Receipt Hero, based in Helsinki, has raised additional funds to supplement the $5.7m already invested. Receipt Hero offers cardlinking as well as QR scans. Partners include PayOne.
Pi-xcels from Singapore has an elegantly simple product that delivers an e-receipt automatically when the shopper taps their phone on the payment terminal. The product integrates with the terminal not the ePOS software and is available on Ingenico and PAX.
There’s an open question whether digital receipts can establish themselves as product category in their own right or whether merchants would prefer to buy the capability as a feature of existing POS or CRM software.
This technology, which allows any off the shelf consumer device to accept contactless card payments, was originally touted as a micro-merchant proposition but is proving most popular with large enterprises.
LVMH is leading the innovation. Liberated from the need to locate the nearest payment terminal, sales associates at Christian Dior, an LVHM brand, each have their own iPhone to serve customers wherever they are in the store. Dior has worked with Adyen, Global Blue and Vo2 Group, a Paris HQ’d tech consultancy, to add instant VAT tax refunds to the proposition.
In vendor news, Rubean, based in Munich, has raised an additional €2m capital to finance its strong growth. Sales are forecast to rise to €2.2-€2.5m this year from €1m in 2023 on the back of new distribution deals.
Rubean’s partnership with Global Payments may be threatened by the Atlanta processor’s unpublicised purchase of Yazara. The Global/Yazara tie up is likely also to be bad news for MyPinPad which local sources suggest may be replaced as supplier to eService, Poland’s largest acquirer, which Global bought last year.
In better news for MyPinPad, Ur&Penn, a leading chain of jewellers in Norway, is using its SoftPOS application to take store payments on the associate’s Android phones. 2izii is the integrator and Elavon the acquirer.
Phos, acquired by Ingenico in 2023, is making good progress building out its distribution network, announcing a key partnership with Shift4, a US processor with big ambitions in Europe. Phos is also the technology partner for BORICA, which provides SoftPOS to the three largest banks in Bulgaria. BORICA claims 1,500 “terminals” live today.
In Italy, Ultroneo has implemented MarketPay’s PayWish SoftPOS application for its Get Your Cash merchant proposition. Volumes are growing swiftly (see below) but it’s not been plain sailing. Writing on LinkedIn, one Ultroneo director explained “For nearly 12 months now we have been struggling with the teething problems of this new technology. Bug after bug, incident after incident, we have managed to stabilize the SoftPos to the delight of our customers.”
Openbanking
The UK’s incoming Labour government is making very positive noises about fintech. Quoting from its manifesto: “Financial services are one of Britain’s greatest success stories. Labour will create the conditions to support innovation and growth in the sector, through supporting new technology, including Open Banking and Open Finance and ensuring a pro-innovation regulatory framework.”
There is much that a new regulatory approach could deliver, including an open banking acceptance mark, “scheme” rules to ensure common standards for authorisation codes, refunds etc, the introduction of consumer protection and a recognition that all this cannot be provided free of charge.
Positively, the number of open banking payments made in the UK rose c.50% year-on-year to 17m in May 2024. Variable Recurring Payments (VRPs), the open banking equivalent of direct debits, now account for 11% of the total.
The increase is encouraging but compared with the 2bn debit card transactions made in the UK in a typical month, volumes remain very small.
The slow take up of open banking has implications for the large number of vendors operating in this sector. There are twenty listed on the UK government’s procurement framework alone. If revenues don’t arrive soon, only the best capitalised will be able to keep trading until the product goes mainstream.
Truelayer, hopes to be one of the survivors, having raised a remarkable total of $271m from its investors. Truelayer’s CEO has given an interview to explain that he is playing a long game, saying “We are an infrastructure business. That means we are likely going to spend a lot of time and a lot of years building and spending money before actually earning,”Subscribe
Cash
Germany is often cited as the last hold-out of the cash economy but the latest Bundesbank payment survey shows a further decline in the use of paper money. The cash share of transactions fell 7% points in 2023 to 51% and its share of volume by 4% points to 26%.
It’s no surprise that policy-makers in many countries are grappling with the implications of the world going cashless. For example, Ireland has passed an “Access to Cash” law which gives the government powers to set minimum numbers of ATMs for each area. The local banks, and their customers, will bear the cost. Revolut, wildly popular in Ireland, will likely get a free ride.
Crypto currencies are assets not money, yet vendors persist in bringing forward payment acceptance solutions at POS.
“Few have heard of SpacePay, but give it a year, and it will likely be a household name” is the bold claim from this London based start-up which graduated from Barclays’ fintech accelerator. SpacePay, which has raised $750K, says it will allow people to spend crypto at “most existing point of sale card machines.” It’s not clear how this would work in practice.
If there is a user base for crypto at POS anywhere, it’s going to be in a cross-border market such as Luxembourg where some shoppers may not want their home country authorities to know what they are buying.
Done4You, an ISO based just across the border in Namur, Belgium, has implemented crypto at POS for a petrol station in the Grand Duchy using GoCrypto’s technology. Crypto transaction are 1.25% compared to interchange + 0.5% for credit cards.
Forrester’s latest analysis of merchant payment providers makes for fascinating reading. The scoring can be a little incoherent at times but the report includes unparalleled direct feedback from Forrester’s clients. Stripe and Adyen come out best but don’t escape criticism. Stripe is “expensive” and Adyen’s support “can be hit and miss.”
Global Payments and Worldline, neither of whom participated in the research, score badly. Forrester doesn’t think either has done enough platform integration.
To celebrate its top spot, Adyen has made the report available free of charge. It’s worth a read and a reminder to always engage with analysts. The more you communicate – product roadmaps, customer testimonials, invitations to events etc – the better coverage you get.
Forrester aside, Worldline had a good month by recent standards. The beleaguered processor has won the fight with arch-rival Nexi to become the exclusive partner of Cassa Centrale Group. The deal doubles the size of Worldline’s Italian business by adding more than 90,000 POS terminals processing €9bn annually.
The next Italian bank up for grabs is Banca Popolare di Sondio which is reportedly considering selling its merchant services business and ending its partnership with Nexi. Worldline is said to be in poll position to pay €70-€100m for 25K POS processing €2.2bn. Nexi, BCC Pay and Market Pay are also in the running.
Worldline has also finalised its JV with Credit Agricole in France. Meriem Echcherfi, currently head of merchant services at the French bank, will run the new business which will should be live in early 2025. This is smart move. The first rule of bank partnerships is to hire your general manager from the bank.
Nexi reported decent full year results with merchant services revenue up 6% in Q4 2023 and a particularly good performance in Germany. Management will be relieved that Unicredit, Italy’s largest bank, looks set to renew it partnership with Nexi and extend the relationship to additional countries.
