PayU executive on what to expect from post-coronavirus payment world

How fintech and e-commerce will develop post-coronavirus? Latest insights from PayU

PayU executive on what to expect from post-coronavirus payment world. Source:

The coronavirus outbreak has deprived many companies of growth opportunities, and even questioned some of them staying afloat. As businesses brace for the long-term impacts of the ongoing pandemic, some of them still manage to achieve growth in this uncertain time. Namely, payment service providers, and e-commerce companies.

PaySpace Magazine Global reached out to PayU’s Fady Abdel-Nour to ask him about the current state of the payment industry, how COVID-19 affected it, and what the post-coronavirus payment landscape would look like.

What are your background and current role?


My name is Fady Abdel-Nour and I am the Global Head of M&A and Investments at PayU, the leading fintech investor and payments provider in high-growth markets. I’ve been at PayU for almost four years and have overseen investments across Asia, the US, Latin America, and Eastern Europe. My role involves closely monitoring the global fintech landscape to identify companies that are defining the future of financial services and who align with our vision to create a world without financial borders.

With the support of Prosus, PayU is one of the most active investors in the fintech space. We’re always looking for opportunities to progress innovation with best-in-field technology across the whole of financial services.

Which areas of PayU’s activity show the best results amid the pandemic?

Consumers were already moving towards online services and the pandemic has only expedited this transition. In line with global trends, we have seen the demand for online payments and marketplace solutions rise as more merchants look to e-commerce during lockdowns. In fact, April marked the highest number of SME merchant registrations that PayU Poland has ever seen for its payment solution in one month.

The global effort to move away from cash for both health and logistical reasons has also seen digital payments dramatically increase, particularly for remittances. Just as physical retail stores have experienced a decrease in custom, so have traditional money transfer providers as many move to digital pay-out methods for the first time. Remitly, a digital remittance platform, has seen its customer base grow 100% from February to March 2020, and it saw a 40% growth in transaction volume overall. As customers still need to send vital funds overseas, digital alternatives become a viable option.

As interest in digital money and fintech apps surges, the pace of technological innovation will keep rising. We’ve already seen a renewed enthusiasm around cryptocurrencies as the current climate encourages us to explore every avenue of potential.

What will be the key characteristics of global e-commerce in the post-COVID world?

I have no doubt that the growth of cross-border e-commerce is a trend that is here to stay, particularly in high-growth markets witnessing the fast penetration of mobile and internet services. Even with temporary limitations around physical logistics, consumers have become accustomed to accessing world-class products and services from their own homes. However, one of the biggest challenges blocking global e-commerce is facilitating payments across borders and in heavily cash-based markets.

Greater availability of frictionless payment methods and clear commerce regulations for every merchant will define the future of e-commerce. Governments and financial institutions have already recognized the potential e-commerce can bring to global economies and are working hard on solutions to ease the process for merchants entering into cross-border trade.

The European Union, for example, has introduced rules to prohibit geoblocking in online trade to encourage consumers to buy from online stores in other countries. In Southeast Asia, immediate settlement on cross-border payments is being implemented regionally; the central banks of Indonesia, Malaysia, and Thailand even launched a framework aimed at increasing the direct settlement of transactions in their respective local currencies. I think it’s clear that real-time cross-border payments will be a focal aspect of global e-commerce in the years to come.

In the global e-commerce transactions in 2019, digital and mobile wallets account for 42%, credit cards for 24%, debit cards for 11%, and bank transfer for 9%. How do you see this pie chart in 5 years?

It’s easy to predict that the world will be unrecognizable in five years, but in truth, consumer habits take longer to shift. Credit and debit cards are going to continue being a strong portion of global payment volumes, particularly with a regulation on their side. I don’t anticipate a significant reduction in card transactions, but digital and mobile wallets are the fastest growing payment method and I don’t see that slowing either, with their market value expected to reach $13,975 billion by 2022.

Will fintech change after the pandemic? If yes, how?

Globally, the fintech industry has seen investment flooding the landscape, and challenger banks have gained unicorn statuses faster than any other tech companies. Fintech is, however, not immune to the effect that this pandemic is having on every single industry. Right now, fintech will have to focus on responding to market needs by creating valuable solutions for those worst hit by the economic downturn.

Additionally, spending is more conservative in a crisis and we’re already seeing the volume of deals falling. What’s likely to happen is an acceleration of the rebundling of financial services that were already starting to appear.

We’ll see more players consolidating and merging in order to strengthen their offerings and financials. In the wake of COVID-19, Revolut, UK-based challenger bank, has had to alter its internal operations considerably. However, it is also diversifying and has a new goal to expand the company’s prepaid debit card roots and look for deals in travel aggregation.

