Interview

Local payment methods: Powering growth and agility in the wake of a global pandemic

Wednesday 2 December 2020 09:42 CET | Editor: Andra Constantinovici | Interview

The Paypers caught up with Simon Black, CEO of local payments infrastructure provider, PPRO, to get his take on how the payments landscape changed in 2020 and what that means for the future

Over the past year, social distancing has disrupted all parts of life, and consumers’ habits and loyalties are no exception. Global e-commerce volumes are up by at least 20%. In some markets, it’s much higher than that. Unsurprisingly, there’s been a huge surge in the use of digital payments. Some providers report a 50% increase in volume since lockdown began.

How has COVID-19 changed the global payments industry?

This year, the transition to a global digital economy – a structural transformation 20 years in the making – arrived in an instant. The pandemic has made e-commerce channels and digital payment methods table stakes for survival. Now more than ever, companies are pressed to offer localised experiences to consumers worldwide. 

Global payments leaders have continued to attract new funding or seen share prices double. Indeed, PPRO raised $50 million from Sprints Capital, Citi Ventures, and HPE Growth this summer. 

The world of alternative – or local, as we prefer to call them – payments is experiencing hypergrowth. 

Local payment methods all around the world have grown at staggering rates; OVO in Indonesia has seen a 267% increase in new users. Payment methods in Europe – BLIK in Poland, for example – have seen triple-digit growth. This has been prompted by an almost overnight need for digital, accessible payment options that newly online consumers trust and prefer. 

In the US, Klarna saw transaction values grow by 44% in the first half of 2020. As a result of smaller incomes and a growing desire for interest-free payment options, other Buy Now Pay Later schemes are seeing similar figures.

How is this growth reflected in PPRO’s business?

Late this summer, we were pleased to report an 85% increase in transaction volume from last year. This growth reflects so clearly the exponential opportunities for cross-border e-commerce amidst the pandemic. 

With all this opportunity in the payments space, do you expect to see consolidation of payment methods? Or do you predict more will emerge? 

I expect continued cooperation, “coopetition,” and consolidation among larger players (paydirekt taking over giropay in Germany, for example). But, as new technologies emerge and new markets or demographics come online, we’ll see many new payment methods emerge to meet the needs of these users. 

These payment methods are experts in the local market, and thus able to gain the trust of local consumers. We’ve seen this again and again, for instance with M-Pesa in Kenya, Grab in Singapore, and so on. 

There’s no reason to believe this will stop or slow down. Globally, billions of people are still not online. But that’s changing fast. In the twelve months leading up to October 2020, 321 million people connected to the internet for the first time. As new markets and new populations come online, providers will certainly develop new payment services for them. 

What does such a massive increase in use of local payment methods mean for payments companies? 

On the one hand, their business is growing. That’s great news! On the other, it’s an enormous challenge to keep up even just a fraction of the world’s 500 local payment methods. Even for the best and biggest out there.

PSPs and merchants must know which payment methods are important to their target audiences, negotiate contracts in different languages for each market, understand regulations, get licenses, open bank accounts, do the technical integrations … This is a lengthy and complicated process, even for just one payment method. 

When companies try to scale their offering to multiple markets or payment methods, it quickly becomes too time-consuming and expensive. So, they need to find an agile way to meet the needs of their customers.

How do payment service providers become more agile?

The most efficient way is to work with a payments infrastructure partner like PPRO. We accelerate time to market and free up our partners’ resources to differentiate in other areas. We integrate and commercialise local payment methods from markets worldwide much faster than most companies, because that’s our sole area of focus. We globalise payments as a managed infrastructure service on-demand. And we collaborate deeply with our partners, acting as a seamless extension of their team. 

Companies work on Google Hangouts or Slack or similar tools. There’s a reason they don’t build their own collaboration system; it’s because everyone needs to focus on doing what they do best. We see local payments infrastructure the same way. The right provider should handle all the technical, legal, and commercial complexities, much of the cost, and speed up time-to-market for its partners.

What is the number one priority for payments businesses in the wake of COVID-19? 

The pandemic created an unprecedented opportunity to win new customers. But companies will miss that opportunity if they fail to create personalised, frictionless payment experiences. 

So, at PPRO, we think offering the end customers’ preferred payment method at checkout should be the number one priority right now. 

But it’s not merely a question of quantity. Payment companies need quality integrations at scale. Focus on delivering that, and your customers will keep coming long after the pandemic is over.

About Simon Black

Simon Black is a seasoned business executive with over 25 years international experience. He is highly regarded within payments, leading two of the industry’s success stories over the last 10 years. Simon joined PPRO as CEO in March 2015. This followed a decade with Sage Group PLC where he held the position of Sage Pay CEO for seven years, driving dramatic growth. Simon expanded PPRO’s acquiring business which connects PSPs and financial institutions with over 140 payment methods worldwide and drove profitability on the e-money issuing side of the business, with more than one million reloadable prepaid cards distributed to date.

About PPRO

PPRO enables integrated electronic payment processing on a global scale spanning the entire payments value chain from acquiring through processing, collection, and settlement. PPRO acts as a B2B payments hub, connecting PSPs and other merchant aggregators, such as acquirers and processors, with local payment methods.


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Keywords: PPRO, Simon Black, payments , online payments, COVID-19, payments service provider, payment methods, Europe, merchants, Germany, buy now pay later, BNPL scheme, Klarna
Categories: Payments & Commerce
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Countries: Europe
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