Rory O'Neill: CMO at Checkout.com

0:00Hello and welcome back to the Scaling Europe show. We have got an amazing show lined up. But before we get into it all, I just want to do a quick shout out to my sponsors, of course, Checkout.com. We have a very special guest from Checkout joining us today and a brand new sponsor, Gather. Gather is an amazing company that helps startups find and save money through partnering up with leading organizations. Checkout.com is, of course, one of the leading tech companies to come out of Europe in the last decade. An amazing, amazing fintech, an amazing partner for the show. So we've got Rory O 'Neill, the CMO at Checkout.com, joining us shortly.

0:31Then we've got Taos Edmondson, who's a partner at DMG Ventures and one of the co-founders of OnStage. We've got the famous Demo Day next week. We also have Tom Pope, co-founder and CEO of Adfin, an index-backed company that is flying at the moment. And finally, we have Mark Fairless, who is the CEO at ClearBank. Amazing. Well, look, we've got Rory here. So let's welcome him into the stream. Rory, you are live. How are you doing? I'm really good, Seb. Thanks for having us this morning. It is my absolute pleasure. It seems like Checkout.com is on an absolute tear at the moment. It has been announcement after announcement, product announcements, partnership announcements, traction.

1:07Can you talk about some of the biggest news that's kind of hit recently and it's kind of demonstrating why Checkout is doing so well at the moment? Yeah, it's obviously a very exciting time for us. We're fortunate enough to play in an incredibly dynamic and fast moving market. And I think, look, you know, Checkout is a digital payments provider working with many of the largest brands, digital brands across the world. You know, everyone from ASOS through Vinted and Pinterest and, you know, Get Your Guide, Timu, Klarna. And just yesterday we announced HelloFresh. So, you know, merchants are buying into our proposition.

1:39And very simply, we exist to solve one of the core problems in the digital economy, which is how do you just increase payment acceptance rates? as you go from the physical world to the digital world. And unfortunately, when you and I use our cards online, even though we buy exactly the same things with exactly the same merchants, using the exact same cards, the acceptance rate can drop when you're online to around 80%, whereas when we are physically holding that card in a store, it can be 99, 99.9%. So that is a big problem for merchants around the world that we're trying to solve. And our focus is on solving that with machine learning, AI, data science and all the product innovation that we put together.

2:23And it seems to be going tremendously well. You know, some of the things you've reported recently is like 30 percent net revenue growth for this year. I think a whopping 300 billion dollars is your total e-commerce payment volume that you're kind of expecting to see in 2025. These are like amazing numbers. Where are you seeing some of that growth come from? Yeah, look, I think the growth is really around the world. I think, you know, Checkout was born out of the UK. We're very proud to be a London headquartered fintech sub. And thank you for helping us tell our story. It's a really important thing for us.

2:53We've grown across Europe. We've grown across the Middle East, North Africa. We've got a great proposition in APAC. We help, you know, Chinese merchants that are trying to reach consumers around the world as they sell their goods into those markets. And the US is a focus for us as well. We, you know, we've grown, I think, 80 percent year over year in 2024 in the US. it's a significant part of our business. The brands that we're winning now are global and expecting to operate in all these markets around the world. And we expect the US to be a significant investment for us and will probably be our largest region, actually, by the end of 2027.

3:25So, you know, the numbers are super important. The growth is super important. Obviously, we take care of net revenue growth being, as you said, 30 % year on year. We're thrilled to be, you know, processing now, by the end of the year, more than$300 billion of e-com revenue, e-com, you know, GMV, sort of, rather, as we kind of work on it. And that's a testament to the amount of merchants that we're working with and the growth that we have. That's amazing. Can we touch a bit more on the US? What's happened in the US? What did you get right that has enabled the US to almost kind of, you know, take over as your biggest region by 2027?

3:57Yeah, I think there's a couple of things. I think the core of what we're up to, I mean, the great thing about checkout is that we're purely focused on that digital enterprise space at the minute from a payments perspective. And, you know, what enterprises need is like, you know, we've got robust AI and machine learning models that are really training and learning based on the whole of the network data to try and optimize and improve that acceptance rate when people buy cards online. So that's a great proposition for digital brands, you know, around the world, but obviously particularly in the US where the scale of everything is just bigger.

