Covid has strongly contributed to the explosion of split payment – starting other uses of digital technology. The PWC firm thus speaks of a market in turmoil. In 2020 in France, these payments represented an outstanding credit of 10 billion euros, an increase of 66% over one year.
Since then, the trend has persisted, despite a slowdown. The use of split payment concerns around one in three French people. Competition is intensifying between fintechs, but also with traditional players. Crédit Agricole provides an illustration of this by taking over one of the French specialists in the sector.
Technologies and know-how shared with Sofinco
In a press release, Crédit Agricole Consumer Finance announces its plan to acquire 100% of the capital of Pledg. Fintechs can no longer easily draw capital through fundraising. An opportunity for traditional finance.
For Crédit Agricole’s retail bank, the acquisition of Pledg is an opportunity to “build on the technological investments made” by fintech. These technological assets must benefit Sofinco and its ambitions.
The Crédit Agricole subsidiary sets itself the objective of being the “leader in France in point-of-sale and e-commerce financing.” With Pledg, Sofinco is continuing its strategy and offering itself the opportunity to strengthen its split payment offering.
The fintech has a portfolio “of more than 200 partners and 220 million euros in annual production in 2023”. By injecting capital, Crédit Agricole will allow it “to continue its technological investments.”
The acquisition, the inevitable outcome for Pledg
These investments will thus be pooled, also benefiting Sofinco. The banking group gets its hands on “know-how in the exploitation of partner data”. It will also be able to take advantage of the “maturity” of fintech “on the use of different tools (proprietary scoring, open-banking, etc.)”.
“Sofinco will benefit from synergies with Pledg to consolidate its position in the split payment market and offer its 7,000 partners ever more efficient and innovative pathways,” emphasizes Crédit Agricole Consumer Finance.
For fintechs, however, mergers with the big players in finance have not always been successful over time. However, for Nicolas Pelletier, the CEO of Pledg, “bank backing was the obvious solution”.
Restructuring and regulation of payments
Young shoots are prime opportunities for banks. And since 2021, valuations have fallen sharply. In 2022, according to the Fintech100 rankings, fundraising fell by 63% to 1.1 billion euros.
And regulation, to which traditional players are accustomed, also complicates the existence of startups. Crédit Agricole also points out that the split payment market is “in full restructuring.”
In addition, “the transposition of the new European directive on consumer credit, which will integrate split payment into consumer credit”, could benefit established companies, such as Sofinco.