Mobile Payment Apps in Europe — Part 2: Payconiq and Tikkie

The first part of these series was analyzing successful solutions from Nordics — the forefront market for digital payments globally. The second part is devoted to two Dutch digital payment apps — Payconiq and Tikkie.

Tikkie strategic path is the complete opposite of Payconiq. Payconiq was launched and banked by a consortium of banks, Tikkie had only one parent. Payconiq bet on partnerships and acquisitions, Tikkie remains a lone self-sufficient warrior. Payconiq tried to conquer the market from the merchant end and offer broad functionality set, together with geographic focus throughout Benelux, Tikkie was doing the opposite — one simple functionality, one market (Netherlands), focus on user base scale-up.

Let’s explore in detail.

Payconiq

Payconiq is a semi-successful mobile payment app, initially launched in 2015. Normally payment players first scale-up in home country and then expand abroad. Payconiq followed a different path — being born in the Netherlands by a consortium of Dutch banks, it failed to scale up in the home country. Subsequently, Payconiq entered the Belgian market (partially via acquisition) and managed to gain significant traction there. Key pillar of Payconiq strategy was expansion via M&A — it acquired competing solution Digicash in 2017, then merged with Belgian loyalty platforms Qustomer and CityLife, and finally joined forces with Belgian local card scheme Bancontact in 2019. This allowed Payconiq to gain a significant merchant base in Belgium and positioned the solution well in the loyalty segment. Interestingly, having a large merchant base (60,000+ merchants, mostly in Belgium), Payconiq failed to reach scale with customers — users figures are not disclosed, and most likely are very low (<100,000 total users)

Reach in 2019: 1.5M users, 75,000 merchants (mostly in Belgium)

Key success factors:

1. Strong Benelux banks backing — again consortium of banks provided resources for development and scale-up
2. Smart M&A and partnership strategy — buying/merging/partnering with competitors and providers of adjacent services proved to be an efficient cross-border and cross-segment expansion strategy. A smart partnership strategy is and has always been a key success factor for payments players.
3. Focus on merchant adoption and monetization ways from the beginning — those aspects are frequently overseen by digital solutions that try to gain scale quickly via free P2P payments and only after this move into monetization areas (Swish, Mobilepay, etc). Payconiq was focusing on C2B payment acceptance from the start (which in turn backfired with low customer adoption)
4. Partnering with large merchants — e.g. launched POS payments in McDonald’s self-service stands in Belgium, these kinds of flagship merchant partnerships are expected to boost solution recognition and adoption
5. Experimenting with new innovative use cases — launched payment on music festivals, bill payments in Belgium, in-app fuel payments partnering with fuel station network, etc.
6. Focusing on value-adding loyalty proposition — integrated loyalty is one of the key value-added levers that digital payment apps can leverage to win over cards and Payconiq is probably the most advanced payment app in Europe regarding loyalty integrations

Potential and Challenges ahead:

1. The main challenge is still low customer adoption, which remains a hard-to-solve problem for Payconiq
2. Apple Pay coming to Benelux in 2018 will limit the scale-up potential even further
3. Generally, low payment acceptance costs in Benelux(through local debit cards at POS and iDeal in e-Commerce) limit the space for new alternative payment methods
4. Integrated loyalty is one of the key value-added features of Payconiq and main potential differentiation lever going forward (both within online and POS payment)
5. Expansion into PIS space in an attempt to serve as iDeal for Belgium (or even EU-wide) is a natural development. Payconiq already received PIS license in Sep’2019
6. The potential for Payconiq also lies within niche customer application (merchants without terminals, closed-loop payments e.g. music festivals, in-app payments)
7. A merger of Payconiq with Tikkie potential could create a strong Benelux local champion, matching Payconiq merchant base and functionality with Tikkie user base.

Tikkie

Tikkie is another Dutch payment app, that was launched in 2016 by ABN Amro Bank, which left the Payconiq coalition in 2019 to focus entirely on Tikkie. As said, Tikkie strategic path is the complete opposite of Payconiq. Launched and supported by only one bank, Tikkie remains a company with almost no partnership deals. Also contrary to Payconiq, Tikkie focused on customer adoption first (and succeded in it) selling the only use case (P2P transfers through payment requests). And the approach worked surprisingly well. It’s not like nobody offered payment request functionality before (in fact it was already a part of many mobile banking apps), but Tikkie managed to package and sell it well — as a separate app, designed specifically to solve the narrow but very widespread problem (e.g “I owe you 10 EUR for lunch”). Catchy name and simple use case allowed to scale up quickly. However, monetization prospects remain ambiguous.

Reach in 2019: >5M users (30% of Dutch population)

Pricing: 0.15–0.25 EUR per transaction

Key success factors:

1. App simplicity, catchy name, good marketing
2. Offering bank transfer with immediate payment confirmation (while it might take several hours for money to reach the payee account, Tikkie sends an instant confirmation of the fact that transfer was initiated by the payer). This basically opens up the use of bank transfer at POS and online without instant payment infrastructure. However, in 2019 Netherlands launched instant payment infrastructure, decreasing importance of this Tikkie functionality
3. Targeting specific use-cases, where there was space for value-add, such as Online payments and ATM withdrawals

Potential and Challenges ahead:

1. A simple single P2P use case is good for scale-up, however, moving from this starting point into monetization areas is quite difficult
2. Tikkie attempts to play in POS payments (via QR code or classic payment request), targeting segments POS-underserved segments like flea market sellers, craftsmen and deliveries positioning Tikkie payment sometimes like a short-term deferred payment. However, the demand for this product offering remains niche and following this route Tikkie POS payment is unlikely to go mainstream
3. Tikkie online payment offers little value-added over well-established iDeal, and therefore unlikely to gain any scale in e-commerce
4. Generally, low payment acceptance costs in Benelux(through local debit cards at POS and iDeal in e-Commerce) limit the space for new alternative payment methods
5. The main challenge and potential for Tikkie’s management is probably to get brave enough to explore monetization areas that are not directly adjacent to current solution functionality. Leveraging 6M user base to cross-sell value-adding payment services for underserved or innovative segments, such as recurring payments, loyalty, in-app, grab-and-go payments, etc.

The two solutions went completely different paths and achieved two different results. Tikkie has an established and active customer base, Payconiq has the monetization functionalities and acceptance network. Tikkie stronghold is the Netherlands, Payconiq is present there as well, but focuses mainly on the Belgian market. This leaves us with a perfect merger case potential resulting in the creation of a strong Benelux mobile payment solution.