SumUp, which has historically been focused on merchants, is branching out with a new consumer product called SumUp Pay.
The new product launches at a time when many payment technology firms are adding on products and services to help them appeal to a broader market. Even adding consumer-facing products is not unheard of; over the course of many years, Block (then Square) launched and shut down many consumer wallet apps before it had success with its Cash App.
SumUp’s own wallet app is meant to have a more local focus than the likes of Apple Pay and Google Pay. This means shoppers will earn points by using SumUp Pay at stores that use SumUp to accept payments.
“We’re trying to keep the money local, to empower local communities,” said Andrew Helms, managing director of the US for SumUp. The company, which operates in about three dozen countries, focuses mostly on small businesses, he said.
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The app has launched in the UK, Germany and Italy on Apple and Google devices, with plans to gradually expand the product to other markets.
SumUp’s wallet includes a virtual Mastercard that can be topped up using a saved card or bank transfers, supporting remote or in-person payments. It also offers peer-to-peer transfers.
“This [‘Pay’ app] doesn’t detract from the merchant side of the business,” Helms said. “It actually helps us to support merchants by bringing in new consumers who are using the rewards.”
SumUp has been building technology over the past couple of years, providing tools that can help its move into consumer products. The Berlin-based company, which has a presence in the US, acquired in 2021 Fivestar, a US-based firm that integrates payments with reward marketing programs and promotions. Other moves include partnering with Shutterstock to help merchants design digital storefronts; and a partnership with Mastercard and Ford to embed payment technology in the cars that small merchants use for their business.
“Playing both sides of the market makes the platform more valuable,” said Richard Crone, a payments consultant. “It allows them to be an issuer without being an issuer, and acquirer without being an acquirer.”
The app’s release closely follows a June fundraise of about $624 million. Bain Capital Tech Opportunities led the investment, which included participation from BlackRock, Fin Capital and Centerbridge, valuing SumUp at about $8 billion, according to TechCrunch. SumUp did not answer questions about its valuation.
“The B2C market presents a clear opportunity for payment tech firms to expand their product offerings. SumUp’s expansion into the B2C space is because we see a clear gap for our unique expertise and ability to bring new products to market, such as SumUp Pay,” Helms said.
Many payment technology companies and other fintechs have seen their valuations fall in 2022, and have responded by adding new products–often to expand their ability to offer consumers more financial services that can be accessed through the payments relationship. Wise, for example, partnered with Google to power cross-border from the US to India, US to Singapore, and other corridors. Challenger bank Revolut, which previously operated largely as a mobile payments and financial services app, added point of sale hardware to round out its mix of products that it sells to merchants. Revolut also postponed plans to go public amid the volatile market.
Two of SumUp’s primary rivals, Block and PayPal, both operate what’s called a “two-sided” market–offering products for both consumers and merchants.
The pinnacle of this business model is PayPal, which has more than 429 million active users and more than 36 million active merchants. That creates a platform for innovation and adding new financial services, according to Crone. “Every acquirer, and especially new entrants and fintechs, are trying to do the same,” Crone said.
PayPal’s executives have spoken often about the company’s plans to build a “super app” which can access a variety of financial products via the payment app login, and has reported double the average revenue per super app account, as opposed to PayPal users that don’t use the super app. And PayPal recently expanded its point of sale credit product to cover larger purchases over longer terms.
Block earlier in September began working with merchants to allow its peer-to-peer payments Cash App to be accepted for e-commerce purchases, luring American Eagle, Aerie, Tommy Hilfiger and other retailers — taking Block’s Cash App out of Square’s merchant network for the first time. Cash App is central to Block’s two-sided approach, supporting the company’s Bitcoin business, merchant and consumer-facing products.
PayPal and Block additionally offer merchant credit, with short-term liquidity loans paid back in part through future payments at merchants. Other payment technology companies, such as Resolve and Ramphave recently upgraded their product bundles to add credit for small business clients.
SumUp is considering adding similar lending products.
“We’re exploring these options,” Helms said, noting that SumUp has banking licenses in the UK and Lithuania and is considering obtaining a merchant acquiring license in Brazil. “It’s a long game to make sure we’re competing and offering products that fit our merchants as they expand.”
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