A LITTLE OVER a decade ago Patrick and
John Collison founded Stripe, a company in Silicon Valley that helped
other tech startups accept online payments.
It has since outgrown them all. On March 14th the firm said it had
closed a fundraising round valuing it at $95bn—three times its valuation
a mere 11 months ago, and enough to make it America’s biggest-ever
unlisted firm. Stripe is not the only company cashing in on the
check-out business, as the digital payments revolution finally takes off
in America.
It has been some
time coming. Back in 2018 Ant Financial, China’s payments giant, raised
private funds at a valuation of $150bn. It was common then to hear
Chinese executives remark that America, land of the posted cheque and
the hand-signed credit-card receipt, was years behind, held back by a
cosy club of banks and credit-card firms that were too lazy to innovate.
Now investors have
decided the moment has come. Take PayPal, a digital-payments firm that
counted Elon Musk and Peter Thiel as early bosses, and which was set up
in 1999 to allow users of Palm Pilots, a forebear of smartphones, to
“beam” each other money. It was later bought by eBay, an online
marketplace, which spun it out in 2015 for $45bn. Today it is worth
$280bn, more than Citigroup and Wells Fargo, and is America’s
19th-most-valuable company. It is also more valuable than Ant, the
global industry’s original gorilla, which has fallen out of favour with regulators in China in recent months and been forced to cancel its initial public offering.
Investors’ enthusiasm for Western digital-payments companies has been whetted by the pandemic
(see chart). PayPal’s share price has jumped by 180% in the past 12
months. That of Square, an American rival, has more than quintupled; and
that of Adyen, based in Amsterdam, has nearly tripled. The digital boom
is luring credit-card colossuses and tech titans, such as Visa and
Google, to online payments. Smaller startups, meanwhile, are carving out
niches. Yet markets still love the four specialists: PayPal’s shares
trade at 68 times earnings; Square’s, near 510. Why are investors so
bullish?.....
more at The Economist
© The Economist
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article