Stripe celebrated becoming cashflow positive for the first time. This takes the pressure off a possible IPO. “We’re not in a rush,” said the CEO. Stripe’s 2023 letter to shareholders was very bullish but didn’t disclose the company’s revenue or profit numbers.
The letter did reveal that payment volume rose 25% in 2023 to exceed $1tn and that the business is increasingly servicing larger merchants. More than 100 of Stripe’s clients process over $1bn and it has been signing good omni-channel customers such as Hertz. The car rental giant is moving its worldwide payment acceptance to Stripeincluding installing BBPOS terminals in 3,000 locations. The big win for Hertz is to be able to accept Apple Pay. Although this seems a low bar, it’s a real pain point in the US.
PAX Technology had a difficult 2023 as key customers showed “increased prudence in payment terminal deployment.” Revenue was down 18% to $860m and profits down 12% to $150m. In Europe, PAX called out good performances in Italy, the United Kingdom, Turkey, Spain and France but Germany proved more challenging.
Although than 50% of sales are Android terminals, PAX is struggling to generate revenue from services. Sales of SaaS solutions associated with the 11m devices connected to MAX Store were just $13m.
Paypoint, one of the UK’s leading ISO’s, will consolidate all its processing with Lloyds Bank Cardnet. Paypoint’s 20,000 merchants deliver around £7bn volume and the acquiring relationship had been at risk, notably from Global Payments Inc., which inherited a chunk of Paypoint’s merchants when it bought EVO last year. It looks like Lloyds’ ability to extend its offer to include a bank account and commercial card won the deal.
We saw several interesting fund raises this month.
PPRO, the white label local payments platform, raised €85m, taking its total investment to an eye-popping $462m. PPRO has some great customers including Stripe and PayPal and insiders tell me it hopes to be EBITDA positive by the end of 2024.
Flowpay, the Czech merchant cash advance specialist, raised €2.1m to expand out of its home market. Already boasting key local ISV partnerships including Dotypos, Storyous and Shoptet, Flowpay is one to watch.
Bezahl, a Cologne based supplier of payment acceptance to car dealers, raised €22m. The business already has 130 clients serving 1,100 locations. Bezahl charges a monthly fee per location and sends most transactions to Adyen for processinghttps://www.youtube-nocookie.com/embed/zplTu4QN3zA?rel=0&autoplay=0&showinfo=0&enablejsapi=0
Staying in Germany, REWE, the supermarket giant, has spun out its payment acceptance team with the brand name of Payment Tools. REWE’s strategy mirrors that of its French rival, Carrefour, which demerged its payment division as MarketPay.
Finally, GoCardless has bought Nuapay, a specialist in SEPA Instant, UK direct debits and open banking, from EML Payments, the hapless Australian processor, for €34m. Nuapay, based in Ireland processes €44bn of A2A transactions annually and is forecast to lose €1.2m EBITDA this year. GoCardless also revealed its latest financial results in an exclusive interview with Sifted. Discussing a substantial loss of £80m on sales of £92m, the CEO said “The results demonstrate that we’re moving from strength to strength.”
MPE 2024
This year’s Merchant Payment Ecosystem conference in Berlin was as good as ever. Read this special edition of Business of Payments to discover more about the end of cards, digital Euro and the slow uptake of open banking.
I moderated an entertaining panel discussion nominally about consumer behaviour but actually covering a variety of topics from Saudi investment in Fintech to why Finland’s largest retailer chose Adyen for its payment processing. The panelists were Adil Riaz from NearPay, a SoftPOS vendor, Gábor Bujáki from OTP Bank, Hungary’s largest acquirer, Janine Kaiser from The Payments Association EU and Kai Lindström from S-Group, Finland’s largest retailer. Watch the conversation below..
Schemes
Visa and Mastercard’s landmark deal to end 20 years of US litigation on “swipe fees”attracted much press coverage. The schemes have conceded an average 7bp reduction in Interchange paid to card-issuing banks. Although retailers will have more freedom to introduce surcharging, it’s likely that large merchants on IC++ pricing will see most of the benefits. Consumers may be annoyed by some potentially rather complex POS flows as merchants attempt to calculate differential surcharges by card type.
JP Morgan has become the first US bank to join Carte Bancaires. A spokesman said the move was “mainly a request from our customers, the use of the [CB] network being less expensive than that of other card networks.”
Ireland no longer has a local scheme so it’s hard to understand recent thinking in Dublin. Ireland’s Central Bank announced that the country’s payments strategy “needs drastic change” only months after the competition authorities killed an attempt to do just this by outlawing the introduction of a domestic mobile payment scheme. Revolut, which is wildly popular in Ireland, will likely profit from this regulatory confusion.
Blik, the fast-growing Polish mobile payment standard, has restated its international ambitions. With launches already planned in Slovakia and Romania, management believes “Blik Euro” could become a pan-European payment system. Local vendors are innovating with Blik. Posnet is offering Blik acceptance at cash registers without the need for a payment terminal. eService (Global Payments) is providing the processing. Fees are 0.6% + 1.4c.
Wero, the new QR based mobile payment scheme promoted by the European Payment Initiative is supposed to launch in June. However, the EPI has not posted any news on its website since December. We await updates with interest.
Capital One has revealed more of its plans for Discover, the US card network it hopes to acquire later this year. The new owners want to “fix” the network’s international acceptance, “which is not quite where it needs to be, for the entirety of our card business today,” said its VP Finance.
While there still seems a strong business case for Just Walk Out in small format stores, Amazon’s decision will come as a blow to other retailers that have bought its technology, presumably to benefit from Amazon’s well-funded roadmap. One of these may be Delaware North, a hospitality vendor that has just installed Just Walk Out technology to sell beer at London’s Wembley Stadium.
Other vendors are available. Lekkerland has installed three AI-based smart fridges at an EV charging station in Saxony. You tap your payment card, open the door, remove the items and are automatically billed. Portuguese start-up, Reckon.ai is providing the technology.
We’ve been talking about RFID to automate grocery checkouts for over twenty years but it’s still not ready. Walmart has withdrawn a pilot in which it used RFID to verify whether customer’s self-scanned purchases were accurate.
Sometimes simpler is better. Take a look at Sticky, a Manchester-based start-up which allows consumers to pay by simply tapping a cheap NFC label. “You can get a drink in five seconds with our physical digital labels. It’s faster than a card,” says the CEO. Sticky charges £60/month for eight “flows.”
Product
Retailers say that returns abuse is the leading source of fraud, overtaking phishing for the first time.Here’s a good round up from Edgar Dunn which shows the scale of the challenge. Unsurprisingly, this trend is leading to a big increase in chargebacks so why don’t retailers dispute more of them? One reason may be the risk of offending good customers. This New York restaurant complained when a customer used a chargeback to reclaim a deposit for a cancelled booking and the ensuing argument became very public.
