Wise £8bn launch on the London Stock Exchange yesterday underpins how the capital’s fintech scene is booming, with a clear investor appetite for payment platforms such as Wise.
Another fintech company in this space that has flourished in the last twelve months is Osu, an instant payments app that was created specifically for the self-employed community.
With a background in computer science and having previously been the tech lead at PayPayl, Noam Nevo set up Osu with the idea to create an ‘easy-to-use financial system that can fit right in your pocket.’
City A.M. sat down with Nevo to discuss the latest fintech trends, the impact of Brexit on the self-employed community and the impact of the pandemic.
As the former tech lead at PayPal, which payment or fintech trends should we keep an eye on in the next, let’s say, 12 months to two years?
In my opinion, there’s probably two or three significant payment and fintech trends I’m keeping my eye on. The first is around embedded finance, this is the ability for fintechs and other startups to build solutions with payments and financial services embedded within the product, rather than requiring a partnership with a third-party provider.
The second is the boom in digital payments – which was already growing pre-Covid and has accelerated to unprecedented levels over the past 12 months. And finally, I’d keep an eye out for the continued democratisation of finance, with financial products and services that were traditionally the preserve of higher income sectors of society, being made more accessible and available to the public at large.
Covid-19 has impacted practically every sector, how have the consequences of the Coronavirus changed or impacted the payments or fintech space?
Covid-19 served as an accelerant on the already rapid growth in digital payments. If you think back to the first few months of the pandemic, and the widespread fear about touching contaminated surfaces, then you can envision how that drove an even greater decline in cash usage vs. the growth in digital payment methods with consumers largely driven to online shopping. And this decline in cash is not only reflected in online payments, but also the usage of non-cash solutions in-store, for example QR code payments and contactless card payments, the latter of which will see a limit increase to £100 later this year.
UK’s self-employed workforce
With your startup Osu you zoom in on the UK freelancer market. Why is the self-employed market such an interesting ecosystem to be in?
When you consider the size, diversity, and scale of the self-employed community here in the UK, you can see why it has such a huge bearing on our overall economy. Firstly, there are more than four million freelancers, sole traders and self-employed people across the country, all of whom are working in the very heart of our local communities.
Secondly, this is a sector that encompasses a vast range of skills, specialisms, professions and passions, from plumbers and painters, to tutors and taxi drivers. These are not faceless transactional businesses. They are the people we invite into our homes and gardens; we rely upon them to teach our children; they service, repair and even build our houses; they keep us healthy, make us look good, support our wellbeing and help us get from A to B. And although this sector is thriving in terms of the number of skilled and talented individuals who operate within it, it’s important to remember that this sector has taken a huge financial hit due to the pandemic.
For every positive story about a thriving self-employed business, you will find another about a professional struggling to survive.
Not only that, but up to three million self-employed people have been unable to claim grants under the Self Employment Income Support Scheme (SEISS). All of this means that this is a sector that needs and deserves support, focus and attention in order to future proof its longevity.
The UK has Brexited, it’s been six months since the transition agreement expired. Has this impacted your business yet? For example, in relation to the clients you serve in Europe or elsewhere.
Fortunately, we have been laser focused on serving the UK market and this has largely ‘immunised’ us from the wider implications of Brexit. Of course, that isn’t to say Brexit has not had an impact on the market we serve, especially those segments with larger European expat communities and self-employed individuals who serve clients in Europe. It’s also important to recognise that we’re still relatively ‘early’ in the post-Brexit era.
In all likelihood it will take some time before the medium and long term ramifications of the UK’s exit from the European Union become apparent.
In the short term, especially in the context of the past 12 months and the impact of the global Covid-19 pandemic, there’s a real urgency to support the UK’s freelancers, sole traders and self-employed.
To stay with Brexit. Does it impact a lot of freelancers and self-employed?
For British citizens operating businesses with primarily UK-based clients, the impact of Brexit is perhaps less keenly felt. That’s to say, if you were trading in pounds before, then you’ll continue trading in pounds today and tomorrow. In contrast, European freelancers, sole traders and self-employed legally residing in the UK have not enjoyed the same certainty and continuity.
To start with, there’s the bureaucratic steps of needing to apply to the EU Settlement Scheme to stay in the UK. And many have not gone down that path – the UK’s Economic Statistics Centre of Excellence (ESCoE) think-tank has talked about an “unprecedented exodus” of international businesses driven by both Brexit and Covid-19.
Finally, all self-employed individuals – whether British or European citizens – primarily serving clients in Europe face an additional impact of increased card processing fees announced by Visa and Mastercard for cross border payments. All of this can, and likely will, have a big impact on these businesses’ bottom line.
And does Brexit have an impact on the way they invoice their services and payments are processed?
For those businesses that serve clients in Europe, there’s certainly an impact. While services can still be rendered digitally, as was the case pre-Brexit, when it comes to accepting payments there are additional costs to be considered, specifically higher interchange fees which the UK self-employed will either need to absorb themselves, or pass onto their clients in Europe.
Simply meeting with clients in Europe will become less convenient.
It’s also worth bearing in mind that when international travel returns to pre-pandemic levels, we will be approaching 2022 – during which time British citizens will become “third-country nationals” and lose the automatic right of admission to other European nations.
Anything else you would like to share with our readers?
It’s been a really tough 12 months for everyone – and we’re by no means out of the woods yet. But for the self-employed, many of whom have had their entire livelihoods grind to a halt, the impact of the pandemic has been particularly devastating. As we continue to emerge out of lockdown and business starts to pick up again, I’d urge people to consider how they can support their local self-employed community so they can continue to serve us as the backbone of our economy.