With the NFL season here, what are the trends you are witnessing in sports betting, and how should this translate to your company’s performance?
Philip: The biggest needle movers for Paysafe are the premier soccer leagues in Europe, the NFL, and the Indian Premier League — those are the three big waves of sports that really move the needle. We certainly see that kind of seasonality. We definitely see September to January as a very strong period for sports betting in the US market.
We see all of our key clients hyper-focused. It’s actually quite hard to get new developments in because they’re just focused on having their sites up and ready. And for us, it’s all about being ready to process and accept their volumes so that we are never ever down.
Do you see any major themes in client preferences post COVID when it comes to different modes of payments?
Covid didn’t really change anything, it accelerated everything. Clearly, there’s the move from the physical world to the digital world. That trend existed beforehand. Covid probably added two-three years of acceleration forward in terms of volumes.
Separately, there’s clearly an acceleration of emerging or alternate payment types. The core payment type is still the credit card and debit card. That’s still the most popular usage in the world. But you’ve seen trends of people going to digital wallets, which you can fund through multiple means and move money very quickly. There’s PayPal and Alipay, and we have seen that accelerate.
When it comes to cash, there is still a lot in the world. But the people that prefer to have cash or have less access to a credit card or debit card, need to transact digitally more than ever. They are playing more video games, playing online poker, and ordering online. So the need for digital cash grew.
Also, you are seeing real-time bank payments with the emergence of more phones and more bank APIs. At Paysafe, we have expertise in a very broad array of payment solutions that helps merchants by accepting more types of payments as per the consumer choice.
Consumers are getting used to it. We did some research that there is a very sizeable uptick in people’s willingness to try new payment form factors during Covid that creates new habits. So we are seeing the adoption of new payment types because of Covid.
How are you playing the crypto space?
We do two things today. One, with our digital wallet, we allow consumers to trade cryptocurrency. We have well over 35 currencies globally, which you can trade in over 90 markets. You can share crypto from wallet to wallet. We will continue to do this. We will have more currencies in more markets with more functionalities.
On the other side, We also pave the process for these sites. We have got the right kind of risk management, the right bank relationships that we are processing. And we see that growing. It’s less than two percent of our business today, but we see it growing well over a hundred percent a year, quite rapidly.
We think cryptocurrency will gain real commercial use cases over time. There will be big corrections. Regulators will come in and there will be ups and downs. But more importantly, I think this is round one. This is very similar to what the internet was in 2000. You got 5G, you got crypto, these are megatrends. So we want to be involved. You should have that really good AML (Anti-money laundering) management to enable crypto. And these are things that Paysafe can do well.
How do you see payments happening 10 years down the line? Is there going to be a revolutionary shift in the next decade or so?
My view on this has been fairly consistent. The most overriding trend, in my opinion, is the following. Payments have migrated from very simple to much more complex. We’ve gone from just in-store commerce to really hybrid omnichannel commerce. Where and how you buy, and where and how you pay is more complex for merchants.
Two, how you pay is definitely more complex. It’s gone from Visa and Mastercard cards to all sorts of cards. Lots of local cards happening in the world as well. You’ve got all of the local wallets like PayTM and Google Pay and Apple Pay. You have got all these other online bank transfer capabilities. There’s more choice in how you can pay online. So how you protect the transactions from fraud, identity theft, etc. has gotten more complex as well.
The payment players can come in and make that complexity simple. And if the payment company can deliver more of those solutions to merchants, they will be the winner. That’s a hundred percent what drives me.
Recently you had announced the acquisition of SafetyPay in a move to enhance presence in Latin America. How do you see the Latin American market – in terms of competition, market saturation, and the potential for sports betting?
Latin America is a very fast-growing market. It’s one of the fastest-growing e-commerce markets and has a huge adoption of alternate payment methods. So that was attractive. SafetyPay in particular has extremely strong open banking capabilities. And in the areas where they see client growth are our clients. So we talked to our biggest clients about this deal, and they were really excited.
In the same way, as in the States, you are seeing this regulatory environment open. We believe we will have a similar trajectory on a country-by-country basis. As a global provider, we want to be their partner in Europe, North America, South America, and Asia.
Should investors expect a dilution in Paysafe shares in the near future?
We don’t see that at all. We are very free cash flow rich. We see a clear path to deliver back to the mid-three-point level.
(Interview by Arjun Vijay)
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