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Mergers And Acquisitions In The Payments industry across EuropeThe payments industry is seeing an upturn in the mergers and acquisitions in the payments industry as companies consolidate to compete for scale and reduce costs in the face of the challenges posed by fintechs and new companies specialising in e-commerce payment systems in a shifting regulatory environment.
Former Senior Vice President of Corporate Strategy and Development at Ingenico, Grégory Lambertie, has joined the Worldline family as Head of strategy, M&A and Public Affairs, following the merger with Ingenico. In this interview we discuss Grégory’s expectations for his new position at Worldline, the opportunities created by the merger and how he thinks the consolidation trend in the payments industry will affect the future of the industry.
Grégory Lambertie, Head of strategy, M&A and Public Affairs.
Can you tell us about Worldline’s high-level post-merger strategy?
Worldline has a proven track record of successful acquisitions and integrations, which reached new heights with the acquisition of Ingenico in 2020. This friendly transaction was a major strategic milestone for Worldline and made the company the fourth largest payment player in the world.
In 2021, we will leverage our new constellation and pursue a transformation towards becoming an ecosystem enabler and trusted technology partner with an enhanced focus on payments acceptance., We will also, among other things, finalise and execute the strategic review of Terminals, Solutions & Services (TSS). The objective is to determine the best option for the long-term development and the transformation of terminal activity in the direction of a cloud-based Payment Platform as a Service (PPaaS) model, where cloud-based payment apps, API and orchestration modules allow an improved experience for merchants and consumers alike at the point of sale (POS). In the end, we want to ensure
that Worldline, as the leader of today in technology at the point of acceptance, remains the leader of tomorrow .
We are also ready to explore opportunities outside of Europe, particularly those that offer high synergies with our existing business. As an example, we signed a joint venture with the Australian and New Zealand Banking Group (ANZ), which is our first major foray into a new continent and we're getting ready to close that acquisition towards the end of 2021.
E-commerce is another focus area we wish to explore at a time when the digitisation of commerce is accelerating. There are many opportunities for growth there and we have the financial means and cash flow generation necessary to achieve our ambition. We're cautiously optimistic as always, but we think there is potential. Finally, in terms of Financial Services, our ambition is to both add scale when possible and think about next gen capabilities (cloud, real-time, multischeme).
Can you tell us about your post-merger strategic considerations that leverage? Some of the key areas of Ingenico?
The merger really added scale to our Merchant Services business. Given the current trends in payments, having an end-to-end value proposition for different merchant segments is a key success factor for us. In the last couple of years, both Ingenico and Worldline built a solid offering in omnichannel solutions for small and medium businesses as well as for large enterprise clients in Europe.
I think Worldline has materially improved its global offering in terms of e-commerce, and the combination of both companies’ portfolios means we have the full product range and the customer breadth that is required when operating at this level. This has been recognised by our clients as well as by our shareholders – our stock price is currently close to an all-time high. However, we're still looking into emerging opportunities that could complement our current offering, help us accelerate the group’s growth or increase market share and I think that's where global e-commerce is coming into play.
Has Worldline’s identity changed from a primarily European company to a more global one?
With the acquisition of Ingenico, Worldline has acquired a broader international perspective in the breadth of geographies that we serve and also because we have a business that caters to global digital players for whom we take care of a number of fund transfer services. Essentially we manage their funds flow when they don't intend to set up complex entities across the world. We are also helping them grow without having the headaches of dealing with payments locally.
From a strategic point of view, where do Worldline and Ingenico complement each other well?
The combined company now has a very strong position in Europe from a market share perspective, as well as an increased footprint globally. Ingenico and Worldline complement each other very well both in terms of products and skills. Worldline has a strong track record of operational efficiency and streamlined processes that is allowing us to deliver the meaningful synergies we promised to the market.
The international aspect of Ingenico is also something that brings talent and cultural diversity as well as probably a stronger balance in terms of gender diversity. This is very good and it contributes to the possible improvement of our working culture.
Could you address the current market situation and the trends you are observing?
We have seen an acceleration of online, mobile and contactless payments over the course of the pandemic. This trend benefits not only consumers but also the card issuers and payment players who streamline their processes and manage them increasingly online.
We will also see an acceleration of Buy Now, Pay Later (BNPL) options, which have become increasingly popular since 2020. Interestingly, the increasing adoption of BNPL is happening in all age categories versus only the younger generation as seen before.
The acceleration of P2P, peer to peer payments, is another notable trend that was stagnating slightly in some geographies prior to the pandemic. It has now accelerated with the limitation of cash payments. People are increasingly using apps to pay each other back. P2P payment may be more relevant for micro businesses and we are observing that tendency – for example, a plumber comes to your house without a terminal and you pay mobile to mobile through different rails. So, these use cases are becoming an integral part of large payment players’ thinking as we get into the next phase of payment.
One other trend, finally, is embedded fintech and the seamless integration of payments and any other financial services into the merchants’ software system so that the payment is no longer a separate action for the customer. This requires a lot of integration and not just having the card on file. It can be achieved by an embedded fintech layer, which is also a trend in itself.
Digital wallets are a part of the online mobile category and the number of digital wallet users is expected to reach 4.5 billion globally by 2025, which is almost double the 2.6 billion users in 2020. The total amount consumers will spend through digital wallets is also expected to double in that time period from $5.5 to $10 trillion. So that's a big move and the pandemic has accelerated that.
What are your ambitions for Worldline’s strategy over the next three years?
We are now moving into the next phase of the Worldline journey where growth will be the name of the game. [pull out quotes] We have very strong skills in terms of generating synergies and increasing margins. However, as merchants want us to accompany them through their growth journey, we will need to raise our game in terms of products and ability to grow. That is going to be our main challenge in the next three-year plan to get there.
“We are now moving into the next phase of the Worldline journey where growth will be the name of the game.”
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