Fintech SumUp at mobile point of sale directs attention to consumers | Payment source

by James · September 13, 2022

Historically focused on merchants, SumUp is branching out with a new consumer product called SumUp Pay.

The new product launches at a time when many payment technology firms are adding products and services to help them appeal to a wider market. Even adding consumer-facing products isn’t unheard of; over the years, Block (then Square) launched and shut down many consumer wallets before they had success with the Cash app.

SumUp’s own wallet app is intended to have a more local focus than the likes of Apple Pay and Google Pay. This means shoppers will earn points by using SumUp Pay at stores that use SumUp to accept payments.

“We’re trying to keep the money local, to strengthen communities,” said Andrew Helms, US CEO of SumUp. The company, which operates in about three dozen countries, focuses mostly on small businesses, he said.

SumUpBL721 — SumUp adds a digital wallet as payment technology firms increasingly offer both merchant and consumer products.

The app has launched in the UK, Germany and Italy on Apple and Google devices, with plans to gradually expand the product to other markets.

SumUp’s wallet includes a virtual Mastercard that can be topped up using a stored card or bank transfers, supporting remote or in-person payments. It also offers peer-to-peer transfers.

“This [‘Pay’ app] It doesn’t detract from the merchant side of the business,” Helms said. “It actually helps us support merchants by bringing in new consumers who use the rewards.”

SumUp has been building technology for the past couple of years, and has provided tools that can help transition to consumer products. The Berlin-based company, which has a presence in the US, bought in 2021 Five stars, a US-based firm that integrates payments with rewards marketing programs and promotions. Other features include collaboration with Shutterstock helping merchants design digital storefronts; and a collaboration with Mastercard and Ford to build payment technology into the cars that small merchants use for their business.

“Playing both sides of the market makes the platform more valuable,” said Richard Crone, a payments consultant. “It allows them to be the issuer without being the issuer, and the acquirer without being the acquirer.”

The app’s release closely follows a June fundraising of around $624 million. Bain Capital Tech Opportunities led the investment, which included participation from BlackRock, Fin Capital and Centerbridge, valuing SumUp at about $8 billion, according to TechCrunch. SumUp did not respond to questions about the valuation.

“The B2C market presents a clear opportunity for payment technology companies to expand their product offerings. SumUp’s expansion into the B2C space is because we see a clear gap for our unique expertise and ability to bring new products to market, such as SumUp Pay,” Helms said.

Many payment technology companies and other fintechs have seen their valuations fall in 2022, and have answered by adding new products – often to expand their ability to offer consumers more financial services that can be accessed through the payment relationship. Wise, such as the partnership with Google to operate cross-border from the US to India, the US to Singapore and other corridors. Challenger bank Revolut, which had previously operated largely as a mobile payments and financial services app, added point-of-sale hardware to round out the mix of products it sells to merchants. Revolut also postponed plans to go public amid the volatile market.

Two of SumUp’s primary rivals, Block and PayPal, both operate what is called a “two-sided” marketplace that offers products for both consumers and merchants.

The pinnacle of this business model is PayPal, which has more than 429 million active users and more than 36 million active merchants. It creates a platform for innovation and adding new financial services, according to Crone. “All acquirers, and especially new entrants and fintechs, are trying to do the same thing,” Crone said.

PayPal executives have often talked about the company’s plans to build a “super app” that can access a variety of financial products via the payment app’s login, and have reported double the average income per superapp account, unlike PayPal users who do not use the superapp. And PayPal recently expanded its outlet credit product to cover larger purchases over the longer term.

Block earlier in September began working with merchants to allow its peer-to-peer payments Cash App to be accepted for e-commerce purchases, luring American Eagle, Aerie, Tommy Hilfiger and other retailers — and taking Block’s Cash App out of Square’s merchant network for the first time. Cash App is central to Block’s two-pronged approach, supporting the company’s Bitcoin business, merchant and consumer-facing products.

PayPal and Block also offer merchant credit, with short-term liquidity loans partially repaid through future payments at merchants. Other payment technology companies, such as Loose and ramphas recently upgraded its product packages to provide credit to small business customers.

SumUp is considering adding similar lending products.

“We are exploring those options,” Helms said, noting that SumUp has banking licenses in the UK and Lithuania and is considering obtaining a merchant license in Brazil. “It’s a long game to make sure we compete and offer products that fit our merchants as they expand.”