Contract Renegotiations, and the Case for a New Sales Model in European Payments
If my previous article mapped the forces reshaping European payments at an industry level, this second part brings those forces into sharp focus through the lens of a single incumbent.
Nexi’s experience over the past few years is not an isolated corporate story, it is a case study in what happens when structural market shifts collide with a business model that has not yet fully adapted.
A Structural Problem, Not a Cyclical One
When Nexi began flagging contract renegotiations in its quarterly reporting, some observers attributed it to the broader macroeconomic environment, subdued consumer spending, volume weakness, and merchants tightening costs wherever possible. The reality is more consequential than that. These renegotiations are not a temporary response to macro conditions. They are a symptom of a structural shift in the balance of power between payment service providers, banks, and merchants, one with permanent and lasting consequences for the business.
The Bank Intermediation Model and Its Limits
To understand why, it helps to understand how Nexi built its business. Rooted in a consortium of Italian banks, Nexi historically grew through heavy bank intermediation. Merchants did not buy payment services directly from Nexi — they purchased them through their banking relationships, with banks acting as the commercial interface. This model delivered scale and distribution, but it came at a cost: Nexi never fully owned the merchant relationship.
That dependency is now being exploited. As multi-year framework contracts — many of them three to five years in duration, with a significant cohort renegotiated around the end of the pandemic — come up for renewal, banks are leveraging their position at the negotiating table. The timing of the pandemic-era renewals was relatively favourable for Nexi, given the strong surge in demand for card acceptance over cash. Today’s environment is markedly different. There are far more providers capable of offering comparable, or arguably superior, services. And merchants know it.
Pressure From Two Directions
The renegotiation dynamic operates on two levels simultaneously. First, there is the pressure that banks apply directly to Nexi as those framework agreements reach their natural end. Second, and perhaps more structurally significant, there is the pressure that merchants are now applying to the banks themselves.
Merchants have realised they are not obligated to source payment services through their banking relationships. They can approach acquirers directly, whether Nexi or its competitors, or bypass traditional channels entirely. This awareness has fundamentally shifted the merchant’s negotiating posture. Combined with Nexi’s underinvestment in direct sales channels and the absence of sufficiently differentiated commercial propositions, the result is a compounding margin problem: bank intermediation erodes economics from one side, while merchants increasingly demand better terms from the other.
The Rise of Embedded Payments and Further Disintermediation
The challenge does not stop at the bank layer. The growth of Independent Software Vendors (ISVs) and embedded finance players (Shopify being the most prominent example) introduces yet another form of intermediation. Merchants, particularly in e-commerce, are increasingly accessing payment capabilities as an embedded feature of the platforms they already use to run their businesses, rather than procuring them separately from a PSP or through a bank.
This creates a dual risk for incumbents like Nexi. Either the merchant disintermediates entirely, establishing a direct relationship with an acquirer or fintech competitor, or they swap one intermediary for another, replacing the bank with an ISV, marketplace, or software platform. In both scenarios, Nexi’s position weakens unless it can offer a genuinely compelling reason for merchants to engage directly.
The SME Opportunity and the Private Equity Angle
The most underleveraged opportunity (and arguably the most strategically important!) lies with small and medium-sized enterprises. This is precisely the segment where players like SumUp, iZettle, and Flatpay have captured significant market share from incumbents, by building direct, frictionless relationships with merchants that larger players were too slow or too structurally constrained to serve well.
A private equity-led transformation of Nexi could provide the mandate and the capital to address this gap directly. The core strategic shift required is a fundamental change in the sales model: moving from a historically intermediated approach to a proactive, direct-to-merchant model that serves businesses of all sizes. This is not a minor operational adjustment — it is a multi-year transformation programme that would require substantial investment in commercial infrastructure, product development, and organisational change. Realistically, even with a transaction completed today, visible results would be two or more years away.
That said, the opportunity is real and validated by competitive evidence.
direct sales only?
The players defending their margins most effectively in this market are precisely those that do not rely on intermediaries, i.e. those that have built and maintained direct merchant relationships across the full size spectrum. That is the model Nexi needs to move towards, and private equity may be the catalyst most capable of driving that change at the pace the market now demands.
High-trust, senior-level advisory
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