Specialist
Senior executive at The Fintech Strategy Group
Agenda
- Operating environment for cross-border payments providers, focusing on B2B and B2C market growth
- Assessment of key players and competitive dynamics – Flywire (NASDAQ: FLYW), Airwallex, PingPong, Payoneer and others
- Fee compression trajectory and other risks to profitability
- H2 2021 outlook – IPOs and consolidation
Questions
1.
What are your thoughts on the B2B cross-border payments industry? What 2-3 key trends or drivers should investors pay attention to?
2.
What gap in the traditional cross-border payments infrastructure for e-commerce transactions requires cross-border payment facilitators to step in? Why can’t a customer buying a product from another country go through the typical card network acquirer bank model?
3.
How would you segment out use cases within B2B cross-border payments? Which do you expect to grow or decelerate?
4.
How would you assess the growth of the marketplace payout, invoice payment, global connections accounts and healthcare and education payment segments across regions? Have you noted any of these four buckets growing faster or slower than the others? What are the relative growth rates?
5.
How would you assess the regulatory environment across the board, given that there are obviously significant differences between North America and Asia? Are there major catalysts in any markets that might impact cross-border payment facilitators?
6.
Could you describe the competitive landscape for the marketplace payout segment? How would you compare Payoneer, Hyperwallet, PingPong and Airwallex? What are the key areas of differentiation?
7.
Who might you expect to outgrow the pack in the marketplace payout segment? You seem most confident in Payoneer, but is there another player you’re most confident in aside from that company?
8.
Who do you think is the greatest threat to Payoneer’s growth if we separate China from the equation?
9.
How do you assess marketplace payout players’ expansion into broader use cases? There seems to be some movement towards other buckets from category players such as Payoneer and Airwallex. Who do you think is executing that expansion well?
10.
How do you assess pricing across the competitive environment? There definitely seems to be some pricing pressure. Is this what’s driving the product expansion and business diversification across the board?
11.
Which player do you think is best executing diversification and insulating itself from negative pricing pressures?
12.
What are your thoughts on Wise? It seems to be pivoting into the B2B market. What challenges do you think the company will face during this pivot?
13.
Do you have an estimate for market share mix and ownership across the four B2B cross-border payment use cases?
14.
Mastercard acquired Transfast and Visa acquired Earthport, both in 2019. How might they utilise those acquisitions to position themselves for B2B and B2C domination? Would their relationship with the banks keep them from doing so?
15.
How do you think banks potentially returning to their role in cross-border payments might impact fees? Wise came in with a 1% Fx fee, which is slightly lower now on certain currencies, but banks are charging 4-7% for their type of Fx fee. Would banks be able to have a competitive pricing compared to fintechs, given the amount of partners they would need to make a cross-border payment arrangement work?
16.
Could you discuss the drivers for the negative, downward pricing pressure in China? The market in China seems to be a different pricing environment, with customers who are slightly more sensitive to pricing. What do you think is the floor here?
17.
How would you assess transaction costs in China vs in other countries, considering take rates and the transaction costs that influence them? Do these costs differ significantly in China?
18.
I understand take rates are quite heavily tied to the vertical being serviced, so e-comm would have lower take rates than travel. Could you discuss these verticals and how their take rates differ on average?
19.
What are your expectations for the trajectory of average take rates as we exit the pandemic and begin to normalise the economy and the different cross-border payment verticals?
20.
Could you expand on your comment that Payoneer is well-positioned to build off its core service and drive higher-margin products? How might the company execute a cross-sell motion to increase ARPU?
21.
Could you discuss the barriers to entry and competing for cross-border payment volumes? You mentioned offline, know-your-customer, AML [anti-money laundering] at a global scale, global banking relationships and CAC [customer acquisition cost]. How do these barriers position established players?
22.
What are your thoughts on disruptors that could potentially derail the growth of B2B cross-border payments or of the players we’ve discussed? Is there a major disruptive force you would highlight as a potential risk? We mentioned Visa and Mastercard enabling banks to better serve their cross-border customers and I’m sure there’s a crypto angle.
23.
Do you expect any industry consolidation? If so, are there any specific pairings or criteria around pairings that you would speculate on?
24.
As Flywire, Payoneer and other players IPO, what are your longer-term expectations for their ability to grow and sustain their leading positions in cross-border B2B payments?
25.
What’s your outlook for the broader industry? Who do you think will be the long-term winners and losers across the players we’ve discussed?
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