GI Huddle

A local marketplace

Gambling Insider provides a recap of our recent payments-themed GI Huddle interviews. First up is Nuvei’s Chief Corporate Development O icer, Neil Erlick

Can you give us an insight into Nuvei’s history and what you do as an organisation? Nuvei is a large, global payment technology company. We operate in over 200 markets around the world and offer over 455 alternative payment types, and 150 currencies. We recently launched 40 additional cryptocurrencies. And really our goal is to make the world a local marketplace. We do that by connecting our customers with their customers, allowing them to pay and get paid anywhere they are around the world – in a timely manner and obviously in a very safe environment.

You’ve personally got a wealth of experience in the payments sector. What does your role with Nuvei cover? I always sound old when I say this but I’ve been in the industry for close to 21 years now. I’ve definitely seen a lot – the evolution of digital payments. My role is I’m the Chief Corporate Development Officer, I oversee all of our strategic partnerships and work very closely on our M&A and strategy. Given my experience in gaming, I set up the infrastructure and the strategy as it relates to our North American initiative.

Looking at payments in gaming specifically, what trends have you witnessed as a result of the Covid-19 pandemic? As a whole, we didn’t see the same blip a lot of companies did with Covid. If you look at the industries we operate in, gaming being one, they always have three main criteria in terms of where we focus. It’s an industry that has inherent growth and tailwinds, it has longevity and it has the propensity to operate globally. So when you look at that, the industries we’ve been in, we started seeing growth before the pandemic. Specifically relating to gaming, the progress has continued. An area we’ve seen an increase in is the cashless aspect in brick-and-mortar.

But really we look at the total addressable market – Covid has expedited the process but we don’t see it coming and going as in other industries. If you look at people now buying their groceries online, some of them will probably go back to the stores once they open up. But if you look at people doing their workouts, are they going to go back to the gym or continue working out digitally? In gaming, specifically in North America you’ve seen an acceleration of states opening as they need those tax dollars. And casinos have had no choice but to move to a cashless option, so we’ve definitely seen an increase.

Do you see this as more of a permanent shift to cashless? I do. There’s obviously tremendous momentum. If you look around the world, our business is global and it continues to grow globally. I thought it was incredible to hear that gaming revenues in Nevada for March and April were the highest that they’ve been since 2013. I think this is just the beginning; people are hungry for entertainment as it’s been a tough year for millions of people around the world. So this is an acceleration, I don’t think it’s going anywhere; we’re very bullish on the gaming industry. We’ve been working in gaming for close to 15 years and we think it’s only going to continue to grow.

Can you talk us through Nuvei’s M&A strategy? Our goal is to provide the operator with any way that the consumer wants to pay and get paid. We want to give them that ability, not just in the US but globally. We look at three things when we’re doing M&A: does it help us from a product capability standpoint? Does it help us enter new territories around the world? And is there an opportunity for scale or something that’s transformational? As examples, we’re very, very excited with our recent acquisitions of Simplex and Mazooma.

Client-focused

In the second of our series of payments-themed GI Huddles, Gambling Insider spoke to VallettaPay Founder & CEO, David Zammit

Can you tell us about your role and what VallettaPay is about as a company? I started working as an accountant way back at the age of 17, working at Deloitte. After that, I graduated as an accountant with the Association of Chartered Certified Accountants at the age of 21. I spent the following 15 years working as an accountant, gaining invaluable experience from different industries. Later on, I was approached by a friend of mine who was working on a project. After a couple of months, we realised we had good synergies working together and we thought it would be a good idea to do something together. This is how VallettaPay started way back in 2016. I am the CEO and focus most of my energy on business development, human resources and also strategic planning.

What would you say you learned the most during your time as an accountant? First of all, it was a good experience for me because I didn’t have the opportunity to experience business firsthand. As an accountant, you can get a lot of information about the business itself, and the financials. I was always interested to learn more about different challenges faced by different businesses. One of the main problems I encountered was the debtor book. You will find a number of companies having to collect a lot of money from others, which has a direct impact on cash flow. The other big lesson I got was funding. Funding is always a big challenge when you have an idea and want to make it commercially viable; funding plays a very important part in this process.

Could you walk us through your journey from founding VallettaPay in 2016 to today? Yes, VallettaPay was founded by myself and my good childhood friend, Colin Jones. Like many other start-ups, we had to invest most of our savings to employ the first six people. We had to spare some money for laptops and other equipment, as well. Originally, we started as a card processing company, so we had a payment gateway that was connected to a number of acquiring banks. Our clients would be selling products or services online; we would connect them to our gateway and the clients would process mainly Visa and Mastercard products. The acquiring bank would then make the settlement to the online merchant. So our background was always related to companies that sell products and services online.

We were lucky to break even in the first months of our existence, and this gave us the courage and opportunity to focus on our product, ensuring we offer a better product, and it was working well. Except for the fact we had a number of clients that had funds sitting at acquiring banks, and were facing difficulty to receive these funds because of the general problem arising from the banking industry. So we had a number of banks that did not understand or were not willing to open accounts for clients selling products and services online. We thought this was our opportunity to tap into this particular market. Colin had a good connection with a financial institution and we thought it would be a good idea to partner with this institution, which would complement our product offering. This is how it all started and how we shifted from card processing to banking.

