Matt Frankel and Jason Moser, our resident Fintech Fools, discuss the 'War on Cash', embedded finance, and the importance of Visa and Mastercard in the payment industry. They also explore PayPal's growth strategy, the rise of buy-now-pay-later services, and the success of fintech companies like Marchetta and Shift4.
Visa and MasterCard remain crucial players in the war on cash, benefitting from the success of fintech startups by providing payment infrastructure.
PayPal, despite some growing pains, proves its value with double-digit growth in total payment volume, revenue, and engagement, positioning for future growth and strategic acquisitions.
Deep dives
Visa and MasterCard: Dominance and Growth
Visa and MasterCard, the two dominant players in the payments industry, continue to rule the roost. With $22 trillion of annualized payment volume split between the US and international markets, they show no signs of slowing down. Despite the rise of fintech startups and crypto companies, Visa and MasterCard remain crucial players in the war on cash, as they benefit from the success of these disruptors by providing the payment infrastructure. With their strong financials, steady growth, and opportunities for international expansion and business-to-business transfers, Visa and MasterCard are poised for continued success.
PayPal: Growing Pains and Potential
PayPal, though experiencing some growing pains and leadership changes, remains a business with immense potential. While their growth strategy may have been disjointed in the past, PayPal is now focused on maximizing its current user base, which stands at 430 million active users. With double-digit growth in total payment volume, revenue, and engagement, PayPal proves its value as a convenient and trusted payment platform. While profitability remains a challenge, PayPal's strong financials, ample cash position, and cost control measures position it for future growth and strategic acquisitions.
Block: Focus and Opportunities
Block, formerly known as Square, is an intriguing fintech company that has gone through its share of ups and downs. While its growth strategy may have been all over the place in the past, Block is now honing in on cost control and focus. The company's various offerings, including Square, Cash App, and its crypto aspirations with Bitcoin, have potential, but the market seems skeptical. However, with renewed leadership, a focus on maximizing its current business, and cost-cutting measures, Block is poised to return to its former heights. Investor optimism aided by a $1 billion buyback program suggests Block is undervalued and could surprise skeptics.
Marchetta, Shift4, and Mercado Libre: Niche Players with Strong Growth
While not as well-known as Visa, MasterCard, or PayPal, Marchetta, Shift4, and Mercado Libre are making waves in the fintech industry. Marchetta stands out as a payment card infrastructure provider, primarily serving Cash App and delivering embedded finance capabilities to various apps. With a recent contract renewal with Block's Cash App, Marchetta is positioned for future growth and a diversification of revenue streams. Shift4, on the other hand, focuses on payment processing and software for businesses, particularly in the restaurant, hotel, stadium, and nonprofit sectors. With significant revenue growth, strong profitability, and a track record of success, Shift4 showcases the potential of software-driven payment processing. Finally, Mercado Libre, often referred to as the early-stage Amazon and PayPal in one, continues its impressive growth as a marketplace and fintech company. With soaring merchandise volume, increasing payment volume, and profitable operations, Mercado Libre solidifies its position as a powerhouse business in Latin America.
Matt Frankel and Jason Moser, our resident Fintech Fools, caught up to talk about the payments space, how it's changed this year, and what they’re keeping an eye on come 2024. They discuss:
The state of the “War on Cash”
Embedded finance
And two “toll booths” that aren’t going away anytime soon