Wild story incoming. Last month, we had to cancel our Boston trip after I was hospitallized. As a result I had to use travel insurance to get my money back on our hotel, train, and restaurant reservations. Today I got this message from @tableboston pic.twitter.com/d7jc84rllJ
The UK has a cunning plan to fight fraud. New legislation will make Faster Payments slower to give PSP’s time to investigate suspected bad transactions.
Dwayne Gefferie lays out the strategic case for PSP’s to move into orchestration or infrastructure-as-a-service. Or both. However, it’s not clear how much money is in orchestration. One analyst says the market will grow from $846m today to $4.8bn by 2032. Aite, a more reliable source, suggest the actual revenue reported by dedicated fintech orchestrators today is less than $25m. Looking on the bright side, Aite says “there’s plenty of room for providers to grow.”
Merchants are divided on whether to go with a single payment provider or use “orchestration” to manage a series of best of breed vendors. Hugo Boss is using Adyen for all its in-store and online requirements. Why not use multiple suppliers? “We are not a petrol station. We are Hugo Boss,” explains the retailer’s head of payments.
InPost, Poland’s last mile delivery specialist, has launched a payment wallet called InPostPay. It could do well as it builds on an installed base of over 9m mobile app users.
Many are sceptical about Click to Pay but the schemes’ much delayed attempt to compete with one-click wallets is finally coming to Europe. ING is offering Click to Pay with Mastercard, initially in Spain. Visa has launched Click to Pay in Francewhere Adyen is the first PSP to offer the product. It claims 4% points increase in authorisation rates compared to a standard transaction.
ISVs and their payment partners are scrambling to offer pay-at-table. Toast, the US restaurant software vendor, has launched in the UK with an impressive solution running on Adyen’s POS hardware. “Long battery life and durable,” says one IT Director.
Revolut launched its acquiring business in 2021 but we heard little news until it launched point of sale software with integrated payments. Aimed at retail and hospitality, Revolut POS is based on Nobly, the ISV it bought in 2021. The software appears to be free and transactions start from 0.8% and 2c for domestic cards. International cards are 2.6% which is pricey for any merchant in a tourist location.
There’s a small but growing category of software vendors aiming at making life easier for people who run payment businesses. Kani, founded in Newcastle, reconciles PSP transaction data with the information provided by the card schemes. Torus, started by an ex Mastercard consultant, won the innovation competition at MPE with its pricing software that gives acquirers better control over their portfolio profitability. Both are worth a look.
SoftPOS
SoftPOS is a downloadable payment application that turns any Android or iOS device into a payment terminal. The standards regime is quite complicated. Matt Jones gives a good explainer of how it all fits together.
This technology seems finally ready for prime time. Tabesto, a vendor of intelligent ordering tools for restaurants, says 90% of sales are a new product called Fox, an integrated all-in-one kiosk with no external POS or printer. Customers can choose SoftPOS payment apps from Worldline or DejaMobile. Here’s it is in action at Waffle Factory.
Deja Mobile, based in France and now owned by MarketPay, has some good case studies. Two months after launch with Rabobank in the Netherlands, 1,200 micro-merchants have activated the service of which 80% are generating transactions.
I’m not convinced PSPs can make any money out of micro merchants but if you want a mass-market customer base you will need to spend money on marketing. Best of luck to Viva, the mPOS vendor partly owned by JPMorgan, which has launched a major advertising campaign in France.
Rubean, the German softPOS vendor quoted on the Munich stock exchange, expects 2024 revenue of c.€2.5m, doubling year on year but below expectations. The company predicts sales rising to c.€10m by 2027 on the back of new contract wins including Commerzbank Global Payments.
Referring to emerging rules for variable recurring payments (VRPs), widely believed to be the best hope of driving mass market adoption, the regulator says it has asked the industry to “get on with it.” Jack Wilson from TrueLayer takes issue with this and writes the industry is now “moving at the pace of the slowest” and that the slowest is the regulator itself. The industry is complaining that it is in limbo waiting for the results of a consultation on how open banking should be priced and without a clear way of making money, has little incentive to commercialise new products.
The lack of an acceptance mark or scheme brand is also major stumbling block. Looking at the checkout page below, how would consumers know they can pay with their banking app? Clue: Vyne is an open banking vendor.
Despite the current uncertainty, there is some good news. Ecospend, Trustly’s UK business says that 30% of payment volumes at Hargreaves Landsdowne, a retail investment manager, are made using open banking.
Ecospend has been the supplier to HMRC (the UK tax authority) which has long been the poster child of UK open banking payments. With Ecospend’s initial 3 year term completed, HMRC is retendering its banking contract. The winner is likely to be one of the 15 vendors selected to join the Government’s framework contract.
A number of vendors are building an interface to allow open banking payments at POS using contactless NFC in place of cumbersome QR codes. Kevin, the Lithuanian fintech which made some high-profile layoffs before Christmas, has demonstrated A2A NFC payment on iPhone. Click through and read the comments which indicate some scepticism.
MultiPay, the UK POS focused PSP is doing something similar. Acquired.com is providing the open banking connections. Assuming the technology works, is there a business case? Alexander Peschkoff explains why A2A payments at POS don’t have commercial appeal.
More importantly, A2A payments may just be too slow for POS. A killer table from the UK Future of Payments Review shows the time it takes for a user to initiate a payment. PIX is regarded as best in class but, with Apple Pay as a comparator, even 20 seconds is too slow for POS merchant payments. Shoppers will keep using cards for a long time yet.
Artificial Intelligence
Klarna’s CEO has clarified that although the company’s AI chatbot is doing work equivalent to 700 people, this is entirely unrelated to the 700 people he layed off in 2022.
It doesn’t matter how clever your chatbot. RSR Resarch says consumers want to talk to a real person.
But the AI demos keep getting better. This ChatGPT video certainly passes the Turing Test.
Possibly, one of the most appropriate uses of AI is to count the number of mentions of AI in corporate earnings calls. Hat tip to PayPal. And to FXC for asking its robots to research this pressing question.
Rapyd’s Icelandic boss hit back at calls for a merchant boycott following the Group CEO’s strong support for Israel’s war in Gaza. “Claims such as that Rapyd works in Israeli settlements in the West Bank and that the company supports the Israeli army’s war on Gaza are completely false”, he wrote.
It’s been a good month for bloated corporate buildings. Fiserv has finally opened its new $37m HQ. “Welcome to Milwaukee. We have been waiting for you Fiserv,” said the mayor. PAX went bigger. Its new $46m HQ in Shenzen is 18 storeys high.
