Through our enterprise sales team we focus on a single go-to-market approach across digital commerce verticals. Additionally, our recent client wins and opportunity pipeline reflects more clients purchasing solutions across Paysafe’s digital commerce offering of Digital Wallet, eCash and card processing solutions.
We typically generate revenue across our solutions through transaction fees that are calculated as a percentage of the transaction dollar volume, a fixed per transaction fee or a combination of both. We generate these fees when funds are loaded onto wallets or cards, when funds are used to make transactions or when we process a transaction on behalf of our merchants or partners. In certain cross-border transactions, we may also generate revenue from foreign exchange fees.
For the year ended December 31, 2021, we generated $122 billion of total payment volume and $1.5 billion in revenue. During the same period, we had a net loss of $110 million and generated $444 million of Adjusted EBITDA. For the year ended December 31, 2020, we generated $101 billion of total payment volume and $1.4 billion in revenue. During the same period, we had a net loss of $127 million and generated $426 million of Adjusted EBITDA See “Item 5. Operating and Financial Review and Prospects” of this Report for additional information relating to non-GAAP measures presented in this Report and for a reconciliation of such non-GAAP measures to the most directly comparable measures calculated and presented in accordance with GAAP.
Our Journey & Evolution as a Pioneer in Digital Commerce
Since our foundation in 1996, we have pioneered and continue to innovate around the development of digital payment solutions that help reduce complexity and expand payment alternatives for merchants and consumers. We have evolved since then by strengthening our domain expertise, adding new capabilities and extending our market reach to build on our early mover advantages in digital commerce and establish ourselves as a scaled market leader across all of our business segments. Some of the key milestones in our evolution include:
Our Foundations and Pioneering of Digital Commerce—We began as an eCommerce gateway in the UK called NETBANX in 1996 and the first customer to sign up for our system was Arsenal Football Club. Separately, the NETeller Group was established in May 2000 in Canada to commercialize an e-Wallet concept it had been developing to fund internet-based transactions without the security risk of processing each transaction at each separate merchant site.
Our Expansion and Consolidation—Adoption of the NETELLER system grew rapidly in the early 2000s as merchants and consumers benefited from the ease of use of our solutions and the growing number of funding sources and alternative payment methods that could be used to fund our digital accounts.
In 2004, NETeller plc conducted an initial public offering and listed its shares on the AIM Stock Exchange in 2004 and in 2005 it acquired NETBANX.
In 2008 the company changed its name to Neovia Financial plc (“Neovia”) as part of a wider rebranding strategy to differentiate the company from is various solutions, NETELLER, NETBANX and NET+, a prepaid card product.
In 2011, Neovia acquired substantially all of the assets of 7012985 Canada Inc. and changed its name to Optimal Payments plc (“Optimal Payments”).
In 2014 and 2015, Optimal Payments acquired five additional companies including the Skrill Group, which included the Skrill and paysafecard businesses. In November 2015, Optimal Payments changed its name to Paysafe Group plc, incorporated in the Isle of Man.
In December 2015, Paysafe Group plc listed its shares on the main market of the London Stock Exchange.
Our Privatization and Significant Investment in the Business—In December 2017, a consortium led by CVC Capital Partners and Blackstone agreed to acquire Paysafe for approximately a $4 billion U.S. dollar equity value, the largest private equity backed privatization of a London-listed company since the 2007-2008 financial crisis and the Company’s shares were delisted from the London Stock Exchange in December 2017.
Our Large & Fast-Growing Market Opportunity
We believe that an increasing percentage of digital commerce around the world is becoming too complex for traditional payment and eCommerce services providers using legacy business models, payment solutions and risk management platforms to support an aging generation of retail eCommerce solutions. These legacy platforms and vendors lack the specialized functionality, sophisticated risk management and robust regulatory compliance infrastructures required to address a large and fast-growing area of the market, which includes digital wallets, APMs and digital currency transactions. Consumers in these verticals are attracted to the differentiated functionality of these next-generation solutions, which enable them to load funds or cash onto a virtual stored-value account that can be used easily and flexibly online, through a mobile device, or inside an integrated app. Many of these users come from the desirable demographic of millennials and generation Z users, who either do not have a bank account or often prefer to use alternative payment methods as they are less comfortable sharing their financial details online. Instead they are attracted to the additional functionality and security features of these solutions, which enable them to engage in digital commerce and control their spending more effectively.