4:26And the US is the biggest payments market in the world. And we've got a great proposition for that market now investing in various product capabilities to do so. So, you know, we run 80 million optimizations a day. We run optimizations on 10 million transactions. Like, you know, the scale of the science, if you like, that we've put behind that transaction intelligence and making sure that acceptance rates are as high as they possibly can be is a really important thing. So that's the first part. And then the second part is that there's been some changes the way the U.S. market has structured from that sort of census.

4:55We announced obviously last week that we've got a Mal B license. It's quite a technical license from the state of Georgia. But essentially what it allows us to do is take more control over merchant acquiring in the U.S. market, which means that we can offer U.S. merchants even higher and even greater capabilities in terms of payments and performance by just reducing the amount of complexities and intermediaries that are in that mix. So that's a big deal for us. And, you know, once that's fully accepted and fully live, you know, in 2026, then that will be even adding to our existing proposition in the U.S.

5:29market. So, you know, again, U.S. is a really big payments market. There's some really great mergers over there. We've got a really existing proposition that we think is really good and we're growing fast there. And I think it's only going to get better with the innovation that we've put behind it. And so that Georgia banking charter, it seemed like quite a game changing new application that you've put in. It's going to unlock a lot of things for checkout. Is that going to take you in direct competition with Stripe? And is that who you're going after in the US? Yeah, look, we've got great competitors across the world, Seb.

6:00This is a$3 trillion market that McKinsey Broadcast is growing at 14 % year on year. So you have great competitors everywhere around the world. And I think that, look, what we want to make sure we offer is we offer merchants a choice and alternative to every brand in every market that we compete with. And look, Stripe, Addy, and WellPay, there's great brands in this space. And we think that, you know, what is unique about checkout is that our focus entirely is in that digital space. So every single dollar, every single resource, every investment we make in checkout is behind solving that digital acceptance rate conundrum for the world's biggest digital brands.

6:38And over time, our focus and our strategy and our bet is that that focus is really what delivers a better proposition to those digital markets. So, yeah, it's a big market. It's lots of competition. Yeah, I love it. And when you talk about solving that problem, how big a problem can that be for the customers that you are solving it for or you want to solve it for? Yeah, I think we've seen many of our products, and take one of the products we announced last week that we've made some innovations to. It's a product called Flow. It's like micro components that just connect merchants' environments to the checkout network.

7:12When we work with merchants around the world on that particular product and the Flow product, we can see anything around a 7 % uplift in acceptance rates. So, you know, you think about that, Seb, right? If you can move an acceptance rate from 80 to 87 or from 85 to 92%, you know, that could be hundreds of millions of dollars for brands that are processing, you know, billions of dollars a year online. So the size of this problem, we talk about a lot at checkout. We talk about chasing basis points. And exactly, you know, if we can say one basis point or improve one basis point on the amount of volume that's conducted across our network, it can mean millions of dollars, you know, hundreds of millions of dollars to merchants around the world.

7:52And that's our inspiration, Seb. That's what inspires us every day. No, yeah, when you put it in that 7 percentage point, it's a huge impact. And the bigger the partner, the bigger the merchant you're dealing with, the more transformational that uplift can be. You talked about Flow Remember Me. I think, you know, it's quite an interesting new product development that was announced last week. but it seems like checkout is also making other bets in this world what other product developments have there been maybe in the last year or so that have been particularly exciting yeah there's sort of almost you know three or four levels to it as you're building a global payments network you know one of the things you can do is expand the number of territories that you you you know you enter so you know we've you know two years ago we went into japan and started processing alongside the the incumbents there um you know last year we've announced the edition of panada working on that too.

8:43Obviously, we've talked about it in the US already. So there's a kind of a market rollout that you can kind of grow and it's, you know, to enter a market, to, you know, get the regulations and the licenses behind it and then build the rails and build the networks with partners. Like Visa and Mastercard is obviously a lot of investment, a lot of resource that goes into that. You can also add payment methods. So all the way around the world, consumers have great preference in what they choose to use to pay. Part of Flow Remember Me is using AI to put the right payment methods in front of the consumers as and when they need to use them, which is an optimization that can lead to increase conversions and more sales for our merchants, which is obviously super, super important.

