Swedish fintech company, Trustly, completed the purchase of its British rival Ecospend in January.
Founded in 2008, Trustly is a global leader in Open Banking Payments, in particular, the account-to-account (A2A) space and at last company counts served over 8,100 merchants, with an estimated consumer base of roughly 525 million across 30 global countries.
Ecospend, meanwhile, was founded a year prior to its buyer and is a FCA UK-regulated A2A payments provider. In money terms, the company reportedly processed over £5bn worth of transactions last year. Notably, Ecospend will continue to operate as an independent entity from within the Trustly Group and the acquisition is expected to be accretive to Trustly’s earnings in the first year.
So what’s behind the transaction and what might it mean for Trustly’s future?
First and foremost, the buy is a power play within the A2A space; most significantly within the UK market. Trustly Group CEO, Johan Tjärnberg, said as much in a statement made following the closure of the acquisition last month.
“This is an important milestone and is fully in line with Trustly’s ambitious target to be the game-changing market leader in the UK,” Tjärnberg said.
The UK is one of the most rapidly growing A2A markets in Europe, and Trustly is looking to expand its presence there. Ecospend has a strong track record in the UK, with over 80 banks connected and a consumer reach of approximately 50 million.
In the UK and Europe, Open Banking payments are taking off and are now predicted to account for $87 billion of Europe’s transaction volume by 2026.
One very attractive aspect of Ecospend’s business is its exclusive contract with the UK government’s HM Revenue and Customs (HMRC) department, which it won in September 2020 after the latter put out a £3m tender contract.
According to the company’s website, Ecospend has processed £12bn worth of payments for the department to date and its ‘Pay by Bank’ feature is currently live across 43 tax regimes.
It also claims that open banking payments had saved HMRC over £500,000 worth of interchange charges, and saved users countless hours of frustration in payment mistakes caused by incorrect sort codes and account numbers being used.
And it’s not the only foothold Ecospend, and Trustly by extension, holds in the UK government. Late last month, the company announced its membership of the All-Party Parliamentary Group (APPG) on Open Banking and Payments.
Formed in 2020, the APPG self-styles as a group that seeks to “highlight the benefits of Open Banking to parliamentarians and ensure that the technology supports economic growth for the UK.”
In a statement announcing the news, Ecospend said:
“As a member, Ecospend will provide expertise to support the development of legislation shaping payments in the UK, fulfilling its role as a leader in global banking technology.
“We will be participating in upcoming panel discussions and advisory meetings with HM Treasury, the Payments System Regulator and the Open Banking Implementation Entity (OBIE).
“This involvement marks a significant milestone in Ecospend’s reputation as an industry leader in British Open Banking and payment technologies.”
But outside of government, how much will the Ecospend transaction aid Trustly in its ambition to be a global player? Can the group ever catch up and lead the market or is Paypal just too far ahead?
Well, soon after the merger finalised the new two-headed ‘monster’ showed proof of its combined power by announcing a new deal with health foods retailer Holland & Barrett; the first deal under Ecospend’s new ownership by Trustly.
Holland & Barrett says the technology’s implementation will solve several payment challenges including refunds, reconciliation, and rising costs relating to payments.
Alternative Payment Methods (APMs) are now expected to make up 25% of global non-cash payments by 2025 – and in some European markets, they already dominate.
And PayPal being the market leader, offers a number of massive benefits for users; including a variety of payment processing options, international disbursements, free bank transfers, invoicing capabilities and easy setup and usage.
However, PayPal has also been criticized for its high fees and complex user interface.
Trustly has several advantages over PayPal. It is faster, cheaper, and easier to use and is therefore gaining popularity among online shoppers and merchants.
In the long run, Trustly has the potential to become a major competitor to PayPal and could be It is well-positioned to capitalise on the growing trend of online payments and the increasing demand for convenience and security.
One of the key advantages that Trustly has over PayPal is faster payment processing time. This is because Trustly does not require users to create an account or enter their credit card information.
Additionally, Trustly fees are much lower than PayPal fees, making it a more affordable option for businesses and consumers.
Alternative payment methods have become an important part of numerous industries outside of retail, such as the gambling industry in the UK, where customers are using Trustly for payments at online casinos at a growing rate.
Indeed Trustly and Ecospend will continue to monitor the progress of the UK government’s long-awaited gambling White Paper, which finally dropped last month.
In the proposed legislation, ‘affordability checks’ are being suggested as a way to monitor activity from potential ‘problem’ gamblers. Though specifics of what these checks have not yet been finalised, the legislation outlines two proposals. First, a checking process for punters who lose £125 net over a month, or £500 over a year and secondly more detailed checks for those who make a net loss of £1,000 in a day or £2,000 over 90 days.
It will be interesting to monitor how Trustly in particular reacts and adapts to the proposed changes, given the complexities and restrictions that could arise if merchants are forced to comply with potentially delayed or cancelled payments as a result of the checks.
The Ecospend acquisition makes perfect sense for Trustly looking to build its brand in the UK and get a larger slice of the burgeoning A2A market in Europe on its road to going toe-to-toe with PayPal.
That said, considerations of significant portions of Trustly’s business such as gambling and gaming merchants in the face of the White Paper are sure to have an impact, the exact scale of which is yet to be seen.
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