British payments platform PPRO Group has just received a major boost in its efforts to help larger companies in Atlanta engage with emerging e-commerce markets around the world.
PPRO on July 16 announced that it had raised $50 million in a new investment round led by online payments giant PayPal, with the goal of bringing its “alternative payments” solutions to more processors.
The investment will drive PPRO’s U.S. growth out of Atlanta, where the company set up shop in a bid to serve the city’s concentration of industry heavyweights.
Simon Black, the CEO, said during an Atlanta visit in May that the London-based company was already planning to double its workforce here in each of the next two years, going from three to 12. (Two new Atlanta jobs are now posted on its website.)
PPRO helps its payment-processing clients offer merchants the ability to accept more than 200 non-traditional payment methods in places like Mexico and Indonesia, where credit card penetration is low.
In other words, it allows customers buy how they want rather than abandoning the shopping cart when Visa or MasterCard are the only available options.
Alternative payment methods might be foreign to Americans, but PPRO estimates they account for about half of global e-commerce sales. And the company says that some 350 “significant” methods exist worldwide. Credit cards, meanwhile, account for only 20 percent of global e-commerce transactions, which totaled $2.3 trillion last year.
Some new methods are quickly becoming de facto standards at home: In China, WeChat Pay and Alipay, both deployed largely by scanning QR codes with a mobile phone, are nearly ubiquitous in major cities. In Mexico, convenience store chain Oxxo has an online payment method that allows the buyer to pay in cash when they pick the item up at a physical location. Mobile money transferred via SMS through M-PESA and other platforms is popular in Kenya.
Even in some developed markets, especially in Europe, the credit card isn’t king. Dutch online shoppers prefer iDEAL, which transfers funds directly from their bank accounts to merchants.
For American sellers, offering such options can make the difference in closing a cross-border sale, and their payment providers are realizing that PPRO can be an ally in simplifying the process and retaining that business, Mr. Black told Global Atlanta in a one-on-one interview at the Fintech South conference in early May.
Since then, PPRO has landed a major investment as well as partnered to bring alternative payment methods to online marketplace provider YapStone.
Below is the full Q&A from Fintech South, edited for length and clarity:
Global Atlanta: Why did PPRO choose Atlanta?
Mr. Black: As more businesses are having international success or thinking they’re going to want to go international, they’re seeing that you need to offer the local payment methods to the consumer. They get first hand consumer feedback, and that demand is pushed up from the consumer to the merchant and from the merchants to the payments companies — so where are the most payments companies and merchants in the States? Atlanta.
Global Atlanta: Why haven’t those giant processors like First Data just built this solution themselves?
It’s really an issue of specialization for acquirers. When you serve a merchant directly, there are so many other things they want from you, from omni-channel to loyalty integrations, risk management and reporting, as well as integrations with third-party apps and accounting systems. We figure international payments is a challenge in itself.
Companies are starting to realize that they can’t do everything. International payments is so fragmented, it’s a lot of work and requires real expert knowledge. We’re partnering with more and more companies, including local ones like First Data and Global Payments
[pullquote]Payments as an industry is globalizing, and the key is the present tense. -Simon Black[/pullquote]
Global Atlanta: Is the mindset among the big transaction processors shifting away from the old model of just accepting payments on the major credit card association networks? How dialed in are they that they need to think more broadly to serve the world of e-commerce, especially in emerging markets?
There’s something about human nature — it’s very hard to recognize that you’re going through change in the moment, and some incumbents aren’t ready for this shift. Payments as an industry is globalizing, and the key is the present tense. It’s not really a global industry.
Five years ago, the big companies’ view on alternative payments was, ‘Where’s the volume?’ But it’s changed as e-commerce has taken off in other countries.
To some extent, it doesn’t matter too much what happens in the States; the rest of the world its just getting bigger and bigger in terms of the size of the market. That’s where you have to support these local payment methods. Some of them individually may come and go, but it’s not all going to be Visa and MasterCard. That, I think, now is widely accepted.
How have you positioned yourself as a partner versus a disruptor with the major players in the payments world?
We are a classic example of strategic outsourcing. We solve a real pain point. It’s speed-to-market: we reduce all the complexity and therefore the overhead. And it’s strategic enough that you have to have this to offer merchants, but it’s not so strategic that our partners feel they have to have it in-house. They’re happy to work with a trusted partner. Also, we don’t compete with them for the merchant. We don’t sell to them directly, so we’re not a threat.
To integrate to one payment method, there’s nothing magic about that. That can be done. It’s quite time-consuming, more than people think. But if you wanted to do more than a handful, the only smart way to do it is to create another platform to keep a little bit of distance from your core gateway. That’s what we’ve done. We’ve cerated a platform integrating 200 different ways to pay, and the magic is that we can make all of that available in one connection.
What is your vision for your U.S. presence and what do you see as Atlanta’s role in your global scheme
I think Atlanta will be really important in a couple of ways. First of all, our model with our customers is very much a partnership model. Most of our revenues are transaction based, so we only make money if our partners are making money.
Being close to some of our key partners in each region is very important, so Atlanta is here to serve the North America region. It will also be a platform to get closer to the Latin America region, but then we’ll open up a regional office there.
Atlanta will also become important for us globally as a technical center. Part of our rationale for selecting Atlanta was the great talent there is on tap at Georgia Tech and other schools.
Do you see the growth of exports in the U.S. as a big opportunity, given that American companies will have to find ways to more easily reach new customers across borders?
Huge — and that’s again why we’re here. If you’re successful selling to U.S. consumers, you’re successful in selling in one of the most challenging, competitive commerce markets in the world. If you’re winning at that, you’re crazy not to go and sell into other markets.
Yes, there’s some additional work and overhead, but it’s not like you’re a physical retailer. It’s very easy, and there are a lot of support companies that will enable you to handle the logistics, taxation, duty requirements, so totally go for it and just get a payment service provider that can support you with all the local payment methods.
