As payments companies continue to look to the long tail of global markets to expand their businesses, a startup that helps them do business in disparate economies is getting a strategic investment from one of payment world leaders.
PayPal is leading a $50 million investment into PPRO, a London-based business that is focused on cross-border payments for merchants, specifically by offering the merchants a seamless way of accepting payments from customers using whatever the most popular payment form happens to be in a particular country. To date, the PPRO platform covers some 140 payment methods, and the plan will be to add more countries, and more payments, into the mix.
The deal comes at the tail end of a wave of acquisitions from PayPal as it looks for new ways of expanding its business as growth tails off in its more established markets and established business lines. Between mid-May and now, it has acquired iZettle for $2.2 billion to expand its mobile point-of-sale opportunities; AI-based CRM specialist Jetlore; AI-based fraud and risk management firm Simility for $120 million; and gig economy payment facilitator Hyperwallet for $400 million.
This PPRO investment also includes participation from new investor Citi Ventures and previous backer HPE Growth Capital. PPRO is not disclosing its valuation but Simon Black, its CEO, said in an interview that it’s definitely up on its previous funding and described it as a “minority investment” in the company.
Interestingly, PPRO has raised only around $10.6 million since its founding in 2006; it is already profitable; it has around 200 employees; and it competes with the likes of Adyen, which recently went public at a valuation of over $8 billion — to give you an idea of the opportunity and value of the company.
The challenge that PPRO — pronounced “pea-pro” — is addressing is an interesting and complicated one. While the growth in e-commerce has been a global phenomenon, like a plant, it has grown differently and adapted to each market depending on local conditions. In the case of payments, that has meant a disparate range of payment methods that are standard in some countries, but not others.
While credit cards or debit cards, for example, are very standard in the US and UK, in Japan, a lot of people pay for items purchased online by cash on delivery, or at convenience stores. In the Netherlands, there is a system called iDEAL that routes payments directly through your bank account. And so on.
For a merchant that is based in one country but interested in selling to people in another, this can pose a problem, if it doesn’t accept whatever the local payment method happens to be.
That’s where a company like PPRO comes in. It essentially creates an interface for the merchant to be able to select acceptance using a variety of methods, with the idea being that PPRO will provide access to whatever happens to be the most common methods in a particular geography. It’s a kind of service that would be too timely, and not the core competency, for a merchant to resolve by itself, and if anything continues to become more complex as e-commerce continues to become more ubiquitous.
“There has been a real change in the last three to five years,” Black said of the rise in transactions, which have been fuelled by smartphones and a much bigger population of people doing more of their buying and transacting through them. “Alternative payments are here to say, and the growth seems to be going a lot faster.” In fact, PPRO estimates that these days, credit cards account for less than 20 percent of all online transactions globally.
PayPal has an obvious agenda in hoping that its platform becomes to default for any transaction, and that is a big part of its strategic interest in PPRO, to provide PayPal as an option in the mix of payment acceptance methods wherever its nearly 20 million merchants happen to be doing business.
The other is to make sure that within PayPal itself, that users can integrate whatever their preferred payment method is into their PayPal wallets. (So in the UK I can link up my debit card, but in the Netherlands a resident there can link up its iDEAL account to top up their PayPal wallet.)
“A merchant’s choice of payments partner is increasingly being driven by the ever-expanding range of locally relevant payment methods available,” said Arnold Goldberg, vice president of merchant product and technology, PayPal, in a statement. “PayPal is pleased to support PPRO as the company continues to grow.”
The two have already kicked off a commercial deal to integrate a “wide range of payment options for our merchants,” he added, as part of the new PayPal Checkout with Smart Payment Button, which also integrates Braintree. “This is yet another way we are positioning ourselves to be the one-stop solution for global digital commerce.”
The other side of PPRO’s business is in issuing physical or virtual Visa and Mastercard prepaid cards to consumers under the VIABUY brand as well as a white-label offering. It’s this part that might have particularly interested Citi, which has a giant credit card business — although it’s one that PayPal can also potentially tap down the line as it expands in more markets outside of its home base in the US and stronghold in Europe.
“Technology is revolutionizing how consumers and businesses make and accept payments, and PPRO is on the leading edge of meeting those needs,” said Luis Valdich, Managing Director, Citi Ventures. “Citi Ventures is delighted to invest in PPRO, which enables businesses to collect funds from alternative payments schemes globally and more and more consumers to join the digital economy.”