Prajit Nanu, CEO of Nium.
The B2B payments space has seen significant upheaval of late, but one of the companies making the biggest waves is Nium. Covering global payments and ecommerce, Nium is now valued at over $1bn, with a run rate topping $100m. It has attracted over $200m funding in 2021 alone, with investors including Visa
“We are on a 3X growth rate right now, and we expect that to continue at least for the next two to three years,” says Prajit Nanu, CEO of Nium.
“We still are not profitable, but the focus is to pick up profitability somewhere around Q1 Q2, 2023. The focus right now is to aggressively build a strong business, and take us to the $500-600m revenue mark.”
Providing pay-out services to over 190 countries, pay-in services to 35 and card issuance services to over 30, Nium is quickly establishing itself as a key player in the embedded finance and banking as a service space.
Along with raising revenue, the company has also been raising its public profile, through initiatives such as a sponsorship with the International Cricket Association. This move may seem unusual for a B2B brand, although Nanu cites increased brand recognition for both potential employees and customers as among the benefits, and there are other examples of B2B fintechs targeting sports.
Nium’s rise: From consumer to B2B to frictionless commerce
Nium’s focus hasn’t always been on B2B. It began life as Singapore-headquartered consumer remittance platform Instarem in 2014, focusing on speed and transparency, and launched a B2B arm in 2016. This outstripped the company’s consumer offering almost immediately.
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“In those days we were doing 15,000 payments a month on the consumer side,” says Nanu. “In the first month of our enterprise payment business, we did 100,000 payments.”
This promoted a rebuild of the company as Nium, shifting focus away from instant payments and towards affordability in response to business needs, as well as moving the company’s headquarters to San Francisco. Today, Instarem still exists as a successful subsidiary, but it accounts for just 10% of Nium’s business overall.
However, in recent years Nium has focused increasingly on a broader goal.
“When we originally started, the vision of the company was to build a global cross-border payment platform. Now the vision of the company is to power frictionless commerce,” he says.
Covering areas such as embedded payments, frictionless commerce sees Nium power commerce payments that are not only made across borders, but also local payments too, with.
“It could be domestic, it could be cross-border, but the focus is on how we can simplify commerce across the globe; buying, selling, movement of money, FX, payments,” he says. “You should never get worried or exhausted thinking about it. You should really focus on the business.”
Nium’s key funding rounds
Nium’s main funding rounds
Shifting narratives and reducing vendors
This approach reflects a wider shift in narrative from Nium, away from a granular discussion about how specific infrastructure and regulatory challenges are solved and towards a blanket solution where customers do not have to think about individual payments challenges.
“We are trying to take the narrative away from payments, because I think that narrative is wrong,” he says, adding that customers care about achieving a transaction, not on how the money is collected and processed.
“What happens behind the scenes – regulatory, licensing, compliance, payment method, authorization rates etc – you don’t need to worry about that.”
As part of this, Nanu sees particular opportunities in reducing the number of individual vendors that bigger, more complex organizations are working with, giving the example of a Fortune 100 company with 70 different vendors handling its payments. And while that may seem like an extreme example, many international organizations add new vendors when they move to new regions, creating an opportunity for Nium to help streamline their operations.
“If you use us, you don’t need these 70 operators. You can reduce that list to 20,” he says.
For merchants, this presents the opportunity for similar gains, replacing some 40 different bank accounts with a solution that can be handled on one screen and in one wallet, funded through a transaction fee and an FX margin.
“That is very exciting because if you think from a financial perspective, the amount of time, bandwidth efficiency you will have by consolidating is massive,” says Nanu.
Key to this offering is the amount of infrastructure Nium has in place, with it having pursued an approach of owning all infrastructure from its outset.
“Because we were a remittance provider at day one, we actually went and took money services business/e-money licenses all across Asia and all of the UK, etc. We also started connecting directly into payment networks,” he explains. “So any market we go to, we get locally licensed. We put local people on the ground.”
This, he says. Results in “incredible” levels of local knowledge, with individual country managers who have high levels of expertise about the market and who can advise potential customers on local challenges and expectations.
“That level of domain is very unique. And that’s what enables us to win a lot of businesses.”
This also comes through in the company financials. By focusing on emerging markets (Nium also works in mainstream markets) and solving multiple pain points of payments in commerce, Nium is able to price at a premium to pure large-scale, mainstream market payment processor companies. Nium’s take rate is 80-90bp, while mainstream market players with domestic focuses operate at around 20bp.
Nium’s key financial and business metrics
FXC Intelligence
Building opportunities: Crypto, M&As and beyond
Looking forward, Nium’s focus is not on new markets or product areas, so much as building on its current offering.
“The next stage of expansion is just about execution,” says Nanu. “We are in a great space because we don’t have to start new markets; we don’t have to go and start new products. We just need to expand our product base and execute.”
The next few years will see Nium place a strong focus on getting new customers, although it also plans to make a number of acquisitions to bolster its growth.
“We will buy a company in Q1 this year. We will buy another company before the end of the year,” he says. “So we’ll at least do one or two acquisitions a year, blend them and then keep scaling.”
However, he also sees crypto playing a role in the company’s growth.
“Over the next two to three years, we think crypto will become a very important integral angle of the business, and how we can support some of the largest exchanges, some of the largest platforms to grow rapidly,” he says.
With this in mind, while Nium gets SPAC offers “every few weeks”, the company is not in a rush to make the jump to the public market – and is unlikely to do so via a SPAC.
“The only reason we’ve been thinking of going public is that with our equity we can start buying a lot of companies,” he says. “But right now we are in no hurry.”
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