Payments from a Merchant Perspective – useful (and free) research from Arkwright. Standardised and low-friction open banking is their number one ask.
Wirecard latest. Dan McCrum, the FT journalist who broke the story, gives a good interview to Chris Skinner. Four years on, the story itself gets even stranger. It seems that Jan Marsalek, Wirecard’s fugitive COO, was working for Russian intelligence and has recently been living in Russia under the assumed identity of an Orthodox priest.
GTCR, which has little previous apparent interest in fintech, bought 55% of Worldpay for $13bn in cash and has committed a further $1.3bn for “strategic acquisitions.” These will likely focus on closing Worldpay’s product gap with Adyen and Stripe through extra capability related to servicing platforms/ISVs and on expanding Worldpay’s international POS capability to serve global, omnichannel retailers.
I asked Bing’s image creator to comment on the news. Surprisingly, Worldpay haven’t yet been in touch for the image rights.
Barclays, owner of Barclaycard, the UK’s second largest acquirer, has turned to private equity to rescue its underperforming payment division after having failed to find a trade buyer. Worldline, Nexi or Global Payments aren’t interested but Barclays is reportedly still looking for £2bn at 6.5x EBITDA.
The French do things differently. One week after Worldline appointed bankers to help avoid a possible hostile takeover triggered by its collapsing share price, Credit Agricole appeared as a white knight, taking a 7% stake. Worldline and Credit Agricole recently announced a JV and the French bank has a strong interest in ensuring Worldline goes through with the deal.
In Italy, Nexi is vying with Worldline for the merchant business of Cassa Centrale Banca, a group of 66 regional co-operative banks. CCB processes €2.2bn annual volume from 25,000 POS terminals and is looking for a valuation of €70-€100m. BCCPay, which recently scooped Nexi for a partnership with Banco BPM, and Market Pay, an aggressive new acquirer spun out of Carrefour, are also believed to be in the running.
Turning to Germany, Global Payments is forming a JV with Commerzbank. The new business, snappily called Commerz Globalpay, is 51% owned by Global Payments and will sell products to the bank’s large domestic corporate and SME customer base. While Commerzbank could be a great distribution channel, German banks are notoriously bad at lead generation. Fiserv launched a similar venture last year with Deutsche Bank which is reportedly underperforming.
There seems little prospect of many payment companies floating on public markets this year. According to one VC, many still haven’t adapted to today’s business conditions: “Where you have massive… processing volumes, but you’re still making negative margins, [this] is no longer acceptable.”
Stripe is also an IPO candidate for 2024 and rumoured to be preparing for floatation by raising prices and being much more discriminating about which customers it is prepared to onboard. One industry expert reports Stripe’s “out of the box API pricing” is 2x3x higher than a year ago. Higher prices and more cautious risk policies may trouble some of the fintechs and ISVs which have built their businesses on Stripe.
In case you missed these stories from from the Business of Payments blog:
Allpay, the UK public sector specialist, reported a very positive set of results. Few other payment companies can boast 21% revenue growth and 16% operating margins.
Trustly, one of the European leaders in A2A payments, reported a difficult 2022 as it recovered from a tricky situation with the Swedish regulator.
January trading updates had contrasting impacts on two London-listed payment companies with roots in carrier billing and names like childrens’ TV characters.
Boku, which is shifting its business towards global APMs competing with Thunes and dLocal, reported payment volume up 16% to $5.0bn and sales up 26% to $38m for H1 2023. Less happily, Bango, which has stayed closer to its original telco customer base, downgraded earnings expectations and lost 40% of its market capitalisation. Management says that new, value-added services are proving slow to deliver cash profits.
Checkout.com is the latest vendor to be designated a “significant provider” of card-acquiring services to SMEs in the UK and brought within scope of the Payment Systems Regulator’s directions. Checkout is normally associated with enterprise merchants, but its good performance is thought to be thanks to a growing PF relationship with Mollie, the Dutch PSP which has begun selling to UK small businesses.
Ant Group, the giant Chinese technology group behind Alibaba and Alipay, has made a smart move into European merchant payments with the proposed acquisition of MultiSafepay. This Amsterdam-based acquirer brings a modern omni-channel technology platform (with Sunmi POS terminals) and 18,000 SME customers but the $200m price tag is expensive. MultiSafepay made a net profit of just $1.4m on sales of $50m in 2022.
New shopping
Just walk out is the new self-checkout, concluded Primark’s Chief Architect after a visit to this year’s NRF Retail Show in New York. Although we’ve not seen much activity in the clothing sector, autonomous grocery and convenience openings are coming thick and fast.
Netto has opened what it claims to be Europe’s largest autonomous store in Regensburg, Germany. The technology is from Trigo and, at 800 sq metres with 5,000 SKUs, this is very impressive. Helpfully, fruit and vegetables are automatically weighed and added to the virtual basket when you take them off the shelves.
Trigo is also behind Aldi’s new SHOP&GO check-out free store in Greenwich, south London. There’s no need to download an app, just tap your payment card, or phone, at the entry gates.
You can get an idea of the potential of autonomous technology with this implementation at a UK football club which could eliminate the long queues inevitable when everyone wants to buy a drink at half-time. Sodexho, the catering company, runs the outlet. The technology is from AiFi.
Credit Agricole’s decision to launch a biometric payment card is equally unconvincing. The main advantage is not having to remember your PIN for transactions greater than €50, but this is what Apple Pay is for. Even the French bank’s supplier can see the writing on the wall. Zwipe is shuttering its biometric payment operation to focus resources on access control.
Despite every consumer carrying biometric ID in their personal phone, investors won’t give up on this. Polish fintech, Payvein,just announced fresh funding for its payment service based on Hitachi’s finger vein recognition technology.
What better way to give the thumbs down to biometrics than with AEVI’s suggestion of gesture based payments? The concept seems to involve waving at the payment device with a pre-registered hand signal. Presumably, not a rude one.
Cooking commerce may be a more fruitful concept. Kroger, the US retailer, has partnered with GE so you can buy groceries direct from the LCD screen on your oven. The new service was delivered via a software update to 150,000 domestic appliances.
Product
Apple, under pressure from the EU competition authorities, has finally opened up the iPhone’s NFC chip to 3rd party banking and wallet applications. The move may allow banks to bypass Apple Pay and its c.15bps charges. More excitingly for consumers, this service could facilitate a new market for open banking payments at POS. Mike Kelly explains how this might work. Excitement levels vary across Europe as Apple’s market share ranges from 55% in Denmark to just 10% in Poland. And the ruling excludes the UK. Because Brexit.
For years, PayPal had the best, friction-free online checkout in the business but this advantage has been eroded by Apple Pay, Stripe and others. These new checkouts also move fraud risk to the issuer which makes them more popular with merchants.
