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April 19, 2022TSG Press

TSG Commentary: Heard at TRANSACT 2022

Last week, the Electronic Transactions Association (ETA) hosted TRANSACT, the biggest meetup in the digital payments industry. Taking place at Mandalay Bay in Las Vegas, it was the first time TRANSACT has been in-person since 2019. With over 2,500 payments professionals in attendance, the industry was happy to be back to face-to-face interactions. In fact, many attendees admitted they didn’t know how much they missed the in-person conversations and mentioned that there was no substitute for getting together at the event.

The Strawhecker Group (TSG), a Gold Sponsor of TRANSACT, had several team members in attendance. The team visited the exhibit hall, speaking sessions, the ETA Star Awards dinner (congrats to the winners!), and was host to a record number of meetings. Throughout the hustle and bustle, the team compiled commentary to highlight key themes that will be prevalent as we continue through 2022.

  • The Buzzword of the Week: “Super Apps”
    • The term “super apps” seemed to be the most buzzworthy topic discussed at this year’s event. Many companies are trying to educate themselves on the topic, while others are looking at these super apps to be a game-changer in the U.S. market and are very focused on monitoring the trend. So why are these ‘embedded’ financial/payments tools all the rage?
      • The term “embedded payments” refers to payment processing functionality that is included within a software solution such as business management software. The functionality allows merchants to accept payments within their software rather than using a separate software product.
      • On a related note, “embedded banking” refers to integrating traditional banking services—such as checking accounts and debit cards—with a non-financial company such as a retailer or marketplace. Embedded banking services can be set up through a banking as a service (BaaS) provider.
  • The State of M&A
    • There were a lot of questions on the M&A market from attendees, specifically around what technology assets companies are looking at.
    • Companies have vastly different opinions on current M&A activity. Some mentioned that there was limited activity taking place, while others communicated that they were seeing a lot of activity with current discussions underway.
    • TSG noted steady M&A activity through Q1 in its Q1 TransactionWatch Special Edition; however, the overall global market noticed a significant slowdown. TSG and its strategic M&A partner, Corporate Finance Associates Worldwide, expect this trend to continue throughout the second quarter and beyond. This is partially due to a few factors, including ongoing global supply chain issues, conflicts between Russia and Ukraine, inflation rates, etc.
  • Challenges Intensify for HR
    • Hiring and retaining talent is a challenge for all industries, let alone the payments industry. A handful of companies mentioned that some of the new fresh talent they were able to secure recently (at above-market rates) are leaving to crypto-focused firms.
  • BNPL vs. Crypto
    • As expected, there were many conversations around BNPL and merchant acceptance of crypto. The consensus was that BNPL is a real need for merchants, while many payment acceptance companies are not prioritizing the enablement of crypto based on the lack of merchant demand.
    • During TRANSACT, TSG released survey results from over 500 U.S. consumers to understand BNPL attitudes, market trends, and year-over-year comparisons. TSG found that over 80% of consumers rate ‘zero interest’ as the top feature for BNPL. Additionally, data showed that 60% of users reported that they intended to continue using this payment method in the future, up from 46% in 2021. Download TSG’s free 18-page mini-report.
  • Payment Facilitation as a Service
    • Payment Facilitation as a Service: Using this model, payment facilitators are leveraging their services to sign merchants, enabling features for merchants that may not be available with processor services. But processors are responding with their own models and one thing is for sure – this is where we will continue to see investment.
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