“There has been so much capital deployed in FinTech building out solutions that don’t actually solve real world problems.”
Philip Fayer, CEO and chair of Nuvei, told PYMNTS’ Karen Webster that the deal-making and private funding rounds in FinTech might have peaked during the pandemic. Many once-heralded disruptors have failed to live up to their promise.
But as 2023 dawns, there’s room, and demand, for payments platforms to combine to help businesses optimize their payments and boost revenue streams.
As Fayer explains: “The biggest thing about payments is that it should be a revenue driver.”
Nuvei’s proposed $1.3 billion deal to acquire Paya will help speed its transformation and growth into new verticals, Fayer said. Paya’s existing software integrations with over 300 ISV platforms and end-to-end commerce solutions “position Nuvei to capitalize on the domestic and global software-led market opportunity.”
In terms of the mechanics, the acquisition will ‘plug’ Paya’s integrated payment capabilities into Nuvei’s global technology platform and extend the combined company’s reach, diversifying markets, distribution channels and offerings. The integrations with Paya, Fayer said, will allow Nuvei to broaden its portfolio, which touches on everything from issuing and acquiring services to payment orchestration and alternative payment methods including ACH.
The acquisition — and the diversification — also gives a level of counter-cyclical protection against the macro headwinds hitting consumer spending (and by extension, acquiring, card processing and merchant-focused payment services). Significant growth opportunities are on the horizon to Nuvei through Paya’s already established presences in B2B and healthcare, with respective TAMs of $1.2 trillion and $235 billion.
And the deal comes as Nuvei has scale and the opportunity to add even more use cases to its in-place technology stack — particularly Nuvei for Platforms, which helps FIs and FinTechs embed payments into their own platforms.
With a nod toward Nuvei’s current geographic reach and aspirations, Fayer noted that Nuvei “operates in Europe. We operate in North America. We have a growing business in Latin America. We have really big aspirations across our APAC business as well.”
Each of those regions, he said, have different needs. But a few overarching themes have emerged: Client firms need to simplify their technical stacks in order to provide local payment acceptance, and to manage shifting regulatory frameworks governing everything from risk management to account verification and authentication. There’s also the need to manage payroll and processing costs.
Put it all together, and the joint proposition of Nuvei and Paya offers its clients’ platforms a standardized set of processes that enable those enterprises to scale and boost conversions.
After acknowledging that “all of Paya’s verticals are additive to Nuvei’s use cases,” Fayer drilled down into the healthcare vertical’s promise, especially in practice management. He said that when the deal is closed, Nuvei will be well positioned to service this vertical with expanded payment capabilities beyond ACH and acquiring, including open banking.
B2B, he said, is evolving toward a payments-as-an experience mindset, well beyond the confines of simply improving accounts receivables functions.
“A lot of these B2B processes are old and antiquated and they’re having a hard time scaling,” Fayer said. “How do you generate the order in the ERP system, drive payments — and how do you collect payments?”
Bringing Paya’s enterprise resource planning integrations and end-to-end commerce solutions will help businesses manage their financial activities and supply chains in new and different ways — getting paid instantly, for example, instead of mailing an invoice and waiting to be paid.
Looking ahead, he told Webster: “We still firmly believe, even at our size, today we’re still on the ground floor. So there’s a lot yet to do. We’re excited about what we can now do to drive global eCommerce as well as integrated payments and B2B payments as additional use cases for our technology.”