Visa and PayPal shares fall – is this the end of the dream run?

Payment stocks have been on a tear for 5 years – have they now peaked?

Visa and PayPal’s shares dropped 5% over night as the focus changes on payment stocks.

Both Visa and PayPal's shares peaked in July - Visa at $252.67 - now $205.06 and PayPal at $310.16 now $206.21 - down 18.8% and 33.4% from respective peaks. ( Mastercard is down 10.5% to $359.17)

Payment stocks have enjoyed a five year golden run but has this now peaked is the critical a question? Payments companies have enjoyed extended growth which accelerated during Covid-19s lock-downs and working from home.

As this unwinds and consumers hit the high streets and malls, online shopping has declined and so has many of the payment uses. This change can be seen in google searches for stay at home activities (in yellow) verses high street activities (in blue)

Competition across all payment sectors has ramped up and this is now seen as critical.

Online Spending has peaked

Data clearly shows online spending has peaked from its Covid-19 peaks.

Payment stocks on a tear

Payment companies especially acquirers and processors have had fantastic growth.

A comparison with banks in this case JP Morgan also shows the growth in payment stocks.

Fintech share is still very small

Despite all the noise and hype Fintechs share is of payments is very small and with a number of very high profile companies e.g. Stripe valued at US$95 billion, Klarna valued at US$45 billion, to name two, about to go public timing is critical.

Any sustained drop in payment market values will have a real impact on VCs and start-ups

Has growth peaked?

Payment company revenues have slowed and growth has moderated in some cases it’s declined.

Visa’s shares dropped 5% on news Amazon will extend its boycott of Visa to the UK. Having trailed the move in Singapore and Australia Amazon now takes it fight with Visa to the third largest online market the UK – read the pce below.

PayPal’s shares also dropped 5% on a rating change by one analyst – a sure sign of a shift in investor sentiment – see the pce below.

?BNPL caught in this sentiment

Australia the home of 12 listed BNPL stocks has shown the sentiment change – stocks are down 48% from their peaks basically supported by Afterpay's stock price.

Two examples in recent days – US operator Zebit stock hit a new low of 0.39 cents down from its peak of 1.49.

Splitit another off shore operator stock hit an new low of 0.32 cents down from its peak of 1.83.

Australian BNPL stocks down from 12 month peaks -

Laybuy?- down 19%

Zip?- down 60%

Sezzle?- down 61

Zebit – down 74%

OpenPay?- down 75% (peak Aug 2020)

Dough – down 77%

Payright?- down 78%

Humm?- down 82% (peak Oct 2013)

Splitit – down 82%

Fatfish – down 84%

Ioupay – down 96% (peak Dec 2002)

This looks more like a total collapse?

The average decline is 77%

Amazon takes battle against Visa to UK

?PAYMENTS DIVE???Lynne Marek Senior Editor Nov. 17, 2021

E-commerce juggernaut Amazon is upping the ante in its battle against card giant Visa, informing United Kingdom merchants that it won’t accept U.K.-issued Visa credit cards for transactions.

The move escalates an Amazon campaign to drive down the interchange fees it pays to Visa when customers use Visa’s credit cards to make purchases. The Seattle retailer has been waging the battle mainly by imposing surcharges on Visa purchases in some markets. Amazon argues that the card fees hurt retail businesses and result in higher prices for consumers.

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?“These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise,” an Amazon spokesperson said by email. “As a result of Visa’s continued high cost of payments, we regret that?Amazon.co.uk?will no longer accept UK-issued Visa credit cards as of 19 January, 2022.”

In a double-ding to Visa, Amazon noted that customers can still use other non-Visa credit cards on its United Kingdom site, and does still also debit cards from Visa and other companies. “With the rapidly changing payments landscape around the world, we will continue innovating on behalf of customers to add and promote faster, cheaper, and more inclusive payment options to our stores across the globe,” Amazon said in the statement.

One saving grace for San Francisco-based Visa in the latest salvo may be that Amazon won’t impose the new edict until Jan. 19, avoiding warfare over the holiday shopping season and giving the companies time to work out their differences,?the Wall Street Journal reported.

“We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon UK without Amazon-imposed restrictions come January 2022,” Visa said in a comment via email.

“We are very disappointed that Amazon is threatening to restrict consumer choice in the future. When consumer choice is limited, nobody wins,” Visa also noted in its statement.

Shares of credit card giant Visa, which operates the largest credit card network in the U.S., dropped on the news while those of Amazon seemed not to be impacted.

The U.K. battle follows on steps taken by Amazon earlier this year to impose surcharges on Visa transactions first?in Singapore in August?and the?following month in Australia. In those shots across Visa’s bow, Amazon also noted its opposition to Visa’s growing fees.

Amazon singled out Visa for the surcharges, suggesting it intends to keep pressuring on the no.?1 card company, which is also grappling with?federal anti-trust probes?and scrutiny from U.S. policymakers concerned about a duopoly, including competitor Mastercard.?

Meanwhile, a?swarm of well-financed payment fintech startups?is finding new ways to process payments and threatening legacy payments companies like Visa and the banks that have traditionally issued credit cards. Those incumbents charge merchants interchange fees every time a consumer presents a credit card to pay for a transaction.

Amazon, led by billionaire founder and Executive Chair Jeff Bezos, explained its complaint like this in September: “These costs should be going down over time with innovation and technological advancements, which allows merchants to reinvest savings into low prices and shopping enhancements for customers. Yet, despite these advancements, some cards’ cost of payments continue to stay high or even rise.”?

Even as it imposed the surcharge in Australia, Amazon said it didn’t want customers to have to pay it, and offered the $20 gift card as a testament to that commitment. “These are the first countries we’ve decided to make changes in, but this is a global issue and is not isolated to Australia and Singapore,” Amazon said at the time.

The Amazon spokesperson didn’t immediately respond to a question on whether the surcharge has been imposed in other markets. A spokesperson for Visa declined to comment.

PayPal shares drop after Bernstein downgrades stock amid rising competition

CNBC??Samantha Subin@SAMANTHA_SUBIN ?17th Nov 2021

·???????PayPal shares dropped on Wednesday after Bernstein analysts downgraded the stock from the equivalent of a buy to hold.

·???????The analysts cited worries surrounding increased aggregation on e-commerce platforms like Amazon and Shopify, and innovation in buy now pay later as some disruptors to the business

PayPal?shares sank 4.36% on Wednesday after Bernstein analysts downgraded the stock from the equivalent of a buy to hold and cut the price target to $220 from $260, citing fears that the company faces a broad array of risks.

Shares of PayPal are down almost 13% for the year while the Nasdaq Composite is up 25%.

“PayPal’s positioning as a leading digital wallet in an increasingly digital world is hard not to acknowledge (one of the reasons we upgraded the stock 2yrs ago),” the analysts wrote. “That said, we believe change is accelerating, and PayPal now risks getting disrupted vs. being a disruptor.”

Bernstein analysts are concerned about the rising concentration of e-commerce around big platforms like?Shopify?and?Amazon, which account for 32% of the U.S. e-commerce market.

Shopify is “emerging as an unassailable competitor” in PayPal’s core small and medium-sized business market, the analysts said, and poses a further risk as it launches its own payments platform. Likewise, Amazon is set to begin accepting PayPal’s Venmo as an alternative payment in 2022, but Bernstein believes Venmo is currently “severely under-monetized.”

The analysts are further concerned that PayPal is “under siege by a thousand cuts” from other payment solutions ranging from?Apple?Pay and?Square?to buy now, pay later options from?Affirm?and Klarna

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