2024-02-15 16:31:00
In a market hit hard by rising rates, the trend towards concentration in split payments continues. After the takeover of ONEY by BPCE in 2020, and the takeover of FLOA by BNP Paribas in 2022 for 250 million euros, it is Crédit Agricole’s turn to be interested in a split payment specialist. Via its subsidiary Crédit Agricole Consumer Finance (CACF), the banking group has just announced its intention to acquire the fintech Pledg.
Launched in 2017, and initially supported by Crédit Mutuel Arkéa, Pledg offers a merchant a technical solution for payment in installments for customer purchases. The advantage for the seller? It is paid immediately, and in full, via a cash advance.
Ready-to-wear: inflation, fast fashion… The “correction is not over” for the mid-range
A formula very popular with commerce, particularly online commerce. In fact, it makes it possible to increase the conversion rate (purchase on visit) and the average basket. This payment method accompanied the boom in e-commerce during the pandemic, with double-digit growth rates.
Operation finalized at the end of the first quarter
Today, Pledg boasts more than 200 merchant clients and an annual production of 220 million euros. In 2022, the fintech entered into a partnership agreement with Django, a subsidiary specializing in “ethical” split payments of La Banque Postale, to provide it with access to its white label technological platform.
The repurchase operation by Crédit Agricole should be finalized before the end of the first quarter. The amount of the transaction has not been disclosed. In 2021, the fintech had raised 15 million euros in capital, following a first fundraising of 1.2 million euros in 2017. Fundraising suddenly dried up in the second half of 2022 in the world of fintech. The last major operation in the sector was the capital increase of 115 million euros, carried out in February 2022 by the fintech Alma, one of the last independent French players.
Fintech Alma is riding the split payment craze
In fact, despite its agreement with La Banque Postale, Pledg has not had the same success as Alma, which notably won a decisive contract with the SNCF to allow the purchase of train tickets in installments. “Bank backing was the obvious solution”, advances Nicolas Pelletier, CEO of Pledg, in a press release. It thus opens its technology to Sofinco (CACF) while taking advantage of the banking group to secure its refinancing.
« This operation will position Sofinco as the key player on the French market. It’s a service (split payment, Editor’s note) that has become essential to meet the demands of our various partners”explains Franck Oniga, general manager of Sofinco.
Difficult years
After the years of crazy growth in 2020 and 2021, the year 2022 was particularly difficult for split payments, and for consumer credit in general. Heavyweights like ONEY, a subsidiary of BPCE, or BNP Personal Finance, have had to carry out major reorganizations, sometimes with the cessation of activities in certain European countries.
“2022, and to a lesser extent in 2023, have been complicated for the profession”recognizes a banker.
The cost of refinancing has exploded and the cost of risk has started to rise once more, at best to pre-health crisis levels. A disastrous jaws effect in a low-margin, high-volume business model. Especially since the French, losing purchasing power with inflation, have reduced their consumption, particularly in non-essential segments, popular with split payment (electronics, travel, beauty, etc.). In short, a sort of “perfect storm” which announced losses – Alma published a loss of 32 million euros in 2022, one of the very few players to publish its figures – and a consolidation movement.
Crédit Agricole in retreat
France is an old land for split payments, both due to strict regulation of consumer credit, but also to banking players from the world of mass distribution, such as ONEY (Auchan) or FLOA (Casino ).
In the absence of official statistics, the split payment market in France is estimated at 5 billion euros, with ONEY and FLOA. The latter two are competing for first place (around 30% market share each). However, fintech Alma scored points by winning the SNCF call for tenders, under the noses of the sector leaders.
All studies show that the use of split payment is becoming more and more common in consumer behavior, especially for younger generations, who are more active online. In this booming market, Crédit Agricole has until now been clearly behind, even if its 3X or 4X card payment offer has seen good development. Finally, several foreign players are interested in the French market, such as the American PayPal, the Swedish Klarna, world leader, which is making a strong comeback following a difficult start, or the more discreet Italian Scalapay.
New universes
The coming years will see the deployment of the new European directive. This now includes split payment and mini-loans in consumer credit regulations (with the obligation to check the borrower’s solvency or display the APR). In fact, split payment transforms very quickly and extends its duration, well beyond three months.
Thus, ONEY now offers payment in 12 installments via bank card. New “verticals” are appearing, such as travel, but also health, particularly optics. But it is above all the circular economy which should see new innovations, in particular the co-financing of goods with recovery.
1708027053
#Crédit #Agricole #continues #consolidation #movement #acquisition #Pledg
