PayPal, Square and Stripe – the disrupters who maybe disrupted by Bitcoin

Both Square and Stripe are in the WSJ Billion Dollar Club (but that may not mean as much when you look below the surface). eBay will be spinning off PayPal, so we will soon see how good it is as a standalone public company (or if it gets acquired we will see the valuation).

The valuations given to PayPal, Square and Stripe do not allow for any execution missteps and assumes that they are the disrupters up against sleepy old legacy companies.

How time flies. It is possible that the disrupters are being disrupted.

Facilitating payment by Credit Card is incremental innovation.

Obliterating Credit Card fees using Bitcoin is disruptive innovation.

Here is the brief history of Credit Card innovation post Internet:

  • Paypal. Any small e-merchant can collect payment online using credit cards.
  • Stripe. Any developer can build the functionality that enables any small e-merchant to collect payment online using credit cards – so that the process for consumers and merchants is less aggravating.
  • Square. Any small p-merchant (“physical merchant”) can collect payment offline using credit cards.

In a world where we will always use credit cards via Visa, Mastercard and Amex, these are all game-changing innovations – which will attract premium valuations.

In a world where credit cards as we know them today is a subject that we teach our kids along with the concept of a fax or telex machine, these start to look like rearranging the deckchairs on the Titanic – and they will be valued like legacy behemoths but without their massive clout and market reach. Oops!

It started to look like this game was changing, when I witnessed a “war by Press Release” between Stripe and PayPal over who was going to be first to accept Bitcoin.

Then there is Stripe betting on Stellar. It is hard to decipher a clear game plan from Stripe.

Square maybe making the right moves. They are adapting their POS to allow both Bitcoin and Apple Pay. That will be welcome to merchants in America, faced with a switchover to EMV.

Disrupting payments is tough.


Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.