Analysts have asked us about the battle raging between Fiserv’s Clover and Square POS offerings.
Is it true that Square can make ground with ISOs?
Can Square partner with banks for more distribution?
How much share can Square take?
While the short answer is yes, Square has an infinitely better product than Clover by virtue of spending more than $0 on R&D, the market seems to be sleeping on SumUp.
SumUp has grown primarily through debt, pulling off a rare feat where the founders haven’t needed to trade large tranches of equity for investment capital.
Founded in 2012, SumUp counts over 4M merchants as customers and nearly $1B in revenues, although that figure likely includes interchange “revenue”, which should be subtracted out. SumUp likes to say that they support 25% of merchants outside China, which is a staggering number.
SumUp supports over 4 million merchants in 36 markets across Europe, the U.S., Latin America and Australia, with tools and services merchants need to start, run, and grow their business, tailor-made for small, micro, and nano segments.
We back into revenues with SumUp announcing that they processed 1 billion annual transactions in 2024. Given the makeup of their customer base, this is like $15B of TPV, of which SumUp clears 100 bps of margin, or $150M. There are probably another $100M+ of SaaS fees on top of that.
Globally, SumUp’s product is still geared at the small of the small.
Think of it this way: if 4M merchants are generating $15B of TPV, that’s less than $4K per merchant.
Super micro.
Even if you double the estimated ticket size to $30, it’s only $8K per merchant annually.
But the most interesting dynamic is SumUp’s efforts in penetrating US ISOs when they’ve previously been 100% direct.
ISOs that sell SumUp are selling to larger merchants – hundreds of thousands in annual TPV, with $500K TPV being a sweet spot.
That’s because the target merchant for these efforts stems from SumUp’s acquisition of loyalty platform Fivestars three years ago, which itself became a payfac through Infinicept in the early days of payfac.
SumUp’s new ISO program is focused on SMB merchants that sell to consumers in person. The product has features for SMB retail and quick service, but lacks handhelds (this is coming) and table service features.
SumUp’s goal is simply to get more SumUp POS into the market. To do so, they’ve got some compelling economics.
An ISO partner can refer the business to SumUp and let SumUp handle the payments. Under this model, the ISO gets an 80% split while doing none of the work. (If you’re wondering, Worldpay is SumUp’s payfac).
If that’s not good enough (it should be, though: the ISO is literally just a referral agent at that point, which in SaaS is only worth about 10-30% of first year revenue depending if the account is warm or already closed), then the ISO can bring their own paper for splits on TSYS or Fiserv paper. IRIS is the CRM, which many ISOs are already familiar with using.
We really want to emphasize how little work the ISO is expected to do here.
SumUp imports the menu.
SumUp does the training.
SumUp does the implementation.
SumUp does the Tier 1 support.
Bro.
Frankly it’s criminal that an ISO should get 80% in perpetuity for what is in all other industries viewed as a referral.
This would NEVER fly in SaaS, yet SumUp is willing to split insane margin here.
In fact the economics are so good we think that it can’t last.
SumUp is a reflection of what we expect to happen in the lower part of the market.
The US is the only SMB market in the world where you can make money on payments.
Toast has ignored anything less than $1M TPV/store because they have an expensive direct sales motion.
This allowed companies like Clover (ISO-led), Square (product-led initially, now ISO partnerships), and now SumUp to compete.
This has to make Toast nervous.
SumUp and Square spend real money on R&D.
They understand software.
Toast has a stranglehold on a segment of the market, and they’ve basically tapped it out.
Measured in years, not quarters, there’s going to be pressure.
I’ve heard that Sumup’s customer service is terrible. For ISO setup, all services will likely be directed to the agent due to the lack of timely response from Sumup
I’m really sorry to hear that this is what you’ve heard, I thank you for sharing, and welcome the opportunity to connect and learn directly. Have we made mistakes in scaling into the partnership arena? Yes, absolutely. Each ISO has a relationship partner that works directly for SumUp and has internal access. Each ISO partner has access to me, and my cell phone. Independent agents have a team lead they work with directly, and again that person is a SumUp employee with access internally at all levels. Our customer support team is based in the US, they are an amazing team, are passionate about succeeding at each interaction, and expect to handle the complete install and menu/inventory build process. tl;dr – we are full service, committed to it, committed to supporting our partners. Again, lets connect and discuss this experience.
david strauss, svp sales SumUp