Browse the most up-to-date analysis of the ecommerce payments partnerships signed in the last two quarters made by The Paypers and extracted from the latest Who's Who in Payments Report 2022
When it comes to B2B and B2C ecommerce payments, we are definitely living ‘the roaring 2020s’. After two years of pandemic, topped off with further uncertainty caused by the current political and military situation in Ukraine, it feels like ecommerce is living its best life on the coattails of a general state of ‘carpe diem’.
With a steady growth starting in 2020, the global ecommerce market is projected to grow more than 50% through 2025 to reach over USD 8 trillion in transaction value, according to FIS study released in March 2022. In all this tsunami of enthusiasm towards buying, spending, and ultimately, experiencing the most out of life, for merchants and payment facilitators, it can become unclear what the actual consumer behaviours they should watch out for are and how to best capitalise on the numerous tech advancements in their payments strategy.
With this in mind, The Paypers set out to trace a red line through the most relevant trends that the main actors in the ecommerce space should be aware of. Now, there are several ways to spot a trend. From sourced market data harvested by reputable industry consultancies probing the ecosystem to identify the needs of companies and their customers along the value chain, to following up on M&As and investments, or just, ultimately, observing your own individual exposure to the frictionless nature of day-to-day spending as an end-consumer in the current tech climate.
But there is another way. If we focus our attention on the strategic partnerships signed over the last couple of months and crunch down on the product and geographical expansion of some of the most relevant companies populating the B2B and B2C ecommerce payments ecosystem, their moves are a tell-tale sign of what we should be focusing on in the coming months, and even years. In the following material, we will be zeroing in on the most notable partnerships driving innovation and the geographical and product expansion strategies derived from them. We clustered the raw data in the following major themes:
After years of dichotomies such as incumbents vs challengers, banks vs fintechs, for the ecommerce space and the average consumer, Open Banking is finally at a stage where the common denominator in the general dialogue has become process simplicity and the cost of transaction, considering the high volumes merchants are increasingly dealing with.
There is something to learn from Volt in this area. In October 2021, the payment gateway partnered with Worldline to give enterprise-level merchants access to Volt’s open payments infrastructure. The companies came together to accelerate the adoption of Volt’s open payments gateway throughout Europe, while continuing its expansion into Asia and Latin America. The British company also dove into crypto payments with the aid of crypto-powered toolbox Mercuryo. As explained by company officials, real-time A2A payments will provide Mercuryo wallet users, alongside their business partners, with single-click payment solutions via fiat.
In February 2022, British payment service provider ECOMMPAY teamed with Singaporean fintech Nium to enable its customers to make payments to global markets. Through the partnership, ECOMMPAY enables payouts to merchants in various regions across the globe, made directly to the bank accounts of the user in the country of choice, using a local network. It also offers merchants a closed-loop system where the entire payment journey is managed in one dashboard.
In the same vein, A2A payments platform Vyne teamed with Gr4vy to enable merchants, through the latter’s cloud-native payment orchestration platform, to streamline and manage payment methods, services, and transactions all in one place. Vyne previously had announced a partnership with British fintech CellPoint Digital, through which merchants can incorporate Vyne into their payment ecosystem, providing instant payments without the need for direct integration with an Open Banking provider.
Employing a more hands-on tactic, global payments platform for A2A transactions Trustly partnered with IKEA, allowing shoppers to pay for their purchases directly from their online bank account. The partnership has initially rolled out in Austria and was announced to extend to several other European countries in 2022 and onward.
Slowly, but surely, we are starting to see A2A payments shifting from a solely P2P medium to a more mainstream and applicable spectrum. To sum up, the current dichotomy might be banks vs card schemes, as payment gateways like the ones mentioned above seize the opportunity to round up their costs when not placed between card schemes and acquirers anymore, merchants look forward to streamlining their processes, both on the front and the backend, and banks strive to reinstate themselves as gatekeepers in a more ‘democratic’ payments ecosystem.
Visa focused more keenly lately on integrating its push-payments platform Visa Direct into businesses in the UK and Europe. In its latest partnership, they recruited Paysafe’s single point of connection to enable push payments to eligible Visa cards for domestic payouts, and to eligible Visa cards and accounts for cross-border payments. Discover, in their own right, embraced A2A payments by partnering with Buy It Mobility Networks to give US merchants the option to accept payments directly from shoppers’ bank accounts. Both of these major card networks seem to be on a path to trying to pluralise their portfolio and capabilities beyond the traditional ‘payments scheme’.
Mastercard, on the other hand, appears to be on a different scaling path, one that includes expanding its issuing reach, through partnerships more attuned to the US market. Mastercard penetrated a significant segment of the ecommerce and delivery scene by issuing credit cards for online grocery and delivery platform Instacart. Just this April, the credit card scheme also partnered with commerce platform GoTab to augment the digital payment experience at hospitality venues in the US with Click to Pay, a feature that facilitates consumers to check out online without having to remember passwords or manually enter card details each time.
