In January, localized payments provider PPRO became the latest fintech-as-a-service startup to hit a billion-dollar valuation when it closed $180 million in funding. As a mark of how payments and e-commerce continue to be major areas of focus in the global economy, today PPRO is extending that round by another $90 million and adding in two new investors to its cap table.
The financing is coming by way of strategic backing from JPMorgan Chase and Eldridge (which is the second time this week the PE firm has been in the news for making a major investment in an enterprise tech company: earlier this week Eldridge was one of the leads on a $475 million round for real-time intelligence provider Dataminr).
The enlarged $270 million round -- the January tranche was from Eurazeo Growth, Sprints Capital and Wellington Management -- includes both primary and secondary capital, and this latest tranche is part of the secondary element, PPRO CEO Simon Black confirmed to me. Prior to this, London-based PPRO (pronounced "P-pro") raised $50 million in August 2020 from Sprints, Citi and HPE Growth; and in 2018 it raised $50 million led by strategic investor PayPal.
PPRO's core product is a set of APIs that e-commerce companies can integrate into their check-outs to accept payments in whatever local methods and currencies consumers prefer, removing the need for PPRO customers to build those complex and messy integrations themselves. Its business has boomed in the last year as one of the bigger providers of that localized payment technology, with transaction volumes up 60% in 2020 to $11 billion in processed payments.
JPMorgan Chase, meanwhile, is one of the world's financial giants, providing banking and credit cards among its many other services. The idea is that it wants to build more payment services around its existing relationships and expand its payment business globally, working more closely with PPRO as part of that. There are two main areas where PPRO could figure: to help its credit card business gain more ubiquity as a payment method in more parts of the globe; and to be a service provider for its business banking customers to help them expand in more markets with more flexible, localized payments.
"We are extending into payments and we are looking to double down on addressing the needs of our clients and their clients, which can be consumers, suppliers or marketplace sellers," said Sanjay Saraf, managing director and Global Head of the Integrated Payments Group at JPMorgan Chase, in an interview. "That last mile becomes important from a customer service perspective."
In particular, the U.S. company is hoping to double down on its business and footprint in Latin America and Asia Pacific, two emerging markets still seeing a lot of growth in e-commerce, in particular compared to more developed, penetrated and mature markets like the U.S.
This latest round of financing underscores two trends of the moment in fintech.
First, it points to how active the e-commerce market has become -- a trend fueled not in small part by the COVID-19 pandemic, and the resulting shift people have made to carrying out everyday tasks online. Second, it's a sign of how global financial services companies are looking for ways to remain relevant in every market, tapping into more innovations from fintech startups to get there.
The problem, as it exists, is that payments remains a very fragmented business.
The standard methods that a person might use to pay for goods or services online in one country -- for example a credit card in the U.S. -- might differ drastically from the preferred methods when selling in another -- for example, in Belgium one popular format is Bancontact (where you visit a new screen to authorize a transfer from directly from your bank checking account).
As with other payments and fintech-as-a-service startups, the attraction of using PPRO is that it has built a lot of those integrations at the backend and packaged them up as a service, taking away a lot of the complexity, in its case of identifying and integrating each of those payment methods manually, and making it something that can be done seamlessly and quickly.
JPMorgan is now one of several other partners. Those relationships work in both directions, providing partners a way to expand their consumer-facing products, and to help them work with more businesses in more markets. (Similar, I suspect, to how JPMorgan will work with it, too.)
Others in PPRO's network of 100 large global customers include PayPal, Citi, Mastercard Payment Gateway Services, Mollie and Worldpay, which use PPRO's APIs for a variety of functions, including localised gateway, processing and merchant acquirer services.
It is also not the only one that has identified the opportunity to simplify this part of the payment process and of other complex financial transactions that rely on localized approaches. Others in the same area include Rapyd, Mambu, Thought Machine, Temenos, Edera, Adyen, Stripe and newer players like Unit, with many of these raising very large amounts of money in recent times to double down on what is currently a rapidly expanding market.
The past year has been "an acceleration of a trend, where behaviors are being reinforced," said Black in an interview. "At the consumer level, we are buying so many more products and services online, and we value convenience more than ever, which translates to a real strengthening of more demand for local payments."
And while emerging technologies like cryptocurrency continue to see a lot of buzz, this is not at all where mass-market activity is for now. "The big trend is mobile wallets, not bitcoin," Black said.