While many have entered the electronic payment market over the past 20 years, there are few who can boast of having made their way to the top today. Among the biggest players in the market are Western Union, created 165 years ago, and the Californian company Paypal, which arrived on the market in 1998 with ambitions to revolutionize electronic payments. In such a competitive field filled with eminent challengers, one could be forgiven for thinking that any company ambitious enough to compete would be lucky to find crumbs under table. That is the reason why Wirecard’s story deserves consideration.
Created in 1999 on the other side of the Atlantic, in Germany, who at that time would have bet on its success? With a revenue growth of 16.9% over the past five years, let’s take a look back at how Wirecard realized its vision making a bet on a cashless future, and became in a few years one of the 30 largest German technology companies.
Creating a new model to compete with existing stakeholders
Created in 1998, Wirecard was first a technology company. It is only in 2006, with the consolidation of Wirecard Bank AG, listed on the Frankfurt Securities Exchange, that the future of the German Group, henceforth listed in the TecDAX of the German Stock Exchange, took shape. Benefiting from both sides of complex industries, but also from the support of Visa, MasterCard and JCB, Wirecard acquired the ability to disrupt the market by internally developing its products and putting forward innovations at a higher speed. As a result, Wirecard kept up with its American competitors, and took a leading part in the European market of virtual payment. In fact, the company was one of the first actors to develop a virtual prepaid card, illustrating its pioneering position.
Wirecard’s cutting edge innovation
Like its competitors, Wirecard adopted and spread new technologies for contactless payment, such as NFC, BLE or HCE, as they slowly gained acceptance worldwide. In 2014, the company became the first actor to market a wearable device based on HCE (host card emulation) technology: a wristband linked to a mobile app, itself linked to a bank account, providing a high level of security. The wide range of the potential clients, including airline companies as well as luxury brands or telecoms, also demonstrates how adaptability and providing personalised services drive the development of the market. Amongst other examples, Wirecard launched in 2012 a “white label” program, a solution for mobile card readers geared toward sales partners who can design the product with their own look and feel. Two years later, Wirecard remained on track in its search for personalisation and introduced the Wirecard Checkout Portal, a scalable solution designed to accommodate actors of different sizes and needs with comprehensive payment and banking services. Today, backed with sixteen years of experience, the company holds control over more than 200 international payment networks.
Moving towards core activities & reaching sustainable growth
Today the sector is at the crossroads of three key markets: Consumer Goods, Digital Goods, and Travel and Mobility solutions. Staying ahead of innovation thanks to an R&D staff of nearly 800 people, young markets have provided Wirecard with grounds to create new services, and have allowed its customers to offset the lack of infrastructure as well as the fast adoption of technology. In this matter, Wirecard provided breakthrough services in terms of security, comprehensive risk management systems and authentication to markets where the concern of security and privacy are raised tirelessly.
Learning from their environment
To survive and thrive amongst historical and international competitors, Wirecard has no other choice but to adopt an expansion strategy pointing towards new digital markets, involving a high level of customisation. Understanding markets from the inside instead of applying standard solutions worldwide need to be another driver of Wirecard’s expansion. Focusing on Eastern markets, Wirecard successively entered Indonesia, Africa, Australia, Turkey and New Zealand, where e-commerce and m-commerce are quickly expanding. As for today, nearly 50% of its employees are based in the Asia-Pacific region. In Africa, Wirecard developed a new system of virtual payment a couple of years ago in partnership with the French telecommunications company Orange, recently introduced on the French market.
Should we bet on Wirecard’s strategy? Yes, definitely. But the coming year will be critical to analyse the development of the internet payment services industry and other major players, like Paypal, also occupy the field. Without any doubt, the announcements made by these two competitors will be under close scrutiny in the next 5 years. It is hard to say what innovation may appear tomorrow and disrupt the market; and the rise of a new player is never to be excluded in a sector in such perpetual motion.