Our eCash Solutions division make online payments accessible to a market of millions of American and European users who may not have a credit card or who prefer to pay with cash. Covid-19 has accelerated the need to transact online and has consequently had a negative effect on this consumer base. We see significant long-term opportunities to provide an eCash payment solution in key categories such as rental payments, utilities, telco, healthcare and government.
Key Market Trends
We are positioned in key market segments that are being impacted by continuing favorable trends, with a majority accelerated by Covid-19, which are driving faster growth and changing the way digital commerce and payments are being implemented. For example:
Growth in Digital Commerce—According to IBM, Covid-19 has accelerated the transition from physical stores to digital by roughly 5 years, increasing consumer and merchant appetite for digital payment methods at a much faster rate. We believe this migration will continue and stay as market demographics shift to a digital shopping experience as emerging trends including seamless commerce, blockchain in e-commerce and mobile commerce expands.
Growth in Digital Wallet— Consumer adoption of digital and mobile wallets is expected to continue growing at a rapid pace with wallets capturing market share from traditional payment methods. According to a 2021 report by FIS, digital and mobile wallets will represent more than half of global eCommerce sales by 2024.
Growth in Integrated Commerce—Covid-19 has transitioned physical stores into an omnichannel experience, requiring merchants to offer integrated commerce to adapt to the post Covid-19 world. Consequently, SMB businesses are increasingly using more technologies at the point of sale (“POS”) to help them run their operations more effectively and satisfy consumer demand. As a result, technology companies, such as smart device vendors and ISVs, are adding more commerce-enabling features, such as payments and loyalty applications, into their core offerings. These firms are increasingly partnering with digital commerce solutions providers to integrate these features as seamlessly as possible.
Increased Adoption of Prepaid and eCash in the Digital World—Online and brick and mortar merchants are continuing to adopt prepaid and eCash solutions as prepaid card solutions are forecasted to double for e-commerce transactions by 2024 according to FIS. Prepaid and eCash payments acceptance allows merchants to access a large market of cash-based security- conscious and unbanked consumers, especially within emerging economies. We believe that we are a leading player in the eCash market, connecting merchants with millions of cash-based consumers across a number of high-growth verticals and geographies.
Shift to Alternative Payment Methods—According to FIS 2021, as traditional payment methods are forecasted to slow in growth, alternative payment methods are forecasted to gain momentum due to advancements in e-commerce from Covid-19. This has caused consumers to increasingly migrate their commercial activities online and engage in more cross-border transactions, we believe they are looking to use the convenient local payment methods that they use every day to conduct
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their local purchases. In return, businesses are looking for partners who can provide them with the abilities to seamlessly integrate and accept a growing number of APMs from around the world.
Shift to Universal Commerce Engagement—Consumer shopping habits are increasingly involving engagement across channels and the combination of payments and loyalty applications, such as digital offers and smart incentives. For example, a consumer can view items online and purchase in-store with a digital reward or buying online using targeted digital incentives. We believe these trends are incentivizing businesses to manage their customer-facing operations, including their retail presence, inventory, incentive programs, payment acceptance alternatives, returns and customer service, across all available channels—in store, online and mobile. As a result, businesses are gravitating to payments partners with the capability to provide integrated solutions that can manage across all channels with highly sophisticated engagement, payment, reporting and data management and analytics capabilities.
The Payments Industry is Continuing to Rapidly Consolidate—Strategic and financial buyers of payments businesses are expected to continue to pursue deals that enhance scale, technology capabilities and vertical and geographic expansion. We believe M&A will continue to be an attractive growth opportunity for the sector and believe we are well-positioned to be a leading M&A platform in the space. We have a broad and successful track-record of M&A execution and integration and believe there are a number of targets across our business segments.
Rising Demand for Integrated Multi-Solution Payments Platforms—eCommerce and brick and mortar merchants are continuing to demand partnering with highly sophisticated payments providers with a broad range of solutions. As the global consumer evolves, the leaders in payments technology are best equipped to help their merchants provide multiple transaction methods, content and highly specialized vertical-specific value-added services all-in-one to serve these consumers. We believe that Covid-19 has accelerated merchant demand for payments partners with integrated solutions that provide a seamless payment experience across a single platform. We believe that our solutions, platform and technology will continue to attract merchants and consumers to our platform.
Latin America —According to the FIS 2021 report, Latin America, a market with a growing middle-class population and high internet penetration via mobile devices, is a growing lucrative opportunity for payment providers. We believe our latest acquisition of Safetypay, a platform that enables eCommerce transactions in over 11 Latin American countries, positions us to compete well in this growing market.