Payment: what innovations have French start-ups brought to the sector?

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The Village of CA Paris called on Deloitte to take an inventory of French start-ups that specialize in payment changes. 70% of these young shoots were born from 2014.

With 2.5 billion euros raised from 11.6 billion euros raised by French start-ups in 2021, the fintech ecosystem in France is doing well. In the face of this situation, Le Village of CA Paris, the Parisian branch of Crédit Agricole subsidiary that has been deploying acceleration structures for start-ups since 2014, has called on the Deloitte company to take an inventory of the start-ups -up. up specializing companies. on payment changes.

To achieve this panorama, 164 young shoots were analyzed and classified according to use case. Note that neobanks are not considered in this overview “Because their business model relating to the provision of online bank accounts and non -specific payment services ”, refers to Deloitte in the study, as cryptocurrencies represent an ecosystem in their own right. As a result, French Tech heavyweights, such as B2B neobank Qonto, which reached a valuation of 4.4 billion euros in January, or the champion of football cards NFT Sorare, author of the largest round history for a French start-up with 580 million euros raised in one operation, is not included.

In this study, it turns out that 70% of payment startups were born from 2014, the year following the launch of French Tech, a label for mobilizing and promoting France’s digital ecosystems. Since then, the growth of companies in the sector has accelerated, with the funding chain for start-ups growing significantly.

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Their proliferation has increased further since the implementation in January 2018 of the second European directive on payment services (PSD2), which obliges banks to make their customers ’data accessible through APIs, which are subject to their consent, to third-party companies. In the wake of neobanks, which have emerged with the departure of a banking sector that has remained archaic for decades, other start-ups have emerged to offer innovations in the payments market. A big challenge in a sector held by some giants enjoying the once hegemonic situation.

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© The Village by CA Paris & Deloitte

77% of innovations are B2B

In this booming ecosystem, the attention of start-ups in the sector is primarily focused on services for individuals (cost sharing, automated savings, microdonations, etc.) and distribution solutions for merchants. The latter is very well represented in the CA Paris & Deloitte Village panorama, as it features that 77% of the innovations of start-ups are reviewed by target merchants and companies.

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38% of them deal with distribution to enable these B2B customers to issue payment solutions and collect payments from their customers, such as Lemonway, Fintecture or even Dejamobile, while 28% of these innovations combined new payment services (payroll and reservation management, services linked to professional cards, etc.), such as Zenchef, Mooncard or PayFit, which joined the circle of French unicorn at the beginning of the year with a rounding of funding of 254 million euros.

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The remaining 23% of the innovations of French start-ups analyzed in the context of the study were therefore intended for individuals, with attention paid to the method of payment itself (strong validation, split payment, ease of use of cards, etc.) in a segment occupied by Alma, Handsome and United Biometrics, or the integration of the payment method into a broader offer (management of receipts, microdonations, etc.), which is enjoyed by start-ups such as PayLead, KillBills and Microdon. Finally, 11% of the innovations combine services aimed at both individuals and businesses, primarily through account aggregation (Bankin ’, Linxo, Budget Insight, etc.), or the implementation of new payment networks (Afive) and central bank digital currencies (Iznes, LiquidShare, etc.).

Adjacent innovations are crushing disruptive technologies

In reviewing all of these changes, it appears that 52% are adjacent to payment, which means they go beyond the transaction itself to create new uses and markets. In this category, we see start-ups that offer split payments, payments between individuals, account aggregation, automatic savings, analysis of payment data, payroll management or even collecting payments. tip. Behind most of these innovations, incremental ones represent 42% of the total, with services related to bank cards, authentication, solutions for issuing and managing payments, and solutions. in physical reception, online or omnichannel, to optimize an existing product.

Finally, there are only 11% of innovative breakthroughs, such as new payment networks and central bank digital currencies, to develop new tools and markets. However, since the entire cryptocurrency ecosystem is not taken into account, it is difficult to push the analysis to disruptive technologies, which are essentially based on blockchain. Meta (Facebook) tried Diem, but the project ended. International regulators and central banks are vigilant, preventing the development of disruptive technologies. Thus, payment start-ups focus primarily on platformization (36%) and digitalization (31%) technologies.

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innovations

© The Village by CA Paris & Deloitte

The more impressive the fundraiser

The best French embodiment of this technique is probably Lydia, which offers so many services, such as mobile payments, paid savings, express loans, debit cards, online pots, current accounts or even trading , after being identified with the general public with its functionality of reimbursement between individuals.

Last year, the company, which counted Chinese giant Tencent and American fund Accel among its investors, identified itself with a $ 103 million fundraising. An operation that has allowed the company to become a unicorn and project itself into the future, with the ambition to become the main current account for 10 million Europeans by 2025. In the same vein, Swile, which is now seen despite dematerialization of meal vouchers, raised $ 200 million in October 2021.

Fundraising

© The Village by CA Paris & Deloitte

In total, the Village by CA Paris & Deloitte study identified six cumulative fundraisers of more than 100 million euros in the sector between 2021 and early 2022, thus including 155 million euros from to Alma, a French split payment specialist who must fight against the Swedish giant Klarna. The panorama also features that the cumulative fundraising of between 300 and 500 million euros is mainly related to payroll management (PayFit), split payments (Alma) and services related to bank cards (Swile).

As for cumulative fundraising between 100 and 300 million euros, they are conducted by start-ups working on payments between individuals (Lydia) and omnichannel and online solutions. reception (Wynd and Sunday). These funding rounds are expected to increase even more in the coming months, with even more impressive amounts, after a French Tech hosting 22 rounds of funding of more than 100 million euros in 2021, for a total amount of five billion euros.

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