While Visa is expanding its scope beyond a card scheme and Mastercard focuses directly on merchant partnerships, UnionPay International has been on a streek of penetrating new markets for a couple of ongoing months. After they partnered with Pecunpay in December 2021, allowing the latter to become one of the first Spanish issuers in Europe to issue UnionPay cards, the Chinese card scheme continued in January 2022 with two partnerships: one extending its issuing services into payment processing, payment gateway, and payment aggregator services (through Bancstac) and the other with British FCA-regulated payments provider FMPay to accept UnionPay affiliated cards starting Q1 of 2022.
It’s interesting to follow the ever-changing nature of the relationship between banks, PSPs, and merchants with card schemes. While some continue relentlessly on a path to the geographical expansion of their issuing reach, others try their best to develop at the same pace as the alternatives that peaked in the last two years.
Being the fastest growing payment method at the POS globally, by 2025 BNPL is projected to account for 1.6% (USD 941 billion) of global POS transaction value according to FIS.
With Europe continuing to lead in the use of BNPL at the point-of-sale, accounting for 1.9% of in-store payments in 2021, Klarna must be mentioned as one of the biggest use cases when it comes to this boom. Their product expansion strategy in the last couple of quarters has been a visible example of having a clever eye for supply and demand.
Its strategy spanned multiple levels, first partnering up with big merchants directly to enable BNPL propositions on their platforms (notable liaisons here are ABOUT YOU in Germany and Switzerland, implementing its Pay in 4 and Pay in 3 proposition to WIX users, or being contracted by eBay in Germany as an alternative payment method on their platform).
Secondly, the Klarna went for major ecommerce platforms to intermediate their proposition for the merchants in their networks, killing two birds with one stone. In October 2021, SaaS giant Stripe has signed a strategic partnership with Klarna to offer the latter’s BNPL payment method to its merchants. For in-store payments on the US market, Klarna partnered with FreedomPay in the same month. The same principle was applied in 2022 with a partnership with GoDaddy, the BNPL provider’s suite of alternative payment solutions being made available on GoDaddy.com across all of Klarna’s core markets, including the US, UK, Australia, New Zealand, Germany, Sweden, and Canada. The company’s most recent partnership is with cross-border ecommerce provider Global-e. Through this agreement, merchants selling to Canada via Global-e’s cross-border ecommerce platform, including brands such as Reformation, SKIMS, Fenty Beauty, Rimowa, Versace, Marc Jacobs, and Marks & Spencer, can now offer consumers flexible payment options.
But the company’s extensive expansion strategy didn’t stop there. American card issuer Marqeta has extended its partnership with Klarna into 13 new European markets in December 2021. After launching Klarna’s UK shopping app in May 2021, a broader expansion to 12 additional markets in September 2021 followed, with Marqeta supporting Klarna’s one-time virtual cards in all 12 markets (United Kingdom, Germany, France, Italy, Spain, Netherlands, Poland, Belgium, Austria, Ireland, Norway, Finland and Denmark). Klarna uses Marqeta’s Just-in-Time Funding feature to give it control over the full transaction flow, as well as Marqeta’s technology, and suite of more than 300 open APIs to power customisable product experiences.
Klarna’s ascent speaks about BNPL’s peak popularity at the moment, considering that this is the same company that reported net losses of USD 470 million for the fourth quarter of 2021, compared with USD 77 million in the same period the year before, according to Financial Times. The company proportionally counted 147 million active consumers in 2021, a 70% increase year on year.
However, if BNPL’s ubiquity during and after the lockdowns is on the table, a number of other relevant challengers to Klarna’s monopoly have something to say on the matter.
The Asian market has been a pillar of innovation and a trendsetter when it comes to the wide adoption of new tech for quite some time. This principle applies to BNPL as well, with the general rule of thumb being that one prominent or up-and-coming BNPL provider seeks an established PSP or ecommerce platform in the market to enable integrated payments and instalment options for their respective merchant partners. This is the strategy Hong Kong-based payment service provider AsiaPay applied by teaming up with BNPL provider Pace to give shoppers the ability to pay in instalments at checkout.
Omnichannel BNPL platform hoolah has signed two important agreements in March and April of 2022. One with ecommerce payments processor Primer, to allow merchants in Singapore, Malaysia, and Hong Kong to integrate instalments in their payment methods portfolio. The other one focused on the same three countries, hoolah consolidating its presence with a partnership with payments platform 2C2P.
While payments infrastructure provider PPRO has announced the integration of Indonesian BNPL operator Kredivo in its ecosystem, Atome signed a partnership with Standard Chartered to deliver mobile financial services to customers across Asian markets, with a focus on Indonesia, Malaysia, Singapore, and Vietnam.
The list can go on, and the context for this fertile market is evaluated by specialists to also be a by-product of still immense potential for the financial inclusion space, with more than 70% of adults in Southeast Asia, or cca 450 million people, either being underbanked, having no bank account, credit or debit card, or access to lines of credit, according to Bain & Company.