PayPal’s set of new product features should help claw back some of the lost ground, especially in Germany where it is still the number one eCommerce payment method. PayPal’s massive global base of 400m customer accounts and 25m merchants means its new one-click checkout recognises 70% of shoppers and is claimed to cut checkout time by more than half.
The product could help merchants benefit from faster checkout where Shopify recognises the customer although the fees will likely be higher than a standard payment gateway. Amazon tried something similar with Amazon Pay although this proposition has struggled and recently announced layoffs. Unlike Shopify, merchants view Amazon as a competitor and avoided offering Amazon Pay if they could.
Shopify is an absolute beast. Its head of engineering says he accepts 23,000 lines of code each weekday and the platform’s app servers handled 60m requests per minute on Black Friday. Blimey.
Irish customers will be delighted they can now use their Revolut card to buy a ticket on the Aer Lingus website. Revolut Pay, a new product, transforms what looks to the cardholder like a debit card transaction into an account transfer. Aer Lingus is reporting impressive performance. Cart abandonment rates are sub 10% and authorisation rates at 98.5% which is pretty good for the airline industry. Published merchant fees for Revolut Pay start at 1% + 20c.
Back in the real world, one obstacle to the growth of the circular economy is how to pay people for products sent for recycling. The Danish city of Aarhus has a solution with this reverse vending machine for disposable coffee cups. People get their deposits back by tapping their payment card. TOMRA provides the machinery and Shift4 the payment processing in this clever use of the Visa Direct and Mastercard Send products.
Computop, the German PSP part owned by Nexi, launched its “Pay to Drive”proposition for EV charging stations using the PAX IM 30 unattended terminals. Computop already has a good customer base in this sector including Compleo and Mercedes Pay for in-car payments.
In scheme news, Carte Bancaire has finally launched an account updater service with the unfortunate Franglais brand of Updat’R. Adyen, MONEXT and Lyra are the first PSP’s to offer the new product.
FX loading can often be a guilty secret in the payment industry. Many vendors depend on marking-up foreign currency transactions for a considerable proportion of their profits and can be vulnerable if their larger customers start to scrutinise their bills too closely. New research from FXC shows how the US providers charge extra fees to their international merchants.
Public policy is turning to how cash can be saved from extinction. The Swedish government has demanded proposals to safeguard access to cash despite the public’s clear preference for electronic money. Only 8% of Swedes used cash for their most recent purchase.
As people need less cash, the fixed costs of running ATM networks are spread over fewer transactions and many locations become uneconomic. In France, three big banks are pooling their ATMs and plan to reduce their number by 30%.
Financial inclusion is normally the reason cited for mandating cash acceptance but this argument ignores the huge benefits of bringing people into digital money. As this new report from the Atlanta Fed explains, people excluded from digital money are also excluded from much of the rest of the economy too. For a plain English description of financial exclusion, read this description of the business of cheque cashing in the US. A cash economy rips off the poor.
It’s still early days in the emerging SoftPOS market but Rubean looks like one of the European winners, having locked down a number of solid distribution partnerships and two enterprise customers in Spain. Read more on the Business of Payments blog.
MagicCube, based in California and one of the first wave of SoftPOS vendors has announced a go-to-market partnership with Shift4. The move comes two years after Shift4 invested in MagicCube and is likely to see the product come to Europe following the American acquirer’s merger with Finaro.
Bain, the consulting company, says that 2029 will be the year card transactions finally stop growing. But Dave Birch thinks we might be even closer to “peak card” than this, especially if large merchants integrate variable recurring payments (VRPs) into their apps. VRPs are the open banking substitute for both direct debits and card on file and promise a better customer experience for consumers at lower cost to merchants.
For the moment, open banking reality is some distance from this promise. A new study shows French banks rejecting 47% of payment transactions using their open banking APIs. “Is this the worst in Europe?” “ask the authors. “Far from it” reply the PSP’s. Portuguese banks are certainly worse. With standard bank API’s so difficult to use in many European markets, it’s no surprise that local schemes linked to SEPA Instant Payments such as iDEAL in Holland or Blik in Poland are prospering.
If the banks are to meet the challenge of producing better quality API’s they clearly need some help. Ozone API in London has raised £8.5m to commercialise its service that enables banks to offer open banking APIs.
The UK was first into open banking but, six years after the adoption of PSD2, the sector is having a long, dark night of the soul. As this good round-up demonstrates, there have been plenty of awards for open banking innovation but nobody is generating many transactions.
Ciaran O’Malley from Trustly posted a killer chart on LinkedIn which shows the extent of the commercial challenge for VRPs. In a two-sided market, there are few win-win scenarios.
This is why the Payment Systems Regulator (PSR) is proposing that the country’s largest banks will be mandated to offer VRPs at zero Interchange for government, utility and regulated financial services.
One of the many reasons Bitcoin has not replaced fiat money is that cryptocurrencies are horribly insecure, often run by crooks and with a terrible customer experience. As Dave Birch put it, “no sane person wants to be their own bank.”
The early hype around crypto set in train projects to launch central bank digital currencies (CBDCs). The Bank of England (BoE) received over 50,000 responses to its public consultation on the digital pound. Many of the concerns expressed were around privacy. The Bank promises that it won’t be able to see your individual transactions, but this won’t placate the zealots.
Any decision to launch Britcoin will be taken “around the middle of the decade” at the earliest but the BoE hasn’t answered the fundamental question of what a Central Bank Digital Currency (CBDC) is for. Neither does this video from the European Central Bank (ECB) shed much light on why anyone would want a digital euro rather than using Apple Pay.
The European Central Bank has begun tendering for some of the components of the digital euro. Worldline, Nexi and the EPI were involved in earlier prototyping exercises and will likely be bidding for the next set of contracts, valued at up to €1.1bn.
Research round-up
Cap Gemini’s payment trends for 2024 places real-time treasury and tokenisation in the top right quadrant. The consultants also see the card market growing in volume but losing share to A2A payments.
A summary up of 2024’s payment topics from the Finanz-Szene blog including wero, real-time bank transfers in Germany (at last) and the implication of TA 7.2 standards for payment terminals. A huge number of devices need replacing in Germany, notably the Verifone H5000s.
An Airwallex survey of SMBs highlights the embedded finance opportunities for payment providers. One interesting finding is that there is very little brand loyalty. 82% of merchants say they would change payment provider if their ISV offered a similar solution.
Chargeback 911’s annual Cardholder Dispute Index is always worth a read, if only to gasp at the average 5.7 disputes raised by each consumer every year in the USA.
