Growth of the payments sector and its impact on legal hiring

The payments sector is an industry that is going through significant expansion and changes, with new businesses being introduced to the market every day, looking to revolutionise and innovate the way payments are processed. It is a sector that is achieving 7% year on year growth and is valued at around $2 trillion today.

Payment transactions is a broad term. It includes real-time online transactions, biometric authentication methods, peer-to-peer lending and more. As a result, it can include numerous businesses and multiple elements at the point of a transaction, allowing for new and old businesses to identify opportunities for technological innovation and to try to take a piece of the rather large pie.

It is a sector that has posed real problems for the traditional banking institutions, which are having to adapt to prevent themselves from losing market share within the growing e-commerce transactions market. New payment service providers are getting banking licenses throughout the globe, which are competing for, and taking, a large number of banks retail, SME, and corporate clients, forcing the banks to fight back. The pressure isn’t just coming from the fintechs, it is coming from bigtechs such as Google, Amazon, and Uber who are getting payments, e-money, and banking licenses to further compete with the banks.

COVID-19 is having a profound effect on the way a lot of firms are conducting business, with the rapid change to the working from home model and the lack of footfall on the high streets, leading to an even more focus on online transactions, combined with the removal of cash sales for risk of spreading the disease.

It is also a sector that is coming under increased scrutiny and focus from the regulators, who are looking to provide more security for customers, where there is significant exposure to fraud. There have been sizable new regulations being introduced over the past couple of years, including PSD2, which requires the affected businesses to adapt to stay on the right side of the law.

The FCA outlined its 2020/21 business plan in May, which was centred around the payments sector, in particular, how the payments firm protects customer funds. With many firms that enter the market, not being profitable for a number of years and relying on investor money, the FCA is attempting to make sure that those firms’ customers are protected and adequately safeguarded against the risks associated.

The increased scrutiny will require most firms, especially start-ups, to make sure they are adhering to the ever-changing regulatory landscape. This drives the need to hire new talent, particularly within the risk functions across legal and compliance, to prevent costly fines and reputational damage. This hiring need is having a sizable effect of the recruitment market, driving up the salaries on the niche payments lawyers, who are key to help support the growth and compliance of the businesses they work for. It is an extremely competitive market, with strong payments lawyers having multiple offers as the banks, start-ups, and bigtechs all compete for the same talent.

For fintechs and start-ups, getting the right lawyer in at the early stage can be key to the growth of the business;

  • External Counsel Spend – A strong senior lawyer, can significantly reduce the costly external counsel spend, bringing most of the work in-house. They can turn their hand at any legal questions  the business may have across multiple verticals. 
  • Business model – With start-ups looking to innovate and change the world, the right in-house lawyer will help to shape the business model, advising on the path of the firm to make sure their ideas will keep them within the law. Many fintechs are able to operate outside of certain regulations, but there will come a time when those regulations will take effect or how new regulations coming into force will affect their business.
  • Partnerships – lawyers can help the fintech understand how the law effects the businesses they are looking to support, helping them to refine their offerings to real solutions.
  • Growth – Every fintech is looking to grow rapidly, expanding into new jurisdictions and product offerings. The right lawyer helps with time consuming and costly registrations and laws that will affect their products. 
  • Design – The right lawyer can help shape the design of the product, advising the business on factors that they may not have even considered such as privacy and cyber security. 
  • Protection – The right lawyer will be on hand to defend the business when mistakes are made, but they will also be there to prevent this from happening, by identifying any legal risks before they arise.

With many businesses looking to hire in the payments space, it pays to partner with the right agency to support you on a hire that can be key for the business. 

Barclays Simpson is on hand to provide support if you are looking to make a permanent or interim hire, or even if you require advice on price, market conditions and candidate information. We have a database of over 10,000 lawyers, who can provide support on all legal verticals.

Please contact Daniel Conway on 020 7936 8918 or to discuss this further.