Fintech will not have any time to rest on its laurels in the coming months. With all the progress that it has made in financial inclusion, I’m hopeful that this remains a strong focus and that we’ll see even more exciting solutions. While there are challenging times ahead, fintech’s nimble nature makes it well-placed to respond rapidly to realities and challenges.

Global VC deal volume in Q1’20 reached a new low since 2013. Still, digital banks can boast of some major recent deals. Are there any other fields of activity in fintech that remain (or becoming) attractive for investors in the time of the pandemic?

In the first quarter of the year, many digital banks were finalizing deals that were already on-going or shoring up new capital, so it’s difficult to say whether they’re resilient to the broader trend. Looking to the future, fintech investment is going to be challenged by not only the physical logistics of getting deals done but also by the wider uncertainty of what the future holds.

As I mentioned earlier, digital payments and digital remittances are two areas that I strongly believe will see an opportunity coming their way. If fintech players are able to ready themselves for this demand and provide online services superior to physical services, they’ll not only gain themselves users who might be new to digital services, but also have the opportunity to retain those new users following this pandemic. An appealing proposition for investors.

This crisis requires old and new fintechs to remain flexible. Incumbent fintechs who were already well-capitalized and have a board of experienced advisors to get them through will most certainly have an advantage at this time.

Name the payment trends we’re going to witness in the nearest future.

I’ve touched on the adoption of digital services and pay-out methods for remittances, but there are a few other trends that are likely to manifest. One that we’ve been exploring for years at PayU that is still relevant today is increasing investment from payment providers in Artificial Intelligence and Machine Learning to gain greater insight into customer data and habits.

We’ll also see regulators begin to change processes in order to keep pace with payments innovation, while incorporating both local and global nuances. In particular, the digital currency market will expand as central banks and third-party players alike begin to develop their digital currencies and stablecoins. This is an area I’m particularly excited to watch over the coming months and years.

Finally, as Covid-19 drives consumers towards digitalized services, payment providers working to cater to the spike in demand need to guarantee their services remain secure. Crises often mark an increase in fraudulent behavior, a recent survey found that in March, the fraudulent attempted transactional value grew by 13% compared to last year as fraudsters increased their focus on electronics retail goods. With higher volumes of online payments naturally increasing security risks, the whole industry should be focused on keeping data and funds safe.

What catalyzes the growth of digital payments?

International lockdowns have certainly forced users to try different products and services, and at a much faster rate than waiting for users to change the habits of their own accord. Naturally, these are not your usual triggers.

Simpler and clearer regulations addressing the new ways of transacting have also helped to encourage the growth of digital payments in recent years. Singapore, for example, recently announced its revised Payment Services Act 2019 (PSA). This legislation consolidated and updated various payment regulations which were inadequate for the major innovation happening in the payments industry. The result is an omnibus framework, covering both new and traditional payment activities.

How do you think payment industry regulations should develop?

The process of governing finance needs to be reactive to the constantly evolving payments landscape. Entrepreneurs are working tirelessly to create new systems and companies that answer the needs of the evolving consumer demand. In many cases, they are then met with regulations that don’t cater to these new business models.

Regulators need to work with fintech entrepreneurs to develop new frameworks that enable and encourage innovation instead of trying to fit them into the old mismatched puzzle.

Moreover, global financial standards tend to respond to advanced economies, despite high-growth markets becoming increasingly important as stakeholders and innovators in the global financial system. PayU works closely with governments and local regulators to gain insight that is then combined with hyperlocal knowledge to help us advise on how financial services can best improve and extend access in each market. A similar approach could work well for regulators.

Do you believe in the viability of the concept of a cashless economy? Why or why not?

Since the imposition of international lockdown, the concept of a cashless society seems more viable than ever. Well before the pandemic though, economies like Sweden and China were on their way to being almost exclusively run by digital transactions. Now, as contactless payments become the norm in an effort to avoid using cash, China has rolled out its digital currency in four cities. If this launch goes to plan and the currency is widely adopted, China could become the world’s first completely cashless society.

Simply put, if someone has a smartphone, they should have access to digital payment services, meaning they then don’t need cash. In some emerging markets, access to smartphones is greater than access to traditional financial services. The largest roadblock to cashless societies is likely to be informal economies with an economic incentive not to digitize. Countries will need to ensure they take all communities on the journey of inclusion in any new systems to avoid this. We’ve seen enough innovation in the last decade to know that anything is possible in the world of money.


Pay Space

6822 Posts 0 Comments

Our editorial team delivers daily news and insights on the global payment industry, covering fintech innovations, worldwide payment methods, and modern payment options.