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Insights Tag： fintech

PAX Revenues Cross $1 Billion in 2022; SmartPOS Adoption Supports Growth

  • The growth was primarily driven by the strong performance of Android-based payment terminals.
  • PAX’s expertise in Android SmartPOS technology and its MAXSTORE platform offers a centralized and seamless way for merchants to navigate an increasingly complex business.
  • PAX is expected to maintain its leading position in Android SmartPOS payment solutions.

PAX Global Technology, one of the world’s leading providers of electronic payment terminal solutions and related services, posted strong revenue of $1,003 million in 2022, showing great resilience in a period of economic challenges such as interest rate hikes and higher inflation. The growth was primarily driven by the strong performance of Android-based payment terminals. Fintech is playing a central role in the advancement of digital and cashless economies by providing greater efficiency, convenience and accessibility to consumers. However, PAX’s software-as-a-service (SaaS) solutions such as the MAXSTORE platform are enabling payment service providers (PSPs) and acquiring bank (financial institution that processes credit or debit card transactions on a merchant’s behalf) to combine core payment services with financial and non-financial applications in a much more flexible and cost-effective way.

PAX Revenue by Segment - Counterpoint Research

Merchants can operate digitally and process orders more efficiently with the use of Android SmartPOS terminals. These terminals also provide valuable insights into consumer behavior, enable the development of automated marketing campaigns, and help to manage inventory more effectively, among other benefits. PAX’s expertise in Android SmartPOS technology and its MAXSTORE platform offers a centralized and seamless way for merchants to navigate an increasingly complex business. The MAXSTORE platform had well over 8 million managed devices by the end of 2022.

PAX Revenue by Region - Counterpoint Research

Key regional developments

Europe, Middle East and Africa (EMEA)

  • EMEA region clocked $319 million in revenue in 2022, an increase of 5% compared to 2021.
  • The growth was primarily driven by the large-scale adoption of Android SmartPOS devices across EMEA, primarily in Europe and the Middle East.
  • PAX’s partnerships with leading acquiring banks, PSPs and independent sales organisations (ISOs), and tailored solutions for the European market drive its growth across the region. The UK, Italy and Germany have increasingly become important growth drivers for PAX. Significant gains were made in France, Greece, Scandinavia, Balkans, Poland, Spain and Turkey.
  • Saudi Arabia’s ‘Vision 2030’ program for economic reform and the Saudi Arabian Monetary Authority’s (SAMA’s) openness to innovative technology finance across the Gulf Cooperation Council (GCC) and North Africa continues to accelerate the upgrade of legacy point-of-sale (POS), driving a big growth for PAX Android SmartPOS devices.

Latin America and Commonwealth of Independent States (LACIS)

  • LACIS region posted $385 million in revenue, a decline of 8% YoY. PAX experienced strong growth in this region in 2021, a major reason for the dip in 2022. However, PAX has a diversified product portfolio and a well-established channel partner network which can help increase its footprint in the region.
  • Brazil, Chile and Argentina are the major contributors to the growth in the region with increasing demand for Android SmartPOS solutions in sectors like multilane, hospitality and parking.

Asia Pacific (APAC)

  • APAC region recorded steady growth of 5% YoY with $172 million in revenue. PAX has expanded its footprint to more Asian countries.
  • India and Japan continued to show positive demand for Android-based smart payment terminals, which is expected to propel further growth.
  • Indonesia, Singapore and Thailand were the major contributors with double-digit revenue growth compared to the previous year. In Indonesia, sales were driven by the government’s ‘Payment System Blueprint 2025’ initiative, which is helping improve the nation’s core payment infrastructure.
  • PAX Technology, established as a Singapore subsidiary in 2021, focuses on local merchants and financial institutions. Singapore government’s ‘Retail Industry Transformation Map 2025’ is encouraging retailers to adopt innovative business models, which is expected to drive the demand for smart payment terminals.