35% of global eCommerce sales now go through marketplaces according to an absolute goldmine of omni-channel retail research available free of charge from RetailX. Retail CIOs themselves are planning major system upgrades to meet the needs of channel hopping consumers. This will likely trigger reassessments of their payment suppliers and is yet more bad news for incumbents saddled with legacy platforms.
In other news
UK retailers spent a whopping £1.27bn on card processing fees in 2023 and the British Retail Consortium is particularly annoyed about the 27% rise in scheme fees. The trade body is proposing that larger transactions should be charged as a fixed fee, not ad valorem; an idea likely to meet fierce resistance from the schemes.
One key application of AI is to automate customer service but you need to keep an eye on your robots otherwise they may start thinking for themselves. One AI chatbot working for DPD, a UK parcel delivery company with a mixed reputation, wrote a poem about how bad its employer was.
Where to find me
I’ll be moderating panel discussions at MPE in Berlin on 12-14 March and ePay Europe in London on 21 May. In between, you can catch me at Retail Expo in London on 24/25 April.
One of the key reasons for the collapse in Worldpay’s valuation is that when FIS bought the business, it was growing sales at about .9%. However, starved of funds under FIS’s ownership, Worldpay hasn’t been able to keep up with high-spending competitors such as Adyen, Stripe, Checkout and JP Morgan. The result: revenue was up just 1% in Q2, JP Morgan has overtaken Worldpay to the global number one spot and $25bn has disappeared.. More details on the Business of Payments blog.
In Europe, most attention is focused on battles for bank partnerships. In Italy, Banco BPM, advised by Bain Consulting, rejected its current partner, Nexi. Instead, in a surprise move, the Milan bank will merge its merchant services business with that of BCC Pay. The combined group, boasting 370,000 POS and €90bn volume, will claim number two spot in the Italian market and has the scale to compete with Nexi and Worldline.
Two other large European banks are in the process of finding partners for their merchant services arms. In France, Credit Agricole has now signed the agreement with Worldline to start a new JV. The revenue should start to flow in 2025. Again, there was less positive news for Nexi. The closure date for its acquisition of a majority stake in Sabadell’s merchant acquiring business (the second largest in Spain) has been put back six months to the first half of 2024.
Both Worldine and Nexi’s merchant services businesses themselves, seem in good underlying health. Reporting H1 results, Worldine revenue was up 13%. Management said it was still interested in acquiring merchant portfolios from banks. Nexi grew revenue 10% in H1 and is proving adept at realising synergies from the recent mergers with SIA, Nets and Concardis. It has decommissioned five of 25 processing platforms, says it’s on track to close another five in H2 and, longer term, to reduce the number to just four.
PagoNxt, Santander’s payment business, is also doing well. Volume was up 22% in Q2with increases recorded in all major markets in Europe and Latin America.
We’ve reported previously on the challenging market conditions for pure-play eCommerce gateways. It’s no surprise that privately owned Computop, which claims 30% of the German eCommerce market, has sold a 30% stake to Nexi. There is strategic logic for Nexi which already owns Concardis, Germany’s largest acquirer. Computop’s volume processed fell from €34bn in 2021 to €30bn in 2022. The decline is partly due the company’s decision to exit the gambling/adult sectors but also indicates competitive pressure from Adyen, Checkout and Stripe.
The decline in value of German payment assets was underlined by KKR’s decision to hand Unzer (formally HeidelPay) to its creditors, writing off most of its $668m investment. KKR acquired a majority stake in Heidelpay, a PSP with about 17% of the German eCommerce market, in 2019. Unzer was recently in trouble with BAFIN, the German financial regulator, due to “serious defects” in its risk processes.
US based Shift4 still hasn’t concluded its acquisition of Credorax Finaro, a European processor. First announced in March 2022, the deal hit regulatory obstacles linked to a sanctioned Russian oligarch on the Finaro share register. Management says it is confident of closing the deal in Q4.
Ryan Reynolds is a much better proposition as shareholder. After taking an undisclosed stake in Nuvei, a Canadian processor with global ambitions, the actor is fronting a witty and self-deprecating brand advertising campaign. Reynolds’ investment is already under water. Nuvei’s stock fell 39% after disappointing Q2 results.
Rapyd, the London based global “fintech as a service” provider, has paid $610m for the slowest growing and least profitable parts of the sprawling PayU empire. The purchase price will be financed by a fresh capital injection into Rapyd in what the company claims could be the largest Fintech fundraise of 2023. Arik Shtilman, CEO, took to LinkedIn to explain the rationale. “If you don’t aim for a big outcome, you won’t get an outsized return,” he says. More details on the Business of Payments blog.
We reported last month that Toast, a leading US restaurant software vendor with integral payment processing, had shocked its merchants by adding a $0.99c service charge to each bill. The fee would have been paid by diners and provide Toast with free money at 100% gross margin. The company has now back tracked with its CEO recognising “we made the wrong decision.”
Shift4, with time on its hands waiting for the Finaro deal to close, responded with a clever “Don’t get Toasted” campaign.
Synch Payments, an attempt by a consortium of Irish banks to produce a domestic mobile money transfer app to rival Revolut, has been delayed once more. Again, it’s Nexi supplying the technology.
While autonomous stores are gaining traction across Europe, Amazon, which invented the technology, is struggling. According to the RTHI blog, Amazon’s stores are in the wrong place, have the wrong products, cost too much to build and are confusing for customers. For example, you can now checkout by tapping your physical payment card but not with Apple/Google Pay. Or with Amex. The stores don’t even accept Amazon gift cards.
Customer satisfaction with traditional self-checkouts is falling. Shoppers resent the ongoing reduction in staffed checkout. With autonomous stores so expensive, smart carts may provide a cheaper and more flexible compromise. Here’s a good round up from Forbes on the state of play. Kroger, the US grocer, says smart cart shoppers spend less time in store but spend more money. Everyone’s a winner.
Shoppers are returning to local stores. As expected, once confronted with the true economic cost of rapid grocery deliveries, people are willing to walk to the shops just like it’s 2019. The last mile delivery specialists are disappearing one by one. Getir is the latest to urgently need more cash to keep trading. Maybe robot deliveries are the answer.
Fans of biometric payments will be delighted that Amazon is rolling out Amazon One, its palm payment product, to 500 US Wholefood stores by the end of this year. Amazon says the technology has been used 1m times to date with zero false positives and is ideal for high volume locations such as stadiums. Shoppers first need to visit an Amazon One location where they can scan their palm and link it with their Amazon account.
Palm payments are no more convenient for shoppers than Apple/Google Pay. But there is clear benefit to Amazon of capturing extra customer data and/or being able to steer transactions to lower cost payment methods.