9:18There's the AI optimizations that we build into the network. And this is just, you know, it's always been at the core of payments, Seb, really, in a way we've kind of gone from, you know, machine learning tables into the use of, you know, AI and those sort of pieces. But, you know, there are machines that are learning how to process more and more transactions and get higher and higher acceptance rates all the time by changing data fields, changing the data packets that are involved, whether it's like, you know, device identification or even as simple as upper and lower case data fields of a postcode.

9:47All of those little things can be optimized in order to make sure that, you know, a bona fide consumer can buy for bona fide goods with a bona fide merchant and the reduction of fraud that goes around that and et cetera, et cetera. So across all those levels, we're kind of, you know, innovating the system. We're also investing in issuing Visa and MasterCard now so that we take complex payment flows in verticals like travel and fintech and kind of help optimize where an awful lot of like redundancy and kind of like mitigations of cash we're putting payment flows or cash flows into the payment network rather with things like checkout business account so actually you know making sure that people can start to move money easier and put money to work a lot easier and then there's the whole settlement question too so you know right the way around the world there's too many merchants that are dependent on banking hours being, you know, extended beyond the weekend so they can get their money and actually put it to work.

10:41And it's amazing that if you think about the amount that's processed across our network, and if we can put that money to work on behalf of our merchants a little sooner, then you can start talking about how payment flows will optimize even things like working capital. So there's an awful lot of ways that we're kind of, you know, innovating in the core of the digital payments network, Seb, and it's building up that network it's building the intelligence network and making sure that you know we share all of those optimizations and power of that network with all of the merchants that are on on it and what are you thinking about the future of commerce more broadly you know you've talked about ai for optimization but what about uh agentic commerce you know is checkout imagining a world which is you know i guess like quite similar to to the release of um to the release of flow remember me but it's almost like your agent will know all your details and maybe it doesn't even need to be a checkout merchant that you've used previously or like you're on the checkout flow remember me but maybe agents will remember all of your details they'll do all the checkout for you are you kind of trying to build or predict a world in which agentic commerce or ai commerce kind of comes in and takes over yeah look i think there's there's a lot of hype and a lot of talk about agentic so for sure yeah many many brighter brains than mine that are sort of spending time in this domain in this sort of area but look i think the a couple of couple of fundamental things I think that, you know, agentic commerce, first of all, is, you know, is agents buying on our behalf.

12:05Right. Like it's agents buying on behalf of consumers. And there are a plethora of implications for merchants. You know, let's put to one side and maybe we can come back to it, Seb, if you want. But like, you know, put to one side, like how you market to an agent. Right. Like the world of search is going to be transformed. Right. Like your website is going to be transformed. Like people like me have cared about, like, you know, flow of websites and conversion rates on websites and, you know, imagery on websites. and perhaps when an agent is buying on your behalf, they'll care less about the pictures and less about the webpage structure.

12:34They'll care more about the data and the code that sits underneath it. So the agenda commerce is a huge topic for merchants to get involved in, let alone how people discover those brands and get to the loan. But when you think about the moment of pull them, actually, probably what's most important is the fundamental principle of trust and identity. Now, if an agent's buying on your behalf, who's really responsible for the transaction who's liable for the transaction what happens when someone goes something goes wrong how do you prevent bad actors from making agents that all of a sudden shop on behalf of said and all your listeners and nobody knows how to get any of the money back if the flow the flows are proven to be fortunate so that's the kind of like trust dynamic that is the first principle that we're going to have to crack in agentic commerce so how do you put trust in the system and if you think back like when the world went from you know physical buying to digital buying in the first wave of e-commerce you know we spent hundreds of millions of dollars putting trust into that system and creating card not present rules with visa mastercard and all the schemes and all the partners in the ecosystem around it so that actually there's as much much trust in the system as there was when you physically put your card in a machine and enter your pin code for example um so i think you know so so so trust is kind of the the first paramount and then the second thing i think this is super important is is is you know agentic commerce is going to be just another channel for merchants to reach consumers right like just like digital commerce and e-commerce was just another channel to reach the same consumer um and that's how we're going to think about it because effectively you know omni channel is going to get another channel and i think that um as we think about this you know for certainly enterprise merchants it's not going to be one size fits all set right like um if you think about again they're going back to e-com right ikea had a different e-commerce strategy to chanel uh ebay had a different e-commerce strategy to amazon right they were all fundamentally different and they were fundamentally built on the basis of what business strategy and business model those merchants actually had in order to reach their consumers so the first question i think for the merchants that we we serve and we work with is you know what is that business model what is that business strategy because there are very few merchants in the world very few retailers in the world that are going to want to open up all their skews um with no branding no support no service no logistics no layer to a to an llm model and then allow agents to buy like effectively from a blank warehouse right like that's not a business model for many merchants that we work with so you know i think we're going to see the evolution of agentic commerce um you know driven by those pieces but what we're working on now more than anything is making sure that the whole of the ecosystem so our partnerships with google our partnerships with with visa with mastercard you know the infrastructures that we're putting in place so you know the trusted agent protocol we announced a visa yesterday the ap2 network protocol we announced with um you know google two weeks ago.