Moving forward, we understand you prefer to work with niche clients in niche sectors, rather than a more general, overarching approach. Can you tell us more about exactly what this strategy means? The online industry is quite big. But it is serviced by a number of banks and institutions. We understand this very well, so strategically it was always important for us to grow organically. This means good clients and clients who fall within our risk appetite. Also, we always wanted to compete on the service. To compete on the service, you need to have a limited number of clients. You cannot offer the product to everybody, because otherwise the quality of the service will start to deteriorate. So it was natural for us to remain focused on clients that have good volumes and good history.

Payments are personal

In the final interview of our payments-themed GI Huddle recap, Gambling Insider interviews Neosurf CCO Andrea McGeachin

The floor is yours for an introduction into Neosurf and what the company does. Neosurf have been around since 2004, in the same space as paysafecard and what was Ukash. A number of us in the team here used to be at Ukash, including myself. Our own payment method is an alternative payment method, in the gambling industry’s terminology. Local payment is something people use more now, which I’d much prefer. We produce prepaid vouchers essentially but we have our own technology and we’re across 58 countries. We reach customers that want to use Neosurf securely or even hiding – in a legitimate manner, not an illegal one – transactions of gambling on their bank account, sometimes from their spouses. We also reach into areas across 38 countries in Africa, where banking isn’t that easy, and we connect to wallets. We reach a local payment method and we deliver that into a number of sectors – the gambling sector is a significant one for us.

I come from Ukash; in between Ukash and Neosurf, I worked in lending at Wonga.

At the end of 2015, Paysafe had bought and killed the brand Ukash. And Nicolas [Saubié], who is the President of the company, saw an opportunity and realised we needed to put some real effort behind the commercial side. So we brought in a few Ukash people and lots of others – the business has grown exponentially. We now have a team of about 30 people in the UK, people in the US and Israel; France is still our headquarters. We’ve got people in Australia and we have a few offices in different countries, as well. We’re a very, very strong team, getting out there pushing as the alternative to paysafecard, doing really well and enjoying ourselves.

Can you tell us about the work you do with the esports sector? It’s interesting because we’re talking about gambling here but one of the sectors we’re growing in is games. We went into esports sponsorship and I can’t begin to tell you how much we’ve learnt. We started with a UK team that became a bit too expensive as it’s a premier team – Excel. In January 2020, we did a Neosurf Cup for League of Legends. The December before that, I was introduced to what the esports arena is, at the League of Legends World Championship in Paris, and I was blown away with the enthusiasm and the quantity of people. We now sponsor teams called the Dire Wolves in Australia. That’s been an amazing success for us; they’ve got teams across different esports. We’re looking forward to the FIFAe World Cup that they’ll be taking part in. We’ve learned about the enthusiasm, the size of the audience, the involvement the audience gets. I now can follow a League of Legends battle but back in December I had no idea what I was watching! Then we’ve got the team K1CK, that’s got a Portuguese element with five different teams, and a League of Legends team in Poland. There is a growing crossover with esports and betting.

Payments are boring. We are a payments service but payments itself is boring. The only way we can really improve and help our clients is by understanding how to convert. So our payment mechanism has to be something that will convert into a deposit. By working with the esports side, it’s really helped us cross over to the gambling side in terms of understanding the consumer.

You’ve achieved growth in the area of cash payments. But this is an intriguing topic, because cashless is on the rise and a lot of commentators say cash is dead. What’s your take on this view, especially given the growth you’ve seen? We’ve got some very interesting stats on it. Cash, at the end of the day, was our core proposition. It’s true that in certain countries cashless and more digitised is taking over. We’ve seen the growth go with that. We’ve seen a massive rise in online sales of our vouchers. We’ve done some data to analyse whether that is purely Covid-driven or whether it’s a pattern. You can see with gamers and the pattern of timing that it’s not just to do with Covid. Even in the UK, and France which is our first country, cash vouchers are still being bought. Whether people are using their cashless card in the

convenience store during Covid, we haven’t got the full answer to that.

But in some countries cash is the only way. Most of us who sit in this industry and talk about it live in a country where we’ve got a card that can be tapped. The other day I needed to tip someone and didn’t have any cash on me – it made me giggle considering the business we’re in. But there are other countries that aren’t like that, so cash is still important. We’re building our position in the US – some people say we’re late to the game but I say no, we wanted to wait and see how things panned out. Someone told me cash isn’t really important in the US – but I think that’s wrong. It costs you a dollar to breathe in New York.

I think PayNearMe are doing a really good service out there. We did a bit of research about prepaid cards – people are spending cash on gambling in America. But they’re going out

and buying a prepaid card and then using that to deposit. It triggered to me when DraftKings decided to go into getting a prepaid card. It is still important – cash isn’t disappearing. However, there is a massive transition – about a third of our vouchers are issued digitally. But cash definitely hasn’t died.

We certainly take your point about cash. But you have mentioned the trend of growth in digital, so how do you compete in this space given the heavy competition? We bring two things here. We have more and more strength within our own digital service, so participating with the online distributors has really supported our position. It’s also our use of our Myneosurf wallet, by making that the best user experience and really learning how to make sure the consumer is looked after. I keep saying this but payments are boring and you’ve just got to get it right. You’ve got a whole lot of regulations and a whole process to go through. Less is more: simplicity.