Trading Through Turbulent Times: Opportunities For Payments’ Fintechs & Investors

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

For many fintech companies and new financial technologies (hello Bitcoin), COVID-19 is proving to be their first real stress test. If they can survive the next 12 to 24 months, it’s a strong signal these aren’t the tech upstarts or flash-in-the-pan ideas that many had pegged them as.

Square, which reports its 2020 Q1 earnings after the bell rings today, will be watched very closely by many, with exactly this in mind. Payment volumes are expected to be lower, based on a mixture of lockdown restricted trade and falls in consumer spending. Some reports suggest $3 out of every $5 in payments processed by the fintech are based on in-store discretionary spending.

The ‘payments pandemic’ has been felt more locally too, notably by Australian fintech Tyro. It has kept investors calm by publishing weekly transaction value updates, in an effort to provide transparency as to the impact of COVID-19 on the business’s operations. April volumes were down just under 40%, compared to the same period last year.

Square and Tyro have relatively different customer bases, however there is no denying the underlying trend in falling payment volumes for all bricks and mortar payments businesses and banks. What can be said is that trading through this period and adapting is key, as are local nuances around lockdowns and restrictions on trade. While Australia has been able to implement a more broad-based approach, it could be said trade in the US has benefitted from less consistency, potentially at the expense of its residents.

Another fintech payments and banking upstart, Revolut, is reported to be looking to use the pandemic to its advantage by snapping up distressed competitors. The company has been plagued by news of churn amongst senior staff, but its growth remains bullish, and its war chest full, after landing a $500M cash injection from Silicon Valley investors.

Bitcoin is also showing tentative signs of a recovery, after a sharp sell-off in March. If it can weather the storm of the next few years, it could edge even further into the mainstream.

The coast is far from clear, but like all businesses, if these fintechs, and Bitcoin, can steadily trade through these turbulent times, their probability of longevity seems on the up. For payments’ fintechs, dips and swings in trading volumes will no doubt impact share prices in the short term, which could mean some good buying opportunities may arise for those investors that feel like they missed out on a good thing the first time around.

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