Frankfurt-based payment service provider Payone GmbH, a subsidiary of French multinational Worldline SA, recently announced an 11% reduction of its workforce, resulting in the loss of nearly 170 jobs. According to an article at the renowned payments expert Finanz Szene, released on 14 July 2024, this agreed measure, surpasses the 8% cut at its parent company.
The decision to lay off 170 employees, sadly, comes as the company grapples with high-stakes legal battles across the UK in multiple fronts with a former employee who blew the whistle on alleged unethical practices linked to the AML related regulatory ban. This raises questions about Payone’s priorities, as they have sought to silence the whistleblower through a UK High Court injunction, reportedly incurring legal costs exceeding £300,000 in that matter alone, while simultaneously defending themselves in several ongoing employment tribunal claims and appeals, as well as facing additional legal challenges related to GDPR and a confirmed violation of UK Pension legisaltion.
Recent Background to Payone GmbH
The firm also plans to close its Kiel branch, which was once the headquarters of the original, agile, and disruptive e-commerce company that merged with B+S Card Service in 2017 to form the current Payone GmbH. In the third quarter of 2017, Germany’s B+S Card Service merged with Payone to form BS PAYONE GmbH, headquartered in Frankfurt am Main with offices across Europe. This merger combined 30 years of expertise in point-of-sale systems with 15 years in e-commerce, serving 255,000 customers in 18 countries and handling over one billion transactions annually. The merger aimed to create a comprehensive payment service provider offering point-of-sale, e-commerce, and m-commerce services.
The Kiel-based Payone was a dynamic, fast-moving tech company that operated as an agile challenger in the ecommerce and payments sector, thriving on innovation and rapid adaptation. This independent streak and modern approach allowed Payone to quickly establish itself as a formidable player in the ecommerce industry. However, its trajectory took a significant turn with its acquisition by B+S Card Service, a more traditional and legacy-styled financial services company with deep roots in the German banking landscape.
The merger of these two contrasting entities raises questions about the strategic wisdom of the move. Critics may argue that integrating a nimble, forward-thinking firm like Payone with a larger, more conventional organisation like B+S Card Service could potentially stifle its innovative spirit and slow down its progress. On the other hand, proponents believed that the merger could combine the strengths of both companies, blending Payone’s cutting-edge technology and agility with B+S Card Service’s established infrastructure and market reach.
The acquisition proceeded, and the new entity adopted the well-known ecommerce Payone brand name, signifying the importance and recognition of the challenger firm’s identity and reputation.
Payone GmbH, part of the DSV Group, enhanced the Sparkassen-Finanzgruppe’s service range, with the new entity poised for European expansion. The merger received approval from the Federal Financial Supervisory Authority and the Federal Cartel Office around 2017.
Worldline JV
Next up, was the $8.7 billion acquisition of Ingenico by Worldline in 2019, where Worldline’s merchant services in Germany and Austria were integrated into Payone in March 2021 following a Joint Venture (JV). Post-mergers, Payone’s IT environment spanned multiple entities and locations, lacking an efficient Continuous Integration and Continuous Delivery (CI/CD) pipeline and facing automation fragmentation. According to the CGI a large IT and Business consulting firm, Payone advanced its cloud transformation journey, building a secure, private cloud to run container-based applications and automating the CI/CD (or Continuous Deployment) pipeline, significantly improving development efficiency. Despite the pandemic necessitating a shift to remote work, Payone successfully transitioned, enabling faster onsite and nearshore development with cost savings. This set the stage for Payone to continue evolving, supported by ongoing collaboration with CGI to drive further transformation and value-based outcomes.
The March 2021 Worldline merger aimed to create a comprehensive payment service provider with a European presence, yet it now faces the closure of one of its key offices in Kiel.
According to sources, the Kiel offices housed some of the most talented minds in the ecommerce and IT sectors, representing a significant asset to Payone and Worldline. The potential closure of these physical premises would not only impact the organizations themselves but also potentially affect the morale and well-being of the employees affected. While the exact number of employees at risk of losing their jobs among the 170 mentioned is unclear, any reduction in workforce is likely to be felt deeply within both companies.