While Amazon can probably be trusted to keep your data safe, other vendors may not be so reliable. For example Worldcoin, a San Francisco-based start-up, is creating a global identity database founded on iris scanning and secured $115m funding in May this year. Its focus has been mainly on developing countries such as Kenya, in which Worldcoin has been asking people to agree to having their eyeballs scanned in return for $50 in tokens on the blockchain. What could possibly go wrong? Bain Capital is one of the VCs which should know better than be mixed up in this madness.
Product
Legacy acquirer like Worldpay and Barclaycard need to make rapid product investments to keep up with the new capabilities showcased by Adyen, Checkout and Stripe.
Optimised checkout is a great example. This uses AI to configure checkout pages with the best selection of payment brands, ensures that transactions contain the correct data and optimises routing to maximise acceptance or minimise cost. Stripe claims merchants moving to its optimised checkout grew sales revenue 10.5% more than a control group which stayed on the old product. Checkout says its Intelligent Acceptance product increased acceptance rates by up to 9.5ppts. Early customers include Klarna.
Checkout.com has also launched Identity Verification which, it says, uses AI to identify individuals within 120 seconds as they video themselves holding up identity documents. Uber Eats is an early customer.
Adyen announced Data Connect for Marketing which helps merchants identify their in-store customers. Retailers used to this themselves before PCI regulations banned them from storing customers’ card details in their own systems. Impressively, Adyen is also the first Fintech to join FedNow, the new US instant interbank payment network.
Subscribed
Away from the global processors, Cashflows, a UK eCommerce acquirer, has added a range of Castles POS terminals as part of omni-channel proposition to its ISV and ISO distribution partners. This is a smart move. New UK regulation has outlawed lengthy POS terminal rental contracts but were connected to one of the 14 largest acquirers. Cashflows is not one of the 14 and so will be an attractive option for ISOs looking to continue business as usual.
Far Eastern tourists are back in Paris to shop and the top retailers know they need to offer their favourite ways to pay. Printemps, a leading department store, has integrated Alipay+ into its POS checkout flow. Alipay+ also gives access to Kakao Pay (South Korea), GCash (Philippines), Touch ‘n Go (Malaysia) and TrueMoney (Thailand).
Fuel cards are commonly issued to staff who drive company vehicles but there’s always a risk of fraud or misuse. A new idea from CarIQ uses vehicle data as a sort of biometric ID. Linked to a virtual card, the vehicle pays for its own fuel, without the driver needing to sign for the gas. CarlQ has just signed a global partnership with Visa.
Access to cash
As cash usage declines, a growing number of merchants are only accepting digital payment. This presents problems in societies where some citizens don’t have access to electronic money. But cash-free stores are also enraging many of the people already angry about vaccines, traffic restrictions, 5G masts and sundry other inevitable aspects of modern life.
If cash is to be preserved, public policy needs to address the fact that the less cash is used, the more expensive it gets. For example UK convenience stores often host ATM machines with the retailer receiving a commission of 15p per withdrawal. One store reports transactions down 70% at a “free” ATM. The result: the retailer is not making enough revenue and is switching to an ATM that charges customers a withdrawal fee. The likely outcome is that transactions will fall further.
SoftPOS has only been available on Android so news of the European launch of Apple’s “Tap to Pay” on iPhone made the headlines. Apple’s SoftPOS is based on the $100m acquisition of Montreal-based Mobeewave in 2020. Architected differently to Android SoftPOS, Apple offers an SDK to developers/PSPs allowing them to build payment acceptance capability into their own iPhone apps.
With Apple SoftPOS, there’s still a need for an acquirer (or payment facilitator) to process the transactions but no obvious role for the specialist payment app/gateway providers such as MyPinPad or Phos. Happily for the SoftPOS start-ups, the Android market is large enough to keep them all busy for some time.
In Android product news, Oona, a Finnish start-up, has some interesting enterprise SoftPOS ideas such as this kiosk, for which Rubean provided the payment application. Getnet (Santander) has launched SoftPOS in Spain although only for larger business customers. Finally, Worldine is now live with SoftPOS in Italy via its new Banco Desio partnership supported by a clever TV commercial.
Open banking
Natwest, which has modestly taken the URL www.bankofapis.com, commissioned a report to identify the key obstacles holding back the wider adoption of Open Banking. It concludes the problems lie in “lack of commercial incentives” to develop or enhance the core APIs and “lack of alignment between.. .banks.” Or as Nick Dunse, former CMO of Pay with Bolt wrote on LinkedIn, “Nobody is leading it and there’s no money in it.”
Some Fintech lobbyists are asking the regulator to lead by expanding the number of services available but Oliver Wyman, the management consultant, thinks its time for banks to introduce financial incentives for themselves by monetising the APIs. The consultants suggest that a typical bank could make $50-$75m per annum if it charged PSPs for value added services linked to the open banking APIs.
Variable recurring payments (VRP) – an open banking equivalent to direct debits – were meant kick start the sector in 2023 but have also been rather slow to take off. Here’s a good podcast from Edgar Dunn which explains how VRPs work and what the opportunities might be.
In corporate news, NuaPay, an early open banking leader may be for sale. Its parent company, Senteniel, was acquired by EML, the accident prone Australian fintech for €70m in 2021. Account to account payments are meant to be hard to spoof but Senteniel was then hit by A$8.5m merchant fraud in August 2022. Now the Irish regulator has raised anti-money laundering concerns and asset sales look likely.
Munich-based Ivyhas raised €7m for “instant bank payments your customers love.” It sits on top of Tink, TrueLayer or Token.io and looks like a very well thought-through proposition. Merchants need vendors to build compelling customer experiences on top of the raw capabilities provided by the API aggregators so this could be a winner.
Crypto corner
PayPal is hoping to legitimise crypto with its newly minted Paypal dollars but opinion is divided. Bank of America thinks PayPal is unlikely to win significant crypto market share but I suspect its analysts are missing the point. PayPal will focus on customer experience, global deployment, and ease of use in a sector notorious for operational complexity. If PayPal can’t make this work, nobody can.
Meanwhile, the regulatory clampdown on unbacked crypto is bringing results. Sex workers are complaining that crypto exchanges have been terminating their accountsciting reputational risk. One adult star left with a pile of unsaleable crypto tokens said “the whole ‘crypto is permissionless and censorship-resistant’ thing is a bunch of bullshit.”
No criminal could possibly need the new “No KYC Visa card” available to anyone with an Ethereum wallet. Jason Mikula explains that this wholly noncompliant boondoggle is most likely built on banking-as-a-service capabilities from Stripe.
Other news
Edgar Dunn writes on payment orchestration platforms (POPs). The consulting company counts 27 multi-acquirer platforms available today plus eight acquirers marketing their eCommerce gateways as orchestration platforms. The sector has attracted over $650m investment in recent years.
