Get into co-opetition: How partnering with your competitors can be a win-win

Trustly CCO Johan Nord and GM of PayPal Scandinavia Mårten Barkman discuss their partnership, moderated by Trustly Communications Manager Kristin Andersson.

Try explaining what Trustly does to someone unfamiliar with the company and their initial response might be: “Oh, so it’s like PayPal?”

It’s true that both are FinTech companies that provide instant online payments, so naturally many assume the two are competitors. And in some ways, they are. But Mårten Barkman, General Manager of PayPal Scandinavia, and Johan Nord, CCO of Trustly, joined forces on Tuesday at Copenhagen’s Money20/20 to set the record straight in a talk about “co-opetition.”

“I tried to talk Johan out of competing with us, but he wouldn’t listen,” laughed Barkman. “Jokes aside, we are competitors, but we also cooperate. I think this works really well because we are very clear on where we compete and where we partner up. In this case, we partner on the consumer side and compete fiercely on the merchant end.”

In 2014, Trustly and PayPal Scandinavia entered into a strategic partnership covering Sweden, Finland and Denmark that allows consumers to top-up their PayPal e-wallets instantly from their bank account. “If PayPal is the digital wallet, Trustly is the digital cash dispenser for consumers and digital cashier for merchants,” explained Nord.

The main difference between the companies, Nord went on, is that Trustly focuses squarely on bank payments and B2B. “We don’t have a consumer relationship to speak of, nor a well-recognized consumer brand like PayPal. And that’s how we can work together with PayPal—by focusing on the B2B element and not standing in the way of merchants owning the consumer relationship,” he added.

PayPal often turns to partnerships to reduce complexity and accommodate specific local needs, Barkman said. So why Trustly? When looking for a way to simplify the customer experience of topping up, the company sought three things:

1) a fully mobilised flow

2) a scalable solution covering all banks in respective markets and

3) easy integration.

Trustly checked all those boxes.

And what was in it for Trustly? It expanded its market to reach the 179M registered PayPal users, but also working with merchants in e-commerce and financial services that have strong consumer relationships is vital for Trustly. “And of course, this partnership shows that we can add value to large and sophisticated financial institutions,” Nord said.

PayPal has been impressed with the results. “We wanted to reduce the hurdles for consumers who wish to top up their e-wallet,” said Barkman. “Before, this was a process that took several days, involving redirects between PayPal and banks and way too many clicks. Now it takes less than a minute and the money is transferred instantly.”

But as any businessperson knows, it can be scary to partner with your competition, and to succeed, both sides must communicate clearly. “I think the fact that early on we found a way to define the project and establish trust between each other despite being competitors was key to a very speedy deployment of the service,” said Barkman.

Competition in FinTech will be fierce, said Nord, so it’s critical for companies to keep innovating and focusing on their strengths, while building partnerships in other parts of the value chain. By considering who their competitors and partners are, all companies stand to win.