United States and Canada (USCA)

  • USCA region posted a robust revenue of $127 million, up 35% YoY driven by PAX’s partnerships with PSPs and ISOs, and its expertise in Android SmartPOS solutions.
  • PAX Android smart payment terminals offer seamless integration and diversified payment methods such as mobile wallets, online ordering, curbside pickup and self-service ordering and checkout, which adds convenience for businesses operating in the retail, supermarket, hospitality and unattended segments.

Key takeaways

  • PAX is expected to experience greater adoption in the future, thanks to its ongoing investment in the research and development (R&D) of Android payment terminal technology. PAX spent $72 million on R&D in 2022, which was nearly 7% of its total revenue. Its terminals are user-friendly and offer a range of payment options, which makes them attractive to merchants.
  • However, POS vendors are now focusing on cloud-based software solutions to earn recurring revenue, increase profitability and offer better solutions to customers.
  • Along with strong payment solutions, partnerships play a crucial role in the fintech industry. PAX is also determined to strengthen its international sales network and customer relationships across geographies.
  • Due to ongoing economic challenges like interest rate hikes and high inflation, and geopolitical tensions, PAX is expecting flattish or lower-single-digit revenue growth in 2023.
  • With its strong portfolio across different sectors catering to different needs of merchants and businesses in different regions, PAX is expected to maintain its leading position in Android SmartPOS payment solutions.

 

Related Posts

PayPal Second Quarter Numbers Get COVID Push

The second quarter of 2020, which was all about COVID-19, turned out to be a phase of accelerated growth for PayPal with the pandemic providing people an additional reason to adopt contactless payment. Introduction of new services, and good results from the partnerships and acquisitions done in the past, contributed to the stellar performance. The company’s revenue rose 14% QoQ in the second quarter compared to a fall of 7% in the previous quarter.

Exhibit 1: Quarterly Change in Revenue of PayPal since Q2 2018

Counterpoint - Quarterly Change in Revenue of PayPal since Q2 2018
Source: Counterpoint Research

Report Card: Q2 2020 Earnings

Counterpoint-Paypal Q2 2020 Earnings

The COVID-19 Factor

Before the COVID-19 pandemic, money in its intangible form was being increasingly adopted by people, with the graph following a steady path. However, COVID-19 gave a big additional push to digital payment platforms following concerns over spread of the pandemic through currency notes. Those who were reluctant to join such platforms before the pandemic took no time in adopting the contactless mode to pay for their essential purchases.

One of the most accepted modes of contactless payment is the QR code. Though it is not the latest form of contactless payment, it caught wider attention when PayPal recently launched the QR code service in 28 markets globally both on the Venmo and PayPal platforms. QR code enables the users to make a payment just by scanning a code. This service has helped many small merchants survive the pandemic. In fact, PayPal marketed the QR facility as a safer mode of payment during the pandemic.

The pandemic has seen a remarkable shift in people towards e-commerce, helping PayPal garner new users at a remarkable rate. However, the company also points to the higher rate of activity by mature users and their loyalty to PayPal.

PayPal registered a fall in revenue from the travel and vertical event segment. However, this segment has a smaller role in the overall numbers since March, when the pandemic accelerated at an explosive rate globally.

Strength of relationships created by PayPal

PayPal, which has its reach in around 200 markets, has been active in entering collaboration, partnership and acquisition deals since its beginning. Some of the major acquisitions include Venmo, Honey, Braintree and iZettle. Honey, Braintree and Venmo continue to outshine their outcome every quarter. In line with the trend, in the last segment of the second quarter, PayPal entered a tie-up with Gojek. The strength of Gojek in Southeast Asia is being seen as an opportunity to have a deeper penetration in that region. In another move, PayPal has extended the Visa Direct partnership across the world with an extra push to global white label Visa direct payment functionality through PayPal, Braintree, Hyper wallet and iZettle.

