Becoming a European payments method: what we have learned along the journey

It was the best of times and we had everything before us

In 2014, Sony, Samsung, Apple, and Google were launching their first NFC-based mobile payment solutions in the US and other countries. The big tech players were starting to flex their muscle and reach entirely new markets, such as the mobile payments one. At the same time, the European Commission was putting forward its proposal for a revised PSD, opening the access of third-party providers to bank resources – what we know today as PSD2.

Therefore, European banks were starting to understand that their competitive position was about to change. Some of them, ING included, were looking for a new edge to keep them on top of the game, and incubators were flourishing all over Europe. This is when Payconiq was created, as a strategic initiative of ING’s incubator. The goal was to build a pan-European, multi-channel, mobile payments solution. This got the attention of another large bank, KBC, which joined the project in 2016.

Five years later, we’re a self-standing, international fintech, headquartered in Luxembourg and active in the entire Benelux area. How have we got here and what lessons have we learnt along the journey?

It takes two flints to make a fire

Banks and fintech companies complement each other. Banks bring their credibility, high security standards, and a strong customer base, and the fintechs come with the latest technology, a great user experience, and the agility to respond to changing market trends. Despite predictions that fintechs will disrupt the banking industry, what we see in practice is that they act as enablers for financial institutions. We’re witnessing an evolution, rather than a transformation, of business models and market approaches.

For us, the best choice was to work with the banks. Surely, in the mobile payments market in Europe, there are several players that position themselves as challengers to traditional banks. They are based on credit cards, or ‘credits’ stored and exchanged between users.

We wanted to keep it simple and safe, so we found a way of doing it while using existing rails. Thanks to the SEPA SCT, we’re using banks’ secure infrastructure to provide everyone in Europe with a simple, mobile solution for payments. We believe that every person owning a bank account and a smartphone should be part of the digital journey – no need for a credit card or a specific smartphone for that.

Payconiq’s payments platform at a glance

To banks, we offer a sustainable ecosystem through an open-API approach and flexible microservices. To merchants, we offer a scalable, secure plug and play payments platform and an independent hardware for simple onboarding, integration, and app development. Consumers get a seamless and secure SCT-based omnichannel payment service (on-line, in-store, invoice, P2P), with international interoperability.

Go big or go home

Payments companies are busy clubbing together to increase their coverage and offerings. Size matters when it comes to payments, due to investments in systems, security, and compliance. Acquisitions are one way to get bigger quickly – that’s also one of the risks for local payment schemes, which could end up being bought or outcompeted by European or global players.

We learnt that the power of the network is essential to win the battle for European coverage, and decided to go for it. When you start as a small project financed by a single bank, you get a label. If you want to go big, you must overcome it and build your own credibility. Getting several banks behind us was not easy, but it was worth the effort.

In three years, we entered three markets in three different ways. There’s no secret recipe for success and no one-size-fits-all. Our market research indicated that we should start by targeting the Benelux countries and so we did. We took the opportunities as they came up and we’re still working on making the most of them.

We acquired Digicash, a Luxembourg-based mobile payments solution, in 2017. A year later, we merged with Bancontact, the leading provider of debit cards and payments in the Belgian market, and completed their offer with our mobile platform. In the Netherlands, we opted for a greenfield venture, which we launched in early 2019.

With every expansion decision we made, we tried to consider the specificities of the markets we were targeting, such as: consumer behaviour, concerns around security, the appetite for mobile solutions, the local competition, and so on. In addition, it was important for us to team up with the right partners, who share our vision and ambitions and are willing to take the extra mile with us.

Today, we have the support of 12 European banks: ASN Bank, Axa Bank, BCEE, Belfius, BNP Paribas, BIL, ING, KBC, Post Luxembourg, Rabobank, Regio Bank, and SNS. We operate across three countries and aim to lead the transformation of the payment industry in Europe.

This editorial was first published in our Payment Methods Report 2019 – Innovations in the Way We Pay, which provides a comprehensive overview of the up-to-the-minute trends, updates, and innovations in the payments space worldwide, depicting the key developments in the way people pay.

About Duke Prins

Duke Prins became CEO of Payconiq in 2016, when the company transitioned from a startup with an MVP to an international scale-up. He has over 20 years of experience in international management, corporate finance, and advisory. Duke was also co-founder of bunq, a European neo-bank and transaction platform.

About Payconiq

Payconiq is a European payments fintech active in Benelux. With the support of major European banks, Payconiq leads the transformation of the payment industry through an open-API approach and flexible microservices. 60,000 merchants across Belgium, Luxembourg, and the Netherlands trust Payconiq’s secure, plug-and-play platform. 600,000 consumers use our app for P2P, invoices, in-stores, or online payments.