Global Payments is one of the leading payment systems companies. Last year, it invoiced almost 4,000 million dollars and maintains double-digit annual growth. It is a permanent partner of traditional banking, whether HSBC or CaixaBank, which does not prevent it from being also from the technological giants that are making their way through the Internet, such as Apple or Google. Its CEO, Jeff Sloan, has been this week in Barcelona, where he participates along with other companies in the Payment Innovation Hub to develop more efficient payment formulas. It is one of the main companies that is putting in trouble the future of cash payment, which in Europe grows between 1% and 3% while electronic money transactions evolve at a rate of 10%.
Question. In what state of health is the payment in cash?
Answer. Paper currently accounts for 75% of transactions in the world and these will continue to grow, but at a slower speed as electronic payments penetrate. There is always going to be a market to pay with cash: it is comfortable, easy, anonymous, difficult to regulate and there is always going to be a need. But it will fall. The markets where there is no paper will be countries like India, where the State banned the use of cash last year. Global Payments is benefiting from the greater growth of digital transactions compared to paper, but also of the growth of the global economy. In Spain the digital market grows at a level of 7% and our alliance with CaixaBank grows in double digits.
P. One of the obstacles to electronic transactions was to achieve an agile and not very expensive system for small operations. It's solved?
R. In Asian markets, QR codes are being used through the telephone to make small payments, as Alipay does. The only thing necessary is to use a mobile phone and charge it with money from your checking account. In Spain, CaixaBank is collaborating with Alipay for such transactions and we are doing the same around Europe. Nowadays the payment system is regulated, in the future it is possible that we adapt to blockchain and bitcoin, but today we do not see the need because the system we have is very effective and safe.
P. Has Global Payments approached the cryptocurrency business?
R. Yes, since 2014 our platforms are enabled to do so. But we have found ourselves with little demand from merchants and users. Today bitcoin is more of a commodity than actually a currency. I do not think it is an effective reality in three or five years, because the substitution of cash or checks is already well covered by digital transactions and, in addition, the volatility of bitcoin and the difficulty of trading with it go to make it difficult to adopt it. In the end there is no practical use for the consumer, because it is an expensive and volatile technology and it is difficult to know what it is worth. At the moment it will not be part of our strategic business.
P. How will the Internet of Things modify the payment on-line?
R. Much. One of the biggest growth factors of our business in Spain and Europe is electronic commerce, the payment of services through the telephone and the Internet of Things, which allows us to make these transactions through the car, the refrigerator or systems like Alexa or Siri. These types of platforms have already driven the growth rates of electronic commerce. In Spain, e-commerce accounts for 20% of our business here and is growing at 20% annual rates. For the customer it is very easy.
P. And socially risky. Do they have the feeling that they can enable a compulsive type of buyer?
R. We are very careful about the types of merchants with whom we operate. We have a combination of physical and online merchants. In Spain we work with Zara or with Mango and it's a kind of business where you would not worry about people going to buy a lot of clothes. The same happens with Vueling, it is strange that you buy too many tickets to fly. It does not involve that social risk of the speaker.
P. But they are in the game business.
R. Yes, but not from the online game. We are only in the physical casinos, and in that type of games centers the laws do not allow the use of credit cards just to avoid that type of risks. There either you take the money in cash or you have to pay in advance.
P. The price of Global Investments has skyrocketed 260% in the last five years. Mastercard, 163%, and Visa, 176%. Is there a bubble in the means of payment sector?
R. We do not fear that it is a bubble, because leaving aside the evolution in the stock market, what counts is the operational and financial health of the company. We have been growing in income between 20% and 25%, and that underlying health of the company is what counts, also in the stock market valuation, beyond the speculation with the securities.
P. In the last months they have made two important acquisitions. What is the relevance of non-organic growth?
R. Two thirds of our growth corresponds to the growth of the existing business. The rest comes from companies that we have acquired, whose growth we accelerate once we bring our technology to them. In Spain, for example, all our growth is organic.
P. In recent months they have acquired a company to be present in the health sector (AdvancedMD) and in the sector of restoration (Sicom). What sectors are you still missing?
R. In fact, in some businesses we are only in specific areas and our interest is to take them around the world. For example, in the United States we are in health and restoration, and what we are trying to do is bring our payment systems from those businesses to Europe. And the same happens in the catering sector, where we offer services for chains of fast food and we want to land in Spain next year. These are two vertical markets where we have a good share of business in the United States but not in Europe. In the real estate sector, in which we are not a significant supplier, we are analyzing how to enter.