Worldline, the European payments giant, recently released its Q3 2024 results, painting a picture of resilience and strategic focus amidst a challenging economic landscape.
Looming on the horizon is an appeal hearing scheduled for 21 November 2024, in a case that could shed light on Worldline subsidiary, Payone’s attempts to suppress allegations of wrongdoing. This hearing centers around a dispute over the secrecy of documents related to an attempted settlement agreement between Payone and a former employee-turned-whistleblower. The whistleblower alleged to UK legal regulator that Payone, in an effort to silence their claims, attempted to prevent them from pursuing regulatory complaints about AML and pension activity through the proposed settlement with The Pension Regulator, the FCA and it’s German equivalent BAFIN.
This case involves the same Worldline subsidiary (Payone) whose “serious deficiencies” in anti-money laundering (AML) procedures led to a regulatory ban by BaFin, the German financial regulator, and a reported financial loss of €130 million for Worldline, apparently still lingering in their financial analyses.
Financial Performance: A Mixed Bag
Worldline maintains its 2024 guidance, projecting an organic revenue growth of approximately 1%, an adjusted EBITDA around €1.1 billion, and free cash flow in the vicinity of €0.2 billion. The company reported a -1.1% decline in organic growth, with revenues totalling €1.16 billion, falling short of expectations.
The Merchant Services division, a key driver of Worldline’s growth, experienced modest gains, but these were offset by the impact of terminated merchant contracts (related to the €130 million loss followimg BAFIN’s ban of certain contracts) and underperforming segments. The Financial Services sector faced a one-time dip due to a major client’s M&A-driven re-insourcing, while the Mobility & e-Transactional Services arm enjoyed robust growth, particularly in France.
Strategic Initiatives and Divestments
Worldline CEO, Marc-Henri Desportes, emphasized the company’s commitment to its Power24 program, aimed at optimizing the cost structure by 2025. He also highlighted strategic moves such as the introduction of embedded payments, the establishment of the CAWL joint venture, and the appointment of a new head of Merchant Services.
In a strategic shift, Worldline announced its intention to divest non-synergistic peripheral activities, signaling a move towards streamlining operations and focusing on core competencies. This decision comes after a decade of active consolidation in the payments sector and reflects the company’s recognition of the need to adapt to the changing market dynamics.
Legal Battles and Ethical Concerns
Despite Worldline’s optimistic projections and strategic initiatives, the company faces challenges due to ongoing legal and ethical issues involving its Frankfurt-based subsidiary, Payone. A former Payone employee, now acting as a whistleblower, has initiated legal proceedings alleging confirmed breaches of the UK GDPR impacting the employee’s personal financial data, as well as claims of unethical conduct, regulatory non-compliance related to pension obligations, and AML (Anti-Money Laundering) violations by Payone. These issues have culminated in an application to the European Court of Human Rights in October 2024, following a June 2024 High Court injunction order that Payone obtained against the whistleblower.
These allegations are coupled with the August 2023 “letter of advice” of Payone’s lawyers, Orrick, by the Solicitors Regulation Authority (SRA) for purporting to suppress regulatory disclosures. The SRA expressed concern that the drafting of the settlement agreement and comments regarding the Pensions Regulator removed the possibility of an independent determination of the complaints. They emphasized that this conduct breached Principle 2 of the SRA Principles, which requires firms to act in a manner that upholds public trust and confidence in the legal profession.
Worldline’s Q3 2024 results reveal a legacy payment giant navigating growth challenges in a turbulent market. However, ongoing legal battles involving its subsidiary, Payone—including a 21 November 2024 appeal where the potential unsealing of currently confidential documents is at stake.
Disclaimer: This article is based on publicly available information and sources cited within the text. The author of this article is a 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 personalized guidance.