Exhibit 2: Partnerships & Acquisitions of PayPal

Counterpoint-Partnerships & Acquisitions of PayPal
Source: Counterpoint Research

PayPal role in addressing socio-economic concerns

PayPal is not only focusing on expanding its reach to people but also looking at leaving an impression in their minds that it cares for their socio-economic well-being. To bridge the economic divide, PayPal has contributed more than half a billion dollars towards the black- and minority-owned businesses and communities in the US, also among the hardest hit by COVID-19. Besides, for the US Small Business Administration’s Paycheck Protection Program (PPP), PayPal has contributed $2 billion in loans to more than 76,000 small businesses. PayPal has also acted as a medium for the customers, employees, and partners for the COVID-19 associated donations. The company campaigned across 12 markets and facilitated over $5.6 billion in donations.

Key takeaways

With the competition in the digital payment industry getting tougher at every turn, PayPal has been making efforts to sustain its growth. A wider reach across nations, along with some complements and substitutes, has helped PayPal in leaving its impression globally at the right time. At the same time, it is essential to educate people about digital payment platforms and their functionality.  With the COVID-19 factor still there, the ripple impact of the second quarter is likely to be highlighted in the coming quarters.

Related Posts

  1. COVID-19 as a Catalyst in the Deeper Acceptance of Digital Payment Platforms
  2. Kenya, Prioritizing Banking Over Banks

Kenya, Prioritizing Banking Over Banks

Kenya is a leading example of how technology complements developing the banking and finance sector. While mobile banking is a path to financial inclusion, it is important to retain monetary control in the economy.

M-Pesa is renowned as one of the foremost initiatives in mobile-based money transfer, financing and microfinancing. It was launched in 2007 by Safaricom, is jointly owned by Vodafone and the Kenyan government. Since its launch, it has expanded successfully to six other African markets including Tanzania, Egypt, and Ghana. M-Pesa has revolutionized financial inclusion in Kenya. It has become a staple for the financial sector – used to pay salaries, book bus tickets and settle invoices in most of its markets. In Kenya, it has expanded into more advanced financial services including small loans, supply chain finance, insurance and a growing number of in-store and eCommerce services.

How can M-Pesa develop banking and finance?

In response to the under-exploited potential of Kenya’s economy and M-Pesa’s grip over part of the financial services system, Safaricom is planning to transform M-Pesa into a bank for the unbanked. Safaricom’s strategy is to expand M-Pesa rapidly in the seven African countries where it already operates as well as in new markets, such as Ethiopia, where it doesn’t have any telecoms operations. While Safaricom can achieve a first-mover advantage, it also potentially opens the market for competitors, though its accrued experience will be hard for new players to replicate.

Adding savings services

Safaricom is testing a new mobile savings service called Mali that adds a new dimension to the M-Pesa offering. Potential customers tend to have uneven incomes with periods of relatively good income interspersed with other leaner periods. Having a trusted platform that can be used to securely manage short-term savings can help both individual savers and support smoother flow of finances within the wider economy; previously savings would likely remain as cash that is unavailable to the financial systems.

Revolutionizing lending

Lending is an important function to ensure a smooth supply of money in an economy. It helps bridge the gap between those with excess funds and those who need financing. Since, the first M-Pesa mobile loan was issued in 2012, lending has been a core service of the platform, though not as well publicised as payments.

New players are entering the market, Carbon, for example is a Nigerian fin-tech start-up that has announced its launch in Kenya. Carbon wants to become a pan-African bank.

Kenya, and many other emerging African markets, have young populations that are highly mobile-communications oriented and also have a high propensity towards consumption. As a consequence they will likely rapidly adopt new solutions if the benefits are clear.  However, mobile banking, which has the power to close the financial exclusion gap does not imply giving up on traditional methods of banking. As mobile banking gains power, central banks will need to be agile in accepting the advantages that new technology brings, while being mindful of potential downsides to the economy in terms of money supply and financial security.

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