Nuvei sees tailwinds in sports betting and crypto as payments processor looks to widen reach

Article content

The chief executive of Nuvei Corp. says the Canadian payment-technology provider plans on beefing up its sales force in North America, where favourable economic and regulatory winds are blowing for the company’s current and potential clients.

“One of the big things that we’ve done in the business is we’ve heavily invested in distribution,” Nuvei CEO Philip Fayer said in an interview this week with the Financial Post. “You can have the fastest race car in the world. If it’s sitting in the garage, she’s not going to be winning races.”

Rivals may have somewhere between 30 to 40 per cent of their workforce devoted to business development and sales, Fayer said, which is not the case at the moment for Nuvei and its roughly 1,000 employees.

However, Nuvei has been making investments in the sales side of the business, which was focused last year on Europe, Fayer said.

This year will be more about the sales team in North America, where Nuvei intends to target large businesses, with a focus on mobile commerce and e-commerce needs. The company also operates in Asia and Latin America.

Article content

“A merchant may be born in the U.S. but may use us in Japan,” Fayer said. “It depends on where their needs are and that’s the beauty and the flexibility of our model.”

Founded by Fayer in 2003, Montreal-based Nuvei boasts a platform that allows merchants to accept payments in more than 200 markets and about 150 currencies, as well as permitting transactions with 455 alternative payment methods, such as Apple Pay.

On the back of that business, the company pulled off the largest tech IPO in the Toronto Stock Exchange’s history last September. Subordinate voting shares of the company closed Tuesday on the TSX at $73.72, well above last year’s approximately $34 issue price.

Part of the reason for the stock’s popularity has been the growing amount of business that consumers and customers are doing online instead of in person, a trend that was ratcheted up by the COVID-19 pandemic.

Nuvei reported that the total dollar value of transactions processed for its client merchants increased by 76 per cent for the year ended Dec. 31, to US$43.2 billion, with e-commerce transactions accounting for approximately 76 per cent of that volume.

Article content

The company also said it expects total volume for 2021 to be somewhere between US$81 billion and US$87 billion, or about double that of 2020. Volume is a key performance indicator for the firm, since it charges fees for the transactions it processes.

“Nuvei’s Q4 is reflective of rising online payment adoption as consumers across the globe continue to shift their transactions online,” wrote CIBC World Markets analyst Todd Coupland in a March 10 note to clients. “Nuvei also benefited from new customers and upselling of its payment processing services. When combined, these trends are powerful, providing increased visibility and confidence in our outlook.”

But Fayer emphasizes that Nuvei’s clientele isn’t made up of transitory winners from the pandemic. Instead, the chief executive sees companies that were doing business before the pandemic struck and will be doing so even when the pandemic is finally, hopefully beaten.

For instance, the company targets “high-growth verticals,” such as regulated online gambling and financial services. Those industries have seen steady demand for their services before, during and, hopefully, after the pandemic.

Article content

“Our customers didn’t see a COVID bump or a COVID drawback,” Fayer said. “They were fairly well insulated.”

Nuvei also sees its key industries as having some strong tailwinds behind them. Sports betting, for example, is being legalized across the United States and may be further expanded here in Canada pending the passage of legislation in Ottawa.

The company said earlier in March that a wholly owned subsidiary had been given the green-light to start serving the sports-betting industry in Virginia, an approval it has also received in the states of Colorado, Indiana, Tennessee and West Virginia. It recently joined the Canadian Gaming Association as well, deepening its ties with both brick-and-mortar and online casino operators.

Other verticals the company specializes in include online retail, social games (such as FarmVille) and digital goods. It is also involved in the travel business, which could really take off when the pandemic ends.

Article content

Part of Nuvei’s growth has been due to its acquisitions, such as the purchase in January of Phoenix-based payment-processor Base Commerce LLC. M&A remains a possibility, but it’s not a must, Fayer said.

Furthermore, Nuvei announced on Monday that it had added both “pay-in and payout” support for nearly 40 cryptocurrencies, including Bitcoin. It also said it could now facilitate transactions for non-fungible tokens, the “certifiably singular digital files” that have become all the rage with connoisseurs of virtual collectables.

Adding the crypto-capabilities, Fayer said, will help keep merchants current with payment trends.

“So that if people end up deciding to pay with forms of crypto, because they want it on the way in or they want it on the way out, it is our job from an innovative payments technology company to make sure we offer it,” he said.

Financial Post

• Email: [email protected] | Twitter: GeoffZochodne