Payments Industry - Finance Sector

By pjain      Published July 14, 2020, 7:18 p.m. in blog Invest   

Fintech, Payments

r Payments

x PYPL phe, too much competition, international disruption

x PYPL - too generic apple pay,wmt pay,gPay,etc.. everywhere soon

PayPal makes its money from the fees it collects each time consumers and merchants use its services for financial transactions. Meanwhile, Shopify sells cloud-based services that allow businesses to sell their own products and services online. + PayPal's financials are in better shape + PayPal has a trailing 12-month free cash flow of nearly $6 b * Year +35% PayPal is one of the leading digital transaction companies, with an array of services and apps that allow users to easily make purchases online. CEO Dan Schulman believes the digital payments market will eventually be worth $100 trillion, and his company's early lead in the space gives it a leg up over its competitors.

In the most recent quarter, PayPal's revenue climbed nearly 12% year over year, it added 9.3 million new active accounts, and non-GAAP earnings jumped 37%. With more than 277 million total active accounts, PayPal's dominance in the digital payment space isn't going anywhere anytime soon.

But it's not just online payment services that make this stock worth considering. The company is also moving into new digital payment markets as well, such as through its Venmo app. Venmo easily allows users to transfer money to each other for everything from splitting a restaurant bill to paying the babysitter. PayPal is also expanding Venmo's reach beyond P2P by allowing merchants to accept it for mobile payments in their stores. Venmo has more than 40 million active accounts, and in the most recent quarter, processed $21 billion in total payment volume, a 73% year-over-year increase.

PAGS, Brazil

  • TECH:

    • Support
    • IPO Jan'18 @$21.50 -> up 171% by 9/19

  • WHAT: fintech PagSeguro Digital Brazil-based payment services
  • KEY: payment processing to small businesses without the need to open a bank account
    • Q2'19> 9.5m Active users, 40% yoy Growth and 42% yoy NI

Payments Segment, Remittances, Consumer Credit

  • x AXP, V, MA - private label hurt?

  • All credit cards benefit from rapid EC growth - secular regardless who wins

  • Fintech disruption is accelerating, esp. with Fb Libra new money - may take years but would destroy credit cards.

  • Reliance on credit card is problematic at a time when debt loads are very high eg student debt, etc for which there is no relief.
  • Unpopular on wall street analysts

  • V, MA are overloved by Wall street at time of super low interest rates, yet credit cards are high like always.

SQ c61

Square * Names that could rise between 15% and 25% over 2020 T Price Target: $80 – Fintech is going to provide incredible disruption and opportunity for the drivers, enablers and beneficiaries of these efficiencies. The under-served small businesses often turn to Square. Merchant lending, instant account funding and cash People 2 People apps are adding fast growth innovative products to their payment processing services.


WorldPay * 30 top holdings by hedgies

PYPL R5 c109 EPS 13%

  • one of 30 most favored by hedge funds

  • CORE ePay Sales 15% Continues to grow Revenue exp thru 2021

  • Profit growing 14%
  • MOAT - occasional use entrenched consumers and merchants eg EBay, US->Outside,Wish

  • VENMO seen huge takeup with millenials - legitimizing its reach for future

  • Overall venmo seeing 50% yoy user growth - but little monetization so far (no fee?)
  • But a lot of FUN merchants accepting venmo directly - uber,grub,hulu,fandango
  • Reduces the costs PayPal must pay to the existing payment network like visa/mc

  • CHINA some home as first foreign firm to get ePay license

  • Took 70% equity stake in Chinese online payments firm Guofubao (GoPay)


  • one of 30 most favored by hedge funds duopoly Visa Mastercard, controls the vast majority of payments transactions around the world.


  • one of 30 most favored by hedge funds duopoly Visa Mastercard, controls the vast majority of payments transactions around the world.

They take a very small piece of each credit or debit card payment. The trend towards electronic payments have led to robust volume growth in transactions, which should continue into the foreseeable future. Despite earlier concerns about new technologies and approaches, the company has positioned itself at the top of the payments “food-chain.” If it can avoid government price controls, the company should have a long path of strong organic growth.


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