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Customer values for Alpha, Cambridge, Ebury & WUBS

By Daniel Webber | Thursday, March 21st, 2019

Focusing on high value corporates

The best performing players in corporate cross-border payments are showing why it is such an attractive segment.

Alpha FX and Ebury, two of the leading players focusing on corporates reported their annual results this week. They followed results from both Cambridge and Western Union Business Solutions (WUBS).

To analyse this group, we have attempted to harmonise the key metrics for each of the companies above as they all report their financials differently.

Forwards and hedging products driving revenue:

  • Only 11% Alpha’s revenue is from spot payments.
  • Ebury’s accounts show a big increase in hedging. Specialist forwards is also a core product set of theirs. (See our Ebury’s CEO interview for much more here).
  • Neither Cambridge or WUBS supply any break-out information on this but risk management is a core offering.

A focus on bigger clients:

  • Alpha’s average annual revenue per client reflects its focus on mid-market corporates, not SMEs. Our previous analysis has shown how highly the market values this.
  • Cambridge has refocused according to its new parent company Fleetcor’s CEO. In the most recent earnings call he discusses Cambridge’s recent growth…

“We got that business squarely focused on larger accounts.”

Strong, human (not digital) sales teams:

  • All of the companies above rely on humans to sell their services. Digital acquisition of any corporates other than small business remains a challenge.
  • A look at WUBS’ stagnant performance versus its peers shows it’s not all tailwinds. This is alongside the numerous successful consumer Fintechs who are trying to enter and grow the corporate space too.

What is clear is that the products and marketing skillsets for corporates are very different from those for consumers. Trying to win at one is hard, trying to win at both may be impossible.

FIS & Worldpay: Big-time M&A

FIS agreed this week to a $43 billion deal to acquire Worldpay, the payments processor. This follows the $22bn acquisition of First Data by Fiserv announced in January. Whilst payment processing for banks, merchants and other major institutions is at the heart of these companies, cross-border is a major driver. Some quick takeaways:

  • Scale is key in high-tech and fast changing sectors, especially when building end-to-end solutions
  • Strong growth in global Ecommerce is behind these deals, already driving many smaller cross-border companies such as Payoneer and WorldFirst (our analysis of the recent Ant Financial acquisition of WorldFirst is here)
  • Expect an expansion of offerings including credit (to compete with PayPal, Stripe and Square

Consolidation is picking up in all parts of the Fintech and cross-border value chain. Stay tuned.

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