For those Kiel employees transitioning to remote work, there is the obvious concern about losing the cohesive environment and collaborative spirit that an office setting often fosters which left unfettered may impact productivity. Human resources teams are likely working diligently to mitigate these challenges, seeking ways to maintain team cohesion, foster communication, and support employee well-being in a remote work setup. Finding effective strategies to bridge these gaps is crucial to sustaining productivity and morale during this transitional period.
The Job Losses and ongoing Payone court cases
Worldline and Payone announced the job losses within their group earlier in 2024. While Payone attributes the layoffs to cost-cutting and restructuring, concerns have arisen regarding the financial burden of their ongoing litigation with a former UK employee. The former employee, has accused the company of unethical and illegal practices closely related to the 7 September 2023 regulatory ban on certain clients following a regulatory audit. The German financial regulator is the Federal Financial Supervisory Authority, known in German as the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). BaFin is responsible for regulating and supervising Germany’s financial markets, including banks, insurance companies, and securities trading. They described Payone’s practices as having “serious deficiencies”, and their intervention which was undoubtedly for the public good is said to have cost Worldline some 130 million Euros. It is unclear to what extent the failures relating to Payone’s AML practices were linked to the huge fall in the Worldline share price (WLN) around the 25 October 2023.
Ongoing Cases
A list of the ongoing cases can be found here in an Loopline Media article written earlier in 2024. On 4 May 2023, Payone GmbH initiated legal proceedings against a former employee, culminating in a High Court judgment on 17 April 2024, which granted Payone a permanent non-disclosure order (injunction) against the former employee. This order prohibits the former employee from using or disclosing certain information obtained during their employment, which Payone claimed were confidential. The majority of the material was deployed during the January 2023 Employment Tribunal trial which the former employee was successful in getting Permission To Appeal in a decision by the Employment Appeal Tribunal following a 1 May 2024 hearing. That full appeal is to be heard in June 2025 and has been listed for a day and a half. A further succesful appeal is awaiting a trial date for allegations related to indirect race discrimination.
Alongside the injunction, Payone sought to recover legal costs exceeding £300,000, requesting an interim payment of £150,000. However, the court awarded a reduced interim amount of £100,000 which it appears they are currently chasing from the unemployed single parent. The former employee, dissatisfied with the ruling and the injunction’s implications for their freedom of speech and fair trial rights, has sought to appeal the decision through domestic channels, which have thus far been unsuccessful.
The former employee says they are now taking the injunction case to the European Court of Human Rights (ECtHR). This appeal challenges the alleged failure to protect the individual’s rights under the European Convention on Human Rights, particularly the freedom of expression and the right to a fair trial, which the former employee believes have been compromised by the broad and restrictive nature of the injunction order.
Sources indicate that Payone’s legal expenses in these ongoing disputes have already reached hundreds of thousands of pounds, with potential liabilities escalating due to outstanding claims alleging breaches of UK pension law and data protection violations following the loss of the former employee’s sensitive data. This, compounded by the recent job cuts and Kiel office closure, paints a complex picture of a company grappling with significant financial and reputational challenges.
The upcoming Employment Appeal Tribunal hearing will be a test of the prinicple of open justice as both parties seek to rely on documents Payone have deemed confidential via way of the injunction, including witness statements and closing submissions.
As these legal battles continue, stakeholders are closely watching how Payone navigates these challenges. The company’s actions will reveal whether their priority lies in financial prudence, legal maneuvering, or upholding ethical standards and employee rights. The choices they make in the coming months could have a lasting impact on their brand image and their standing in the industry.
Disclaimer: This article is based on publicly available information and sources cited within the text. The author of this article is the referenced “former employee” of Payone GmbH and may have a personal interest in the outcome of the legal proceedings. However, the author has made every effort to present a balanced and objective view of the situation. This article is not intended as financial or legal advice. Readers are encouraged to conduct their own research and consult with qualified professionals for personalised guidance.