Looking back to the Western space, notable names such as APEXX, Zilch, Splitit, or Affirm are taking their fair share of the pie, partnering either with monoliths like Amazon to offer BNPL (APEXX) or with payments platforms with strong merchant networks like Thunes:
One strategy that becomes apparent for these up-and-coming BNPL providers is to team up with indisputable powerhouses in the ecommerce space that register very high transaction volumes, thus maintaining a steady and trusty influx of customers.
Overall, there’s no telling if this is a good enough tactic to stay afloat in the long term, but if we are to take a page out of Klarna’s workbook, an integrated approach of tactical partnerships with key merchants, heavying your portfolio of ecommerce platforms who enable you access to a wide network of smaller merchants, paired with a constant outlook for means to widen and diversify product ranges is clearly the way to go.
From Damocles and uncle Ben, we all know that with great power comes great responsibility. This ancient adage can be easily applied to the ecommerce boom of the last couple of years. From building an ecommerce business for your brick-and-mortar shop from the ground up to regulatory compliance, all the way to running a tight ship when it comes to payments security and orchestration, merchants have learned the advantages of turning to integrated full-service platforms such as Shopify or BigCommerce. These two behemoths, along with a number of other similar services offer subscription-based tools to set up and scale digital storefronts.
We’re taking a closer look at them as both of these names have been signing notable partnerships focusing not only on expanding their merchant portfolios but most visibly on solidifying their product offering.
In March 2022, BigCommerce selected dLocal to support cross-border as well as local-to-local payins in LATAM. dLocal’s solution enables BigCommerce merchants to accept localised payments such as local cards and Alternative Payment Methods (APMs), including Boleto Bancário and Pix in Brazil, and Oxxo in Mexico. In the US, its main operating market, BigCommerce extended its partnership with checkout and shopper network company Bolt to allow SMEs to set up the Bolt One-Click Checkout payment solution. Furthermore, the platform integrated with commerce enabler Digital River to provide mid-market to enterprise merchants an end-to-end solution for cross-border selling and expansion.
As subscription payments are a growing market in its own right, BigCommerce has been working with subscription management software provider Chargify to build a recurring billing and subscription management suite for B2B or B2B2C companies to support their ecommerce billing and pricing models.
In February, following a BigCommerce survey stating that 77% of global customers were considering abandoning their carts if the delivery options were unsatisfactory, the ecommerce platform partnered with FedEx Express to improve conversion rates and boost the fast-shipping sector.
Unanimously, the above moves have a more scaling and strategic aspect to them and have less to do with geographical expansion. Shopify, however, the de facto monopoly-owner of its segment (with around 600,000 retailers in its portfolio) has turned its eyes towards the Chinese market in January, integrating with local marketplace JD.com to make it easier for US merchants to sell to China.
This move came after the ecommerce platform announced a flashy partnership with music streaming platform Spotify in October 2021, to enable artists to link Shopify accounts to their artist page. Shopify was no stranger to consolidating its range of products, however, teaming with Microsoft and Oracle to develop its own ERP programme, offering key business data like financials and inventory to ecommerce businesses
These use-cases speak volumes both for merchants looking to bundle up their needs and seek assistance from an integrated platform such as the above too, but also for ambitious integrated service platforms looking to get in the game of scaling ecommerce businesses, both on an infrastructure and payments processing level. The key is to strengthen your position through a steady balance of client enrichment and constant improvement of core services.
As we look onward to see what the rest of this year and the upcoming period has to offer, it’s apparent that the ecommerce payments ecosystem is pulsing with life and growing at an unprecedented speed. The general goal of key actors in the ecosystem seems to be simplicity and ease on the side of their merchant clients, along with their respective end-consumers.
But this ideal of seamless interaction with the ecommerce store and the shopping experience as a whole can be achieved only by reconciling this end need with a complex array of decisions made in the background. Should you put your money on A2A payments becoming a true day-to-day reality or maybe focus on creating a ‘smoooth’ instalment plan for your merchant clients or your shoppers? Invest in an integrated platform or slowly consolidate your payments processing with individually-specialised service providers?. It all might require a little patience and most importantly, a very educated eye for what’s out there.
This article was originally published in the Who's Who in Payments Report 2022, the most recent market overview and analysis of key payment providers in the B2B and B2C commerce payment ecosystem. Download the full report to browse our latest infographics, M&A and investments analysis, detailed payment trends overview and much more.
Alexandra is Senior News Editor at The Paypers. A passionate writer, Alexandra has an extensive background in journalism – as a graduate of Journalism and Communication studies –, as well as editing, publishing, and marketing. She coordinates the news coverage at The Paypers and, together with the team of editors, she strives to bring forward the latest trends for our readers, while investigating and sharing with our community the upcoming innovative industry shifts.
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