Poland is a fintech hotbed. There are over 80 payment businesses referenced in the 2023 Map of Polish Fintech.
If you want to become a wealthy payments sales person, here’s a handy guide from the US Electronic Transaction Association. Because independent sales agents are rewarded with small but long-lasting commission payments, the best advice is to be patient and love your customers.
The British Government has launched (yet another) Future of Payments Reviewalthough without clearly stating the problem it is trying to solve. No matter. The UK Payment Association has a handy survey for you to give your views.
The collapse of Railsr has caused havoc at Irish shopping centres, many of whom had sold open-loop gift cards issued by UAB Payrnet, a Ralisr subsidiary whose licence was revoked by the Lithuanian regulator.
Latest Wirecard news. Two ex-employees have been jailed in Singapore, the first criminal convictions anywhere in the world relating to the scandal. Meanwhile, Jan Marsalek, the fugitive COO, has claimed that Wirecard’s third party operations, whose existence or lack of existence, brought down the company, have continued to trade.
And finally
Worldline kindly invited me to join its Navigating Digital Payments podcast. If you’ve enjoyed this newsletter, give it a listen. Although I was certainly flattered to be asked to participate, my head isn’t normally this large.
Worldline has reported strong growth in revenue and profits for H2 2022 as its Merchant Services division wins new customers and delivers on acquisition synergies.
Total group sales rose 15% in Q4 to €1.186bn. Excluding acquisitions and currency effects, revenue was up 11%. Worldline only releases profit numbers for half years. In H2 22, total OMDA (operating margin before depreciation and amortisation) rose 25% to €664m.
Worldline’s future is quite clearly now tied to Merchant Services, which accounts for 70% of group sales and 78% of profits. Performance at the two smaller divisions has been much less exciting. Financial Services grew sales just 4% although management is very proud of a new multi-market issuer processing deal with ING Bank. Mobility services, including mass transit ticketing, saw revenue grow only +1%.
In contrast, Merchant Services numbers all pointed in the right direction. Payment volume rose 16% to €173bn, revenue was up 20% to €835m and profits (OMDA) rose 42% to €517m. Margins expanded 5ppts to 31% “reflecting the widespread and rapid shift towards digital payments as well as the Group’s strong positioning following the acquisition of Ingenico.“
Bottom line performance has been helped by the impressive realisation of synergies from the Ingenico and SIX acquisitions. Worldline claims €60m annual savings already realised from Ingenico with a further €40m to come in 2023 from this and other acquisitions. The fourth and final year of the SIX integration plans has been completed with over €110m annual synergies delivered.
Merchant count rose 7% year on year to 1.245m split between 1.06m POS merchants and 185,000 web shops. Excluding recent acquisitions, Worldline has gained 200,000 merchants since the end of December 2020. Annualised processed volume per merchant rose 8% to €277K and revenue per merchant was up 15% to €1,335.
Marc-Henri Desportes, deputy CEO, said: “We build the best comprehensive payment stack by combining progressively the best assets of all our acquisitions, connecting them and migrating our volumes to reach scale, efficiency and the best product features.”
Management provided some detail on its Merchant Services strategy which focuses on leveraging Worldline’s consolidated acceptance/acquiring platforms to win enterprise clients, continued geographical expansion, normally in alliance with local banks that have good SME distribution, and on adding additional product capability through acquisition.
Enterprise sales are reported very strong as potential clients warm to the unified set of capabilities presented by the Worldline brand as highlighted by this chart from the results deck. Desportes went on: “We have now the best and most competitive offer on the European market for demanding high-volume retailers…these customers need a simple, unified commerce solution… we could beat the best international players who were tendering against us.”
Moving to SMEs, roughly 50% of European merchant acquiring is still controlled by banks, many of whom do not have the scale or technological capacity to provide modern payment acceptance propositions. In the past year, Worldline has concluded several good bank partnerships:
Italy – purchase of 80% of Axepta, which brings 5% of the Italian market, and a strategic partnership with BNL. The latter aims to sell Worldline products through BNL’s extensive distribution network. Worldline has also announced plans to buy the merchant acquiring activities of Banco Desio, adding a further €2bn payment volume.
With FIS demerging Worldpay, analysts asked whether Worldine would participate in any mega-mergers. Gilles Grapinet, CEO, said he was focused on more manageable corporate activity. “We are more interested into the size of the distribution channel than the financial magnitude of the transaction.. We believe the best way … is to expand the size of the distribution for Worldline, much more than onboarding any sizable, new payment platform that would generate massive integration effort and costs for a few years’ time.”
Sabadell is believed to be insisting on a trade buyer for the unit. Having ruled out a sale to private equity, three international processors – Nexi, Worldline and Fiserv – are reportedly still in the running to buy Spain’s second largest merchant acquirer which accounts for 16% of the market. The EBITDA multiple is not available, but the suggested sale price of €400m suggests a very similar valuation to Bankia, another merchant acquirer, sold to a Global Payments JV in 2021.
Spain’s domestic payment industry has had a difficult couple of years. The merchant acquirers are more tourism dependent than most. Many were badly hit by the pandemic and associated travel bans but business has since bounced back as borders reopened. With total payment volume of c.€258bn and strong cash to card trends, Spain remains a very promising market for inward investment.
Sabadell’s payment volume was up 31% in the twelve months to June 2022 at €41.9bn with 14% of volume as eCommerce according to Nilson. Sabadell has 438K points of sale (physical and online) across 214K merchant outlets. Revenue for the whole cards business (issuing and acquiring) was up 14% in H1.
Sabadell is outsourcing merchant acquiring primarily because it needs to raise extra capital to support its transformation plans. Outside Spain, Sabadell partners with EVO Payments in Mexico and Square in the UK, through its TSB subsidiary.
In Spain, the successful bidder will likely also get a long-term partnership arrangement with Sabadell for lead referral. This will help the bank maintain its customer relationships and prevent a competitor bank using merchant acquiring to establish a bridgehead with Sabadell’s merchants.
None of the three suitors has much business in Spain today. For each, the deal would represent a springboard into one of Europe’s largest payment markets helped by a strong distribution partnership with this leading retail bank with over 1,500 branches. For Fiserv, Worldline or Nexi, the business case to buy Sabadell’s merchant acquiring unit is primarily about cutting costs through consolidating processing and product development with their other European businesses. There will also be opportunities to sharpen up local sales and marketing and introduce leading products from other markets such as Clover.
Nexi and Worldline are both highly acquisitive. Nexi has recently bought merchant service businesses from banks in Croatia and Greece. Worldline has made two purchases in Greece and set up a JV with ANZ in Australia.
According to Reuters, the Sabadell board has already reviewed offers and will move quickly to the final stages of the auction.
