The payment terminal market, worth $50 billion worldwide, is dominated by traditional players. But the arrival of fintechs in this sector is reshuffling the cards.
A sector dominated by traditional players
The payment terminal sector is still dominated by traditional players, who share 95% of a fast-growing market. But for how much longer?
The arrival of the pandemic has accelerated the decline of cash, which was already losing ground each year to bankcards and mobile payments. At present, just over one in two retailers has a card reader, but more and more are equipping themselves with a payment terminal.
New players, attracted by the boom in this market, are appearing: fintechs, which offer terminals at prices well below those charged by incumbents such as Ingenico or Verifone.
What's more, unlike the card readers distributed by banks, the terminals offered by fintechs are subscription- and rental-free, in exchange for a much higher commission on transactions. The average commission is 1.75%, compared with less than 0.5% for bank terminals.
SumUp and iZettle, leaders of the new generation
Two European players in particular stand out in this new landscape: the Anglo-Saxon SumUp and the Swedish iZettle.
PayPal bought iZettle in 2018 for $2.2 billion, and SumUp acquired scale-up Tiller, which offers bank card readers and digital cash registers to merchants. This is SumUp's fourth acquisition in three years.
While the costs of the payment terminals offered by these two European leaders differ, the commission on transactions is the same: 1.75%.
A number of start-ups are also doing well, such as Smile & Pay, which offers merchants a combination of monthly subscription and a lower commission rate of 0.75%. Smile & Pay recently raised 5 million euros in financing.
Faced with the arrival of this new generation, incumbent players such as Worldline, France's leading payment processor, are being forced to keep pace with the digitalization movement, or risk falling rapidly behind.