How U.K.'s Paysafe pushed back as coronavirus threatened U.S. expansion
The coronavirus outbreak initially looked like it might torpedo U.K.-based Paysafe’s plan to expand in the U.S. in 2020. But several months into the pandemic, the payments conglomerate sees ways it can grow by helping bruised small businesses retool operations.
Businesses hammered by losses after months of paralyzing coronavirus quarantines are coming back to life with different payment needs, according to Philip McHugh, who was appointed CEO of Paysafe Group last year with the mandate to expand internationally.
“The pandemic created the sudden need for most businesses to become digitally savvy, and many will want to rapidly scale payment-acceptance solutions across new channels in the post-coronavirus environment,” said McHugh, who previously served in executive roles at TSYS and Barclays.
The sudden retraction of the U.S. economy will make the task harder, but Paysafe likens the situation to its history of helping merchants in complex retail niches such as online gaming, where unpredictable business cycles and ever-shifting requirements are par for the course.
Paysafe has been preparing for its U.S. push for years, building an arsenal of payment solutions organically and through acquisitions. Its efforts focused mainly on customized small-business payment acceptance services sold through ISOs and global e-commerce and remittance payments services. Paysafe also operates the global digital wallet Skrill, whose cross-border remittance feature recently became available in the U.S., and other payment tools for unbanked consumers.
“We are truly a specialist in scaling up customized payment solutions for everything from gaming and betting to commodities trading, cryptocurrencies and remittances, spanning both banked and unbanked consumers,” McHugh said.
Payment services for the online gaming space still drive about a third of Paysafe’s revenues, but with its push into the U.S., the company aims to further diversify, McHugh said.
Staff diversity also is a cornerstone of Paysafe’s U.S. push, said McHugh, who in May announced a company-wide commitment to inclusiveness and zero tolerance for racism in the wake of the murder of George Floyd.
As part of that, McHugh is sharing leadership with two other execs in CEO roles he created to balance power.
One is Paulette Rowe, recently named CEO of Paysafe Group’s new global e-commerce and integrated solutions unit, who is helping U.S. merchants including software vendors use Paysafe’s upgraded payments services to expand their global reach. Rowe, who was recognized as one of PaymentsSource's Most Influential Women in Payments in 2020 and 2017, also aims to raise awareness of Skrill’s cross-border consumer payments service in the U.S. as remittances begin to regain volume post-coronavirus.
“The Skrill digital wallet is extremely successful in Europe, but not everyone knows it’s part of Paysafe, so we want to make Skrill part of our holistic offering,” Rowe said.
Afshin Yazdian was recently hired as Paysafe’s CEO of the company’s newly formed U.S. acquiring division, after serving for several years as president of Nashville, Tenn.-based Priority Payment Systems.
“Over the next year we’ll be strongly focused on supporting SMBs and our ISO and agent partners to overcome the challenges of the ongoing pandemic and associated lockdowns in various U.S. states,” said Yazdian.
In addition to SMBs, Paysafe plans to go after mid-size and larger merchants with its array of card-present and card-not-present payment solutions.
“The merchant shift to omni-commerce — in-store, online and mobile channels — will be key to our growth,” Yazdian said.
Paysafe began the groundwork for a concerted U.S. push several years ago, Yazdian said. In 2017, Paysafe acquired Texas-based Merchants’ Choice Payment Solutions; a year later it bought iPayment, a large U.S. payment processor servicing SMBs via offices in California, Massachusetts and Nevada.
Coronavirus dampened Paysafe’s U.S. expansion plans, but the company has continued announcing deals and partnerships through the pandemic.
In July, Paysafe announced plans to buy Openbucks, a payment gateway allowing online merchants to accept retail gift cards in lieu of credit cards (a practice popular with online gaming operators). Openbucks will be folded into Paysafe’s global eCash division that includes paysafecash, which enables consumers to make online purchases with cash at participating shops via barcodes..
Paysafe this year extended Paysafecash to 28 countries, with the addition of Bulgaria in July, with plans to launch in the U.S. later this year. The company also has plans to expand U.S. availability of paysafecard, its longtime prepaid cash payment card used around the world.
Though many sports are currently on hold because of the pandemic, Paysafe is plotting U.S. growth opportunities for when stadiums reopen. Through a partnership with Venice, Calif.-based Bump 50:50, Paysafe will enable contactless payment acceptance at thousands of mobile point of sale terminals set up at sports stadiums.
Separate from any stadium’s existing payment acceptance systems for tickets or concessions, Bump 50:50 works directly with sports leagues — including many NFL, NBA, MLB and NHL teams — to collect funds for charitable causes through raffles conducted during events, Paysafe said.
One of Paysafe’s biggest challenges will be marketing such a diverse array of services through streamlined points of contact, McHugh acknowledged.
“Over the years we have grown to become quite a large company, but we are consolidating our delivery as we expand in the U.S.,” McHugh said.
The complexity of Paysafe’s services suits the post-coronavirus market, according to McHugh.
“We cover banked and unbanked consumers and we have deep expertise in all types of verticals, which gives us a rich set of data for developing the kind of specialized solutions merchants will need coming out of the pandemic,” McHugh said.