15:40This is all putting trust into the system to create an ecosystem that merchants can work with. But the most important thing for us is making sure that people take the time to listen to what a merchant's business model is, and how you protect what a merchant's interests are in a world of an exciting new channel. Yeah, interesting. Okay. So I think we've got a long way to go to build the trust first before we can even start talking about really using this technology to work in a meaningful and safe way. Look, I'm conscious we're running out of time. One of the things I absolutely wanted to talk about was the$12 billion employee share buyback scheme.

16:19This is like an absolutely amazing result for so many employees, I imagine, at checkout.com. Can you touch a bit on the rationale for why Checkout decided to do this? Yeah, it's really simple. You know, the end, who's our CEO and founder, has a fundamental belief that the value that's created of an organization should be shared with its employees. And was there always going to be an employee share buyback? Or did you look at perhaps doing like a secondary sale like lots of other organizations have done? Yeah, look, I think that the driver here is the employee value, right? The whole point here, is that we allow employees to join in the value that they've helped create.

16:56And look, there's lots of debate around private versus public markets. And I can tell you that, like, you know, fortunate to be part of the executive team at checkout, we don't talk about that an awful lot, right? Like, we're very focused on, you know, growing the business, what's the best product, the best proposition we can solve. I'm personally, you know, tasked with how do we tell more people of the world the checkout story and grow checkout, help to grow checkout with our commercial colleagues around the world. So that's what we spend all our time on. And I think that, you know, it's great that employees are, you know, have this a chance to kind of get, you know, access to some of the value they've created and it helps long-term motivation of employees.

17:35I think you're going to see it more and more often with being we're not the first privately held company that's remained private for a long time that's used you know the levers of buybacks as a long-term motivation tool. I think you're going to see more of it and I think that with private finance being more widely available in the last five to ten years than it ever has been, I think this is going to be a trend that you're going to see more and more you know fintechs tech businesses, growing companies that use this tactic more often. But the prime purpose here is how you cut employees into the value they help create.

18:04No, that's amazing. And I think from an outside perspective, it's absolutely amazing to see that European operators getting real cash in their hands and being able to convert those shares into real money that can be quite life-changing often. How is Checkout.com thinking about the broader ecosystem at all? Everybody's saying the market is crazy hot right now. We're in the midst of potentially a bubble. Has that change the way that Checkout is looking at the wider market when it comes to things like the IPO market or fundraising again? How's Checkout looking at the market right now? I can tell you that we don't even think about it.

18:37The management team operate. If we don't even think about it, it's not even on the radar. We don't talk about it. We've got some great investors. Guillaume does a great job with managing investors around the world and managing the company. We're focused on the operational execution of the business. And honestly, So I've been around long enough to know now that if we take care of our core proposition, if we take care of winning new customers, winning new merchants and growing the business, all those great conversations that are in the future, they take care of themselves. I can honestly tell you it's not on the radar.

19:05Amazing. Laser focused on building new products, delivering value, signing new clients. Amazing. Well, look, Rory, thank you so much for joining me. It's been an absolute pleasure. I'm a huge fan. Thank you for your support on the Scaling Group Show, of course. But yeah, let's stay in touch. Yeah, brilliant. I think you're doing an amazing job, Seb. I think it's an important, the world needs people to help companies like Checkout and many others in Europe tell their voice, right? Like the European techs need this platform. So really appreciate your work and thank you for your partnership. No, love to hear it.

19:32Well, thanks, Rory.