Valitor is an international payment solutions company which provides its customers with diverse services in the field of acquiring, issuing, gateway and point of sale services. The company is dedicated to helping merchants, partners and consumers to make and receive payments. Valitor was founded in 1983. Its headquarters are in Iceland and it operates in 22 European countries.

In 2019 Valitor faced enormous challenges and wide-reaching changes were implemented across the business. Net earnings from ordinary activities matched the company’s forecasts, but substantial one-off expenses were recognized during the year. The key factor here was the impairment of goodwill and other intangible assets, but another important factor were the damages paid to DataCell and SPP following legal cases initiated in 2011. In the last four months of the year, there were substantial costs relating to staff redundancies and restructuring.

Main lines of business

Valitor has three lines of business: Solutions for small and medium sized business (SMB), omni-channel solutions and issuing solutions. SMB solutions offer acquiring to customers in Iceland, the United Kingdom and Ireland directly or through Valitor's partners in Europe. This service is also provided to companies through the company’s omni-channels. Omni-channel solutions integrate commerce across all sales channels, whether shopping online or instore, and serve medium-sized and large customers in the Nordics, the United Kingdom and pan-European retail spaces. Most of these customers use acquiring services from Valitor. Until this year Valitor had been the acquirer for Visa and MasterCard but in the first quarter of 2020 Amex will be added to customer portfolio and this addition will help make Valitor even more competitive. Issuing solutions applies to services and partnerships with Icelandic banks. Valitor still provides issuing services to several international partners but the company is discontinuing international services in this field.

Although SMB solutions generated a loss during the year, it nevertheless performed better than the previous year and the outlook is bright for 2020. Revenue growth from SMB solutions in the UK and Ireland was most satisfactory in 2019. A long-awaited change to interchange fees, which helped level the playing field between the Icelandic and European markets, came into effect in Iceland at the end of September. Omni-channel solutions did not perform as expected and the results are explained by weaker than expected sales and delays to product delivery. As in previous years, issuing services in Iceland performed as expected.

Sale process

In June 2018 Arion Bank, the owner of Valitor, held an IPO and was listed on the stock market. In the period leading up to the IPO, the Bank stated that it was examining its options regarding its ownership of Valitor. In the autumn the Bank announced its plans to sell Valitor and in November engaged Citi Group to handle the sale. Between December 2018 and mid-summer 2019, Valitor worked with Citi and Ernst & Young to prepare the sale process and due diligence. The public sale process began in May 2019 and was still in progress at year-end.

Change in strategy

Until late 2019 Valitor operated according to a strategy adopted in 2012. The focus was on increasing the volume of business and growth through partnerships. The company also sought ways to gain a firm foothold on markets through direct business and provide customers with a wide spectrum of services, particularly in the UK, Ireland, Denmark and Iceland. On the basis of this strategy, Valitor invested heavily in the company's growth, sacrificing short-term profits for long-term value creation. The focus was on state-of-the-art payment solutions and on developing international operations and distribution networks to make the company more competitive.

In the summer of 2019 the board of directors decided to implement wide-reaching changes in order to consolidate the company’s core operations and to generate positive EBITDA in 2020. In August 2019 Valitor's management team began laying the groundwork for organizational changes and redundancies were made in Iceland in September and in the UK in October. At year-end further job cuts were announced, with an additional 60 people being made redundant in January 2020. A total of 90 people, or 20% of employees, have been made redundant since the end of 2018. In January 2020 Valitor had 330 employees in Iceland, the United Kingdom and Denmark.

The company is now structured more efficiently and there is less emphasis on investing in the company’s omni-channel solutions which did not generate the expected revenue growth. The company aims to improve results on the basis of two lines of business:

  • Payment solutions aimed at SMBs in the UK, Ireland and Iceland and through European partners who resell Valitor’s services to merchants
  • Issuing services for banks in Iceland

Sustainability and society

Valitor endeavours to lead by example on environmental issues. The goal is to minimize the negative environmental impact of the business by acting sustainably, both inside and outside the company, and in particular with regard to the fight against climate change. The first steps in this direction have already been taken in Iceland.

To achieve these aims Valitor is partnering Klappir Green Solutions in Iceland in a focused effort to reduce the company's carbon footprint. Valitor has entered into an agreement with Kolviður on carbon offsetting the company’s flights and car journeys over the next few years. Valitor has renewed its fleet of vehicles with electric and hybrid cars. Valitor’s headquarters in Hafnarfjörður have green parking spaces and charging stations for vehicles belonging to the company and customers. Valitor also offers its employees a travel allowance which encourages them to use sustainable means of transport. The company has also introduced standards which uphold environmental considerations when doing business with suppliers and service providers.

Corporate social responsibility at Valitor is also about ensuring that the company performs its role conscientiously in order to guarantee that customers receive quality service and that the company is an excellent place of work for its employees. One important milestone in this respect was when the company gained equal pay certification in March 2019. Valitor continued to support important causes and projects with its community projects fund in 2019, as it